Thames Water: Ofwat boss refuses to apologise for water industry debt crisis
Ofwat’s former boss yesterday refused to apologise for allowing the water industry to rack up an eye-watering £65bn debt mountain, which has led to Thames Water’s desperate scramble to secure funds and avoid collapse.
“I won’t apologise for my role at Ofwat, no,” Cathryn Ross said, during yesterday’s grilling with MPs when Labour MP Darren Jones scrutinised her record.
As chief executive of Ofwat for four years between 2013 and 2017, Ross signed off the watchdog’s price review in 2014, which enabled former Thames Water owner Macquarie to hike the supplier’s debts from £3bn to £10bn before later selling the company.
She is now interim co-chief executive of Thames Water, following the troubled company’s boardroom exodus and pressing financial difficulties – which has seen the UK’s largest supplier scramble to secure £750m in funds from stakeholders as it struggles beneath a £14bn debt pile.
Ross also confirmed households will be on the hook for improvements to Thames Water’s creaking infrastructure and poor operational performance, with customers footing the bill for billions of pounds of investment needed to tackle sewage spills, wastewater flows and leaking pipelines.
“It is an unfortunate truth that the only source of ultimate funding for that in the current model is the customer,” Ross said.
Water suppliers are pushing for hikes in customer bills of up to 40 per cent to fund their improvement plans, as they struggle with the present challenges of debt and poor infrastructure, and the future issues of climate change and population growth which will weigh on supply and demand.
Ofwat is currently working on the 2024 price review, which will set price controls for water and sewerage companies for 2025 to 2030.
Exposing the crisis water suppliers are facing, Ofwat chief executive David Black did not rule out the potential nationalisation of Thames Water – confirming they had made contingency plans to place the supplier in a special administration regime if the firm buckles under its debts.
This would be in line with what happened to Bulb Energy during the domestic energy crisis last year, which was placed on life support by the government, propped up transfusions of taxpayer cash.
However, Black played down the prospect of any imminent breakdown for Thames Water, and expected a special administration regime “won’t be needed.”
The watchdog is now confident Thames Water’s £4.4bn liquidity position and recent £750m reprieve from shareholders will ensure the supplier stays afloat.