What's gone wrong at Thames Water?
Thames Water is England's biggest water company, and it's in trouble. Here's what you need to know about its debt, its past controversies and the possibility of a government take over.
Friday 30 June 2023 08:25, UK
One in four people in Britain rely on Thames Water for their supply - but there is a question mark over the company's future.
That's because of its £14bn debt. It needs to pay some of that back soon, and it is trying to secure extra cash as the government considers whether it will need to step in.
Here's what you need to know about what's happening at England's largest water company.
A mountain of debt
Thames Water is sitting on a £14bn debt pile. A debt pile is exactly what is sounds like - an accumulation of debt.
In Thames Water's case, the debts started to accumulate after it was privatised in 1989.
A large proportion of the debt was built up during the 11 years it was under the ownership of Australian investment bank Macquarie.
By the time it was sold in 2017, it had a debt pile of £10bn.
High interest rates in the past year have added to the debt.
About 10% of the £14bn debt pile is due to be paid at the end of this year as a bond matures.
A scramble to secure extra cash
Thames Water has said it is working "constructively" with shareholders to find the necessary funds, reportedly £1bn.
It received £500m from shareholders in March.
Its largest shareholder is Ontario Municipal Employees Retirement System, a vast Canadian pension fund.
Others include China's sovereign wealth fund; the Universities Superannuation Scheme, the UK's biggest private pension fund, and Abu Dhabi's Infinity Investments.
Will the government step in?
The government has confirmed it has "contingency plans" if Thames Water is not able to repay its debts but has not revealed the details.
On Wednesday, Sky News revealed the government is discussing placing Thames Water into a special administration regime (SAR) that would effectively take the company into temporary public ownership if it collapses.
This kind of insolvency process was used when the energy supplier Bulb collapsed in 2021, sparking concerns that it could cost taxpayers billions of pounds.
The government response would ensure service was still provided to all Thames Water customers.
What does it mean for customers' bills?
Thames Water customers have been assured that "absolutely nothing" will happen to their bills.
Health minister Neil O'Brien told Sky News: "Absolutely nothing is going to happen in terms of either their bills or their access to water, we have contingency plans - like we do in all of these network utilities - to manage any difficult situations."
What controversy has Thames Water faced?
Thames Water has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.
In 2021, it was fined £4m for allowing untreated sewage to escape into a river and park - and, in the same year, was ordered to pay £11m for overcharging thousands of customers.
It was hit with a record £20.3m fine in 2017 for repeatedly allowing raw sewage to flow into the Thames, just a year after it had paid the largest fine for a single pollution incident of £1m.
Read more:
Ministers weigh contingency plan for collapse of Thames Water
Pressure on 'rip off' water industry unlikely to go away any time soon
What happened to the chief executive?
Sarah Bentley, who was chief executive of Thames Water for less than three years, stepped down on Tuesday with immediate effect.
The news came weeks after it emerged Ms Bentley will receive pay and perks worth £1.6m this year - nearly double her annual salary.
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In May, Thames Water said it was giving up her bonus due to the water industry's continued struggles with sewage outflows and leaky pipes.
She is being succeeded by the company's chief financial officer Alastair Cochran and the strategy and regulatory affairs director, Cathryn Ross, while a search for a permanent replacement takes place.