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A report from the Environment, Food and Rural Affairs (Efra) select committee has said bonuses and dividends for water company bosses and shareholders should be approved by the regulator Ofwat before they are paid, as billpayer funds are being used irresponsibly. MPs also recommended that the government consider ending the profit-driven water company model and making English companies non-profit, similar to how the system works in Wales.

The report notes: “Welsh Water’s gearing levels are lower and its financial resilience is better than many of the main water companies. Not-for-profit models lack one of the negatives of private ownership, dividends, which have contributed to the worsening finances of several water companies, most notably Thames Water.”

Thames Water renationalisation plans being stepped up

The environment secretary, Steve Reed, has said the government is stepping up preparations for temporary nationalisation of Thames Water, indicating it will reject pleas from the company’s creditors for leniency from fines and penalties.

Thames Water’s largest creditors control the utility and have made a bid to cut some of its debts and provide £5.3bn in new funding to try to turn it around. However, the creditors have said their plan needs considerable leniency from the water regulators Ofwat and the Environment Agency over fines for environmental failings, including immunity from prosecution for environmental crimes.

The Guardian reports that one person close to the situation said they believed it was “50/50” whether the government imposed a special administration regime (SAR), essentially a temporary nationalisation. Steve Reed told the House of Commons that there would be no special treatment for the UK’s largest water company, which is struggling under nearly £20 Bn of debt. The Financial Times reports that Reed’s comments mark a haredening of the government’s language in relation to the possibility of Thames going into the government’s SAR scheme.