UK River Report #3: Thames Water Troubles and Lenient Lawmakers

Welcome back dear reader to the third installment of the UK River Report. In this month’s post, I will cover some of the most recent updates regarding the Thames Water debt crisis, including some of the bids from potential investors and how the company is still finding the money to pay executive bonuses, while also discussing the limitations of the government and regulators in tackling the unlawful activities of water companies. 

Thames Water woes:

Thames Water's demonstrably worsening debt crisis is set to increase to £18 billion next March, although multiple bids for the UK's largest water company may yet save it from running out of money from early next year. [1] Potential investors include the Scottish utility firm Castle Water and infrastructure investor Covalis, supported by French firm Suez, both of whom plan on listing the company on the stock exchange. [2] While this approach has the potential to quickly raise the required equity for Thames Water, the scope of worthy beneficiaries remains questionable, since profitability for shareholders will evidently remain the company's core focus, rather than prioritising affordability for customers and environmental sustainability. [2] 

However, whether any of these proposals will follow through is not yet certain, since current investors must agree to how much debt will be written off, while limits for increasing household bills must also be considered and as the regulator Ofwat has recently rejected requests to increase bills by 59% over the next five years, instead permitting a 33% rise, which has the potential to deter likely investors. [2, 3] 

Given the challenges facing Thames Water, its collapse may prove a better result in the long term for customer costs and the sewage crisis, as water supplies will remain unaffected and this could pave the way for re-nationalising our water. [4] 

Rising bills and sewage spills:

Amid worsening debt, Thames Water's proposal for increasing customers' costs comes as the company saw a 40% rise in pollution incidents in the first 6 months of 2024. [4] Yet, recent executive bonuses, totalling £770,000, remain unaffected, again demonstrating the warped priorities of a company responsible for providing a public service to 1/4 of the UK population, clearly neglecting investment in favour of paying bonuses and shareholder dividends. [4] 

This comes as Thames Water, along with two other water companies, were recently reprimanded by Ofwat for attempting to use customer money to pay bonuses, with Thames Water, Yorkshire Water and Dwr Cymru Welsh Water blocked from paying these bonuses collectively worth £1.6 million. [4, 5] 

Despite the action taken by regulators against water companies, much more needs to be done. 

Lawmakers, lawbreakers: 

How can we expect change to deal with river pollution from water companies, if the action of the government and regulators in managing sewage spills is deemed unlawful? [6]

This illegal activity was first reported to the Office for Environmental Protection (OEP) by wildlife charity WildFish. [6] The OEP subsequently found that both the government and regulators, including Ofwat and the Environment Agency, broke the law by being too lenient toward water companies that were responsible for repeated sewage spills. [6] The OEP said this contravention was due to excessive, unnecessary releases which are only legally permitted under exceptional circumstances, such as during unusually heavy rain. [6]

Campaigners, including those from wildlife charity WildFish, have described the moment as 'bittersweet', as it is evident that the government and public bodies responsible for regulating the water industry are not doing enough. [6] 

At least some comfort may be taken from these failures not going unnoticed, although charities and pressure groups are seemingly burdened by the responsibility to report these incidents as the regulators consistently fail to do so. 

Thank you for taking the time to read this month's issue of the UK River Report. I hope you found it informative. If you would like to get involved and raise awareness of river pollution in your area, please head over to the UK River Report website and check under the 'Get Involved' page to complete our survey, or feel free to get in touch via the 'Contact' page, if you feel you have more to discuss than the survey can offer. 

Lastly, I would like to wish you all a Happy New Year, as we gradually move in the right direction for the sake of our water and our rivers. 

With hope for the future,

Federico 

References:

1. Jack S, Jordan D. Thames Water Secures £3bn Loan to Survive Into 2025. BBC; 2024. [cited 2024 December 30]. Available from: https://www.bbc.co.uk/news/articles/c704wzx38p1o

2. Espiner T, Jack S. Bidders Line up for Struggling Thames Water. BBC; 2024. [cited 2024 December 30]. Available from: https://www.bbc.co.uk/news/articles/cpvnzw43gx9o

3. Isaac A. Thames Water to Get Green Light to Hike Bills by More Than a Third by 2030. The Guardian; 2024. [cited 2024 December 30]. Available from:

https://www.theguardian.com/business/2024/dec/18/thames-water-green-light-hike-bills-one-third-by-2030-ofwat

4. Jones L, Jack S. Thames Water Boss Defends Exec Bonuses as Sewage Spills Soar. BBC; 2024. [cited 2024 December 31]. Available from: https://www.bbc.co.uk/news/articles/cg4zklxgwwwo

5. Jack S, Masud F. Three Water Firms Blocked From Using Customer Money for Bonuses. BBC; 2024. [cited 2024 December 31]. Available from: https://www.bbc.co.uk/news/articles/cly0pjedj0zo

6. Stallard E. Government Has Broken the Law on Sewage, Says Watchdog. BBC; 2024. [cited 2024 December 30]. Available from: https://www.bbc.co.uk/news/articles/c4g38drwmrlo