Thames Water funding set to dry up by November as Burnham poses risk

With creditors withholding further funding until the incoming government clarifies its stance, Thames Water said its finances are projected to last until November.

The incoming government’s view will determine the provision of more funds by the creditors, leaving the water company, which serves around 16 million customers, anxiously awaiting their rescue.

Currently, Thames Water has a £1.1bn reserve, but time is ticking as it races to secure additional funding.

The group of creditors, angling to assume control of Thames Water, had a rescue package previously dismissed by environment secretary Emma Reynolds in June.

This package intended to eventually list the utility company on the London Stock Exchange.

Now, this proposal is left in limbo as creditors await the new government’s next move.

Despite Thames chief executive, Chris Weston, stating that creditors are willing to offer additional funding to prevent the company from hitting a cash wall, they are holding back until they get clear guidance from the government on their future approach.

Burnham has previously called for more public oversight of the long-criticised water sector, even suggesting potential nationalisation.

However, whether he will dismiss a private sector-led remedy for Thames Water or opt to place it under temporary government control is currently unspecified.

The announcement came alongside the release of Thames Water’s annual results, showing it achieved just 55 per cent of its regulated targets.

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Currently, Thames Water has a £1.1bn reserve, but time is ticking as it races to secure additional funding. (Image: Newsquest)

Moreover, an increase of 101 per cent in customer billing complaints was reported.

The company made it clear in its annual accounts that its cash reserves would dry up in the fourth quarter of the year.

This financial crisis points towards Thames Water potentially entering a Special Administration Regime, which could set the stage for nationalisation under a government led by Mr Burnham.

Burnham’s anticipated role in Thames Water’s future has received significant attention, underlining his potential influence over the future of the more significant water industry, which is under scrutiny for potential upgrades, including pipes and storm drains.

Meanwhile, Thames said it had proposals for an £800m up front payment in place to avert years of crippling penalties.

The results statement showed a reduction in total pollution incidents in the past year, falling from 470 to 386.

Unfortunately, even so, Thames fell short of its targets in several other categories, including leakage rates and supply interruptions.

This has led to anticipation of further fines, with a forecasted 40% rise in penalties for failing to meet pollution obligations, in spite of the reduced number of incidents.

The figure was likely driven by increases allowed by industry regulator Ofwat to fund record but overdue investment in infrastructure including pipes and storm drains.

As Thames Water clings to life with a limited reservoir of funds, all eyes are now on incoming prime minister Burnham’s next move.