In the second part of our focus on the water industry, we chart the decline of one of the UK’s major utility companies, now on the brink of restructuring or renationalisation
In the second part of our focus on the water industry, we chart the decline of one of the UK’s major utility companies, now on the brink of emergency renationalisation“It’s in a shocking state,” said one official who has visited the 1960s site, which supplies approximately a third of the capital’s population with drinking water and sewage services. “It’s a slow-motion management disaster.
Britain’s privatisation wave, kicked off by Margaret Thatcher in the 1980s, was entering a new phase. The early owners were cashing in their lucrative investments, and a new breed of financially savvy investors was circling. “It had self-portraits drawn by the directors – they didn’t even pay for a designer to create them,” says a former Thames executive. “Macquarie ran a very tight ship: if money didn’t need to be spent, it wasn’t.”
Thames Water, which was privatised with zero debt, saw its debts swell from £3.4bn in 2006 to £10.8bn in 2017, when Macquarie sold its final stake. The pension position went from a £26.1m surplus in 2008 to a £260m deficit in 2015. “They left Thames in a crumbling state,” says Roney.amassed at water companies, including Thames, while dividends grew fatter, a senior water industry source said. “It was asset stripping, pure and simple.
In the aftermath of that report, long-mooted plans for reservoirs finally advanced, including a reservoir to the south-west of Abingdon in Oxfordshire –, a separate project that sits outside Thames Water’s ownership but which will ultimately be paid for by Thames customers. It was just eight days after Macquarie had sold its final stake in Thames to investment managers controlled by Omers and the Kuwait Investment Authority.Get set for the working day – we'll point you to all the business news and analysis you need every morningimposed after the emergence of huge leaks of untreated sewage into the Thames and its tributaries which had led to serious impacts on residents, farmers and wildlife, killing birds and fish.
But the wheels of regulation turn slowly. Ofwat’s concerns were building in 2018, 2019 and 2020, according to insiders who were working on issues such as dividends at the time. But cash was running out. In July 2023, Thames said it had secured £750m of emergency funding from its shareholders to run to March 2025 and indicated that a further £2.5bn would be needed to cover the five years to 2030.
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