‘Disgrace!’ – Michael Gove has ‘zero sympathy’ for Thames Water bosses demanding 40% hikes | UK | News

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Scottish Conservative Conference 2024 - Day Two

Michael Gove blasts Thames Water bosses (Image: Getty)

Michael Gove has branded Thames Water bosses a “disgrace” for their refusal to rule out bill increases of up to 40%

Taxpayers could pick up the debt-laden companies’ bill after its nine shareholders – aalmost all non-UK companies – ditched plans to inject £500million of extra cash into the country’s biggest water supplier.

Chris Weston, Thames Water’s CEO, admitted that if no alternative funding could be found by the end of next year, then it could face the prospect of a special administration.

He said the company was “quite a long way off” from emergency nationalisation but did not rule out the possibility.

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Levelling Up Secretary Michael Gove warned Thames Water’s leadership must “carry the can” for the company’s shortcomings and not pass higher bills onto consumers after successive management teams failed to invest enough.

He said: “I think the leadership of Thames Water has been a disgrace.

“I think for years now we have seen customers of Thames Water taken advantage of by successive management teams that have been taking out profits and not investing as they should have been..

“When I was Environment Secretary I called this out. They haven’t changed their ways. I have zero sympathy for the leadership of Thames Water.”

Mr Gove continued: “The answer is not to hit the consumers, the answer is for the management team to look to their own approach and ask themselves why they are in this difficult situation, and of course the answer is because of serial mismanagement for which they must carry the can.”

Campaigners said executives have pocketed sky-high bonuses and given billions to overseas investors whilst their infrastructure crumbles.

Thames Water, which supplies 16 million households across London and the South East, has paid out £4,636,000 in bonuses, incentives and benefits since 2019/20.

Total remuneration for the firm’s executive team, including base pay and pensions for the same period, came to £10,617,000 – figures provided by the Liberal Democrats showed.

Liberal Democrat Spring Conference Day One

Sarah Olney MP has called for Jeremy Hunt to rope in water bosses (Image: Getty)

The party has called for ministers to block proposals which could see customer bills rise by at least 40%.

Sarah Olney MP, Liberal Democrat Treasury spokeswoman, said: “Thames Water is a polluting giant which has accrued billions in debt whilst pumping our rivers full of rotten sewage.

“Ministers must intervene today and block any attempt by Thames Water to saddle customers with extortionate bill increases. Customers can’t be bailing them out of their own mess.

Jeremy Hunt should also call a Downing Street summit with Thames Water’s bosses to reassure taxpayers they will not be on the hook should the company go down.”

Billpayer Scott McNeish, from Slough in Berkshire, echoed Mr Gove by blasting Thames Water as an “absolute disgrace”.

Taking to social media, he said: “Shareholders have been filling their bank accounts whilst the whole network turns to s*** and they expect us to foot the bill. They can get to f***. Thames Water is not fit for purpose.”

Mr Weston, who is on £850,000 salary, said the firm’s proposed plans require an investment of around £20billion between 2025 and 2030 – which requires the staggering 40% bill rise.

He said: “That is the price customers have to pay for the investment in our infrastructure that’s needed.

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The Chancellor said the Treasury will monitor Thames Water’s situation “very carefully”. (Image: Getty)

The Chancellor said the Treasury will monitor Thames Water’s situation “very carefully”.

The water giant stressed that it had £2.4billion of cash currently available to it, which should see it meet funding needs for the next 15 months.

Thames Water agreed a rescue funding plan with shareholders last July – including the Universities Superannuation Scheme, China’s sovereign wealth fund and a Canadian pension fund – that would see them pump in £750million, with the first £500million due by Sunday.

But the firm said the funding plan was subject to conditions, including a business plan that was supported by “appropriate regulatory arrangements”.

Thames Water on Thursday blamed water regulator Ofwat by claiming that the regulator had made its business plan “uninvestible”.

The GMB union accused Thames Water of “blackmailing” the watchdog and customers, adding it was meeting with bosses at the firm on Thursday.

Gary Carter, GMB national officer, said: “Holding bill payers to ransom for costs after years of underinvestment is completely unacceptable.”

Thames Water revealed in December that it paid a £37.5million dividend to a parent company.

When asked to explain the move by Ofwat, the firm said the money had been moved to help pay its debts.

