UK Government Moves Closer to Nationalising Thames Water

The Government's Objection

The UK environment secretary, Emma Reynolds, has objected to a £10bn rescue proposal for Thames Water because it would place an “undue burden” on consumers, pushing the troubled utilities firm closer towards public ownership.

Thames Water's Financial Woes

Thames Water serves about 16 million people in London and the south of England. Since it was sold under Margaret Thatcher, successive private equity owners have loaded the company with £17.6bn of debt, and it is now close to collapse.

The Proposed Rescue Deal

Ofwat was close to a deal under which the struggling company would avoid any new fines over sewage leaks for four years in return for a cash injection into the business from its creditors, who would take over the company. The consortium, named London + Valley Water, wants to take over Thames in a multibillion-pound restructuring.

The Data Analysis

• Thames Water's debt: £17.6bn
• Number of people served: 16 million
• Proposed cash injection: £3.35bn of new equity and up to £6.55bn in new debt

The Impact Analysis

The UK government's objection to the rescue proposal has significant implications for the water industry. If the government waves through the rescue deal, Thames would be part-controlled by Elliott Investment Management, which is run by the billionaire Trump donor and hedge funder Paul Singer.

The Prediction

With 107 MPs, including 42 from Labour, signing an open letter to Ofwat and Reynolds calling on them to reject the Thames creditors' latest deal and instead bring the company into a special administration regime, a form of temporary nationalisation, it seems that nationalisation is becoming a more likely option for Thames Water.