Privatised Thames Water—which is responsible for water and sewage services for 15 million people in London and surrounding areas—is on the verge of financial collapse.
It’s the result of the ruthless exploitation of crucial public services by profit-hungry corporations. They have bled customers dry, avoided necessary improvements, polluted the environment, loaded up the firms with debt and are now preparing to slink away leaving taxpayers to foot the bill.
The Financial Times newspaper reported on Wednesday, “The British government is on standby for the potential collapse of Thames Water and ministers are examining options including the temporary nationalisation of the debt-laden business.”
If it happens it won’t be permanent nationalisation under democratic public control. Instead it will be like the temporary takeover of energy supplier Bulb. The company has since been sold on by the government to Octopus Energy and again the state will look to some other groups of parasites to run the company.
Thames’ demise could have a “domino effect” and lead other water companies to topple, one chief executive of another water company warned. In December, regulator Ofwat said it was concerned over the financial resilience of Thames Water, Yorkshire Water, SES Water and Portsmouth Water.
Thames Water chief executive Sarah Bentley resigned on Tuesday as Britain’s biggest water utility struggled to find a bank to shore up its massive £14 billion debt pile. Bentley joined Thames three years ago with a £3.1 million “golden hello” payment.
Her exit comes just weeks after it was reported that she will receive pay and perks worth £1.6 million this year—nearly double her annual salary.
Water, like other key services, is a happy hunting ground for corporate raiders.
Britain’s privatised water and sewage companies paid £1.4 billion in dividends to shareholders in 2022, up from £540 million the previous year. This was despite rising household bills and a wave of anger over sewage outflows on beaches.
Margaret Thatcher’s Tory government privatised water in 1989. The Tories gave the new owners monopolies to supply services in their areas and wrote off all the previous debts.
The corporations running water then loaded up the firms with debt while using complex financial arrangements to avoid tax and hand money to their executives and shareholders.
Multinational infrastructure firm Macquarie owned Thames Water between 2007 and 2017. They left it with £2 billion of debt but paid shareholders a return of between 15.5 percent and 19 percent in dividends a year. If you had £10,000 of shares you grabbed a payout of between £1,550 and £1,900 every year—and you kept the original £10,000. That’s a stellar return on spare cash.
Thames paid £37 million of “internal dividends” to its parent company in the year to 31 March 2022.
It is owned by a wide-ranging collection of looters out to make profits. The largest shareholder is Ontario Municipal Employees Retirement System, with a 31 percent stake. Other big investors include the university workers’ pension fund the Universities Superannuation Scheme (USS) as well as the Chinese and Abu Dhabi sovereign wealth funds.
UCU union members who have a role in the USS should be asking questions about the financial skulduggery behind the latest moves—and demanding that their pensions aren’t invested in such firms.
It’s guaranteed that workers will be told to pay the price for new ownership for Thames. Gary Carter, GMB union national officer, said, “The potential collapse of Thames Water is indicative of the failure of the water industry’s ownership model. The chickens are coming home to roost.
“Thames Water’s employees and contractors now need a categorical assurance that their pay, pensions, and conditions will be protected.
“Forty years since privatisation and we’ve seen almost no investment in infrastructure and the workforce while shareholders and fat cats drain fortunes from the industry.
“We need to get our water industry back into public hands now.”
It should be renationalised—and under proper democratic control that puts customers and workers before profit. That will take a fight from the unions.
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