The firm stressed that it has not paid a dividend to “external shareholders” for at least the past five years.

A Thames Water van is seen at a repair site in Central...

Thames Water also faces Britons’ fury because of leaks and sewage discharges (Image: Getty)

Taxpayer Aaron Hall, from the east of England, said on social media: “What planet is the board of Thames Water on? Why on earth should the public pay more to cover improvement works and for shareholders to keep taking huge dividends. Maybe they could pay back some of what they took out.”

Thames Water was owned by a consortium led by Australian financial services group Macquarie for a decade until 2017, during which it ran up debts of at least £10billion and paid out billions of pounds worth of dividends.

Thames Water said it was in ongoing talks with Ofwat to secure regulations that were “affordable for customers, deliverable and financeable for Thames Water, as well as investable for equity investors”.

Raw sewage pours into recreational field used by children

It said once the new regulatory plan was agreed with the watchdog, it “intends to pursue all options to secure the required equity investment from new or existing shareholders”.

Ofwat will tell Thames Water in June what the percentage of a possible bill rise is that they will accept.

Mr Weston said: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water.”

Ofwat said the firm, which has debt of nearly £15billion, must now seek further funding for its turnaround plan but tried to assure that “safeguards” were in place to protect services to households.

Thames Water is ring-fenced from its holding company Kemble, which has a £190million loan due for refinancing next month – a debt that the group has already warned it will not be able to repay.

The company has also come under intense scrutiny after missing sewage spill and leakage targets.

There was a 162.9% increase in the number of hours which Thames Water dumped sewage from 2022-2023.

The figures released by the Environment Agency on Wednesday showed the firm dumped sewage for a total of 196,414 hours last year, up from 74,693 in 2022.

The spills occurred on 16,990 occasions in 2023, up 112% on the 8,014 reported instances the year before.

Labour urged the Government and regulators to “do everything in their power to stabilise” Thames Water.

Steve Reed, the Shadow Environment Secretary, said: “The Conservatives weakened regulation, allowing water companies to get massively in debt while the sewage system crumbled and illegal sewage dumping hit record levels.”

By Cat Hobbs, Director of We Own It

Thames Water is on the brink of collapse and its shareholders want the public to rescue them. Of course they want us to pay to clean up their mess. 

They are proposing to hike our bills by an eye-watering 40% while they continue to receive dividends and pour sewage into our rivers.

They’ve done very nicely already.  The shareholders – including a Canadian pension fund and sovereign wealth funds owned by Kuwait, Abu Dhabi and China – have received £7billion in dividends since privatisation. 

The company borrowed £18 billion in order to extract this money. Meanwhile Thames Water bill payers spend 25p in every pound on servicing this enormous debt mountain.

Actually providing a decent water and wastewater service takes a back seat as Thames Water’s main purpose is to make a profit. 

They’re one of the worst performers for releasing raw sewage and they leak away a quarter of our water because they’d rather not invest in infrastructure.

WE are the investment – the poor sods who have no choice but to use Thames Water’s services because water is a natural monopoly. This is an extreme ideological experiment – nowhere else in the world runs water the way England does. 

The crisis at Thames Water demonstrates everything that is wrong with water privatisation. The privatised English water companies treat customers like a cash machine, and our rivers and seas like a toilet.

We Own It is calling on the government to bring Thames Water into permanent public ownership and make it accountable to households, workers, communities and the environment. 

The government can use special administration powers right now to nationalise Thames Water permanently on the basis of insolvency AND performance. There must be no bailout for shareholders, Thames Water must not be returned to the private sector at our expense so they can fail all over again.

Why should we bail them out? Why should we pay yet higher bills, pay for their debt and see our rivers filled with sewage? 

We refuse to pay any more for Thames Water’s mistakes and reckless asset stripping.

In Scotland, water is already in public ownership and they invest 35% more in infrastructure to tackle sewage and leaks. 7 out of 10 people believe water belongs in public ownership, including a majority of Conservative voters.

The truth is, we the public can’t totally avoid paying for this mess, we’ll need to pick up the pieces once Thames Water’s shareholders have fled, cash in hand. 

But we can avoid rewarding them further. And we can make this the start of bringing water into public ownership across England so we never get ripped off like this again.

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