Thames Water should have a market-based solution says Reeves

Chancellor of the exchequer Rachel Reeves has told debt-ridden Thames Water to seek a “market-based solution” to its woes in a recent open letter to the company’s 100-institution-strong creditor group.

‘Market-based solution’ to Thames Water

In the letter, Reeves stated over Thames Water that:

The government recognises the seriousness of the situation facing Thames Water … Our position remains that the company should find a sustainable, market-based solution to the current situation.

This solution must not only secure the company’s long-term financial stability but also deliver a successful turnaround that achieves positive outcomes for customers and the environment.

However, she also reiterated that:

The government is prepared for all eventualities across its regulated industries and has undertaken detailed contingency planning for a special administration regime, should this be required to ensure the continued provision of vital public services.

This echoes earlier comments from environment secretary Steve Reed. He said the government was at the ready for “all eventualities” regarding the fate of the ailing water company.

Under water

The threat of ‘special administration’ – that is, temporary nationalization – has caused concern for Thames Water’s debt-holders. The company is on the hook for £22 billion, which could be restructured if the government takes control, potentially making it harder to collect.

Thames Water supplies 16 million people within London and the Thames Valley. Its decline has been evident for some years now, and all too visible to the general public. Water shortages have been threatened during sunny weather, mains pipes have burst frequently, and the river has been polluted with sewage after rain.

Meanwhile, former Bank of England deputy governor Jon Cunliffe is heading a review into water regulator Ofwat. Under Ofwat, English water companies caused a 60% rise in serious pollution events last year. The review is, quite unsurprisingly, expected to result in the abolition of the failing regulatory body. This could in turn result in further troubles for Thames Water if government interest means that it secures a favourable deal.

We Own It

However, Rachel Reeves’ issues don’t end with trying to right a sinking water company. Anti-privatization campaign group We Own It issued an open letter on 28 August highlighting the fact that the chancellor has appointed a water lobbyist to the Treasury.

Jenny Scott is the co-founder of Apella Advisors, at which she works full-time. Now, thanks to the chancellor, she also has a part-time job on the treasury’s board of directors. We Own It pointed out that Appella are Thames Water lobbyists, and that they’ve held meetings with the Treasury for the water company.

As the open letter put it:

Thames Water is over £22 billion in debt and teeters on the brink of special administration. It is crucial that the future of this vital resource is decided transparently and democratically, with the interests of households and the environment placed front and centre.

Appointing a lobbyist who is directly linked to Thames Water flagrantly disregards the democratic process.

The Treasury’s defence – that the Board has no influence over government policy – is untenable. In your government’s own words, the Board’s purpose is to ‘advise and support the department’s ministers’.

Water is a necessary resource for human life. That fact alone should make talk of a “market-based solution” to its supply laughable. But even if we entertain the idea of privatized water for the moment, surely the fact that a water lobbyist sits on the board for the National treasury is proof enough that our government doesn’t have the public’s interests at heart?

Featured image via the Canary