29 June 2023 , 14:24
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The water industry is “teetering on the brink of insolvency,” campaigner Feargal Sharkey warned today, as anger over a possible bail-out of Britain’s biggest supplier grew.
The Government is drawing up plans to rescue debt-ridden Thames Water, despite being owned by a wealthy foreign investors from as far afield as Canada and Abu Dhabi.
It comes amid fears over other water companies given a jump in interest rates.
Regulator Ofwat warned last December over the financial resilience of Thames Water, as well as Yorkshire Water, SES Water and Portsmouth Water.
SES Water, which supplies about 745,000 people in south-east London, West Sussex and Kent, has been put up for sale by its Japanese owners.
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Former punk singer turned clean water campaigner Feargal Sharkey blamed the “regulatory system and the political oversight” for what had gone wrong.
“This has been building for some time,” he told BBC Radio 4’s Today programme.
“We have seen the symptoms of it in terms of the sewage crisis.
“It has exposed this deeper, underlying structural issue that the industry is clearly, very financially fragile, if not teetering on the brink of insolvency.”
He called for the government to use powers to control the companies, to order them to invest, and limit what they can pay out in dividends.
“Not a penny of public money should go into any bailout of these companies,” he said.
“They have made off with £72billion of our cash, they have ram-raided these companies for cash.”
Australian bank Macquarie has been slammed for its ownership of Thames Water between 2006 and 2017.
It is estimated that Macquaire lumbered Thames with £2.2billion in extra loans while extracting £2.7billion in dividends.
A black hole in Thames Water’s pension fund also ballooned from £38million to 2005 to £260million in 2015. It now stands at £250million.
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Darren Jones, Labour chair of the Commons Business and Trade Committee, said: “The law doesn’t provide the means for the government to claw back the money that very handsomely rewarded shareholders have taken out from the business over very many years.
“That is one of the problems with our regulatory system in that it has not only put us in this situation in the first place but ultimately puts the burden on the taxpayer.”
Thames Water is owned by a group of private equity, pension and infrastructure funds.
Its biggest shareholder is Canada’s Ontario Municipal Employees Retirement System, a pension fund with 500,000 members.
Others include a fund linked to Abu Dhabi, plus closer to home, the Universities Superannuation Scheme, the UK’s biggest private pension fund and scheme for university staff.
Mika Minio-Paluello, policy officer for industry and climate at the TUC, said: “UK families have been ripped off by greedy water companies for too long.
“These firms have taken billions in profits while destroying our rivers with raw sewage.
“Privatisation is the problem, and regulation won’t fix it. Thames Water should be taken into public ownership permanently.“
The Consumer Council for Water said Thames Water should be communicating more openly about its finances with customers.
CCW senior director Mike Keil said: “Thames Water made a commitment to its customers to make significant improvements through its turnaround plan and people need reassurance that is going to be delivered.
“The company should be communicating more openly about its finances with its customers, who want to see a marked improvement in Thames’ customer service and wider performance.”
He added: “All water consumers should be reassured that there are robust regulatory safeguards in place to make sure people’s taps keep running and their services are protected.”