Ministers weigh contingency plan for collapse of Thames Water

Published

2 years ago

June 28, 2023

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The government has begun drawing up contingency plans for the collapse of Thames Water amid growing doubts in Whitehall about the ability of Britain’s biggest water company to service its £14bn debt-pile.

Sky News has learnt that ministers and Ofwat, the industry regulator, have started to hold discussions about the possibility of placing Thames Water into a special administration regime (SAR) that would effectively take the company into temporary public ownership.

Such an insolvency process was used by the government when the energy supplier Bulb collapsed in 2021, sparking concerns that it could cost taxpayers billions of pounds.

Ultimately, the Bulb administration is likely to have cost the public purse a far smaller sum, but water industry ownership restrictions which prevent consolidation mean this figure could be dwarfed if Thames Water was to fail.

The talks within Whitehall, which involve the Department for Environment, Food and Rural Affairs (DEFRA), Ofwat and the Treasury, remain at a preliminary stage and relate at the moment only to contingency plans which may not need to be activated.

Thames Water serves 15m customers across London and the south-east of England, and has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.

On Tuesday, Sarah Bentley, its chief executive for the last three years, resigned with immediate effect, saying: “The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance.”

In March, however, Sky News revealed that Thames Water was facing crunch talks over its finances and had hired Rothschild, the investment bank, and the law firm Slaughter & May, to explore financing options for the company.

The Daily Telegraph reported on Tuesday night that Thames Water was still trying to raise £1bn from shareholders and that AlixPartners had been drafted in to advise on the company’s operational turnaround plans.

One industry source said that regulators had also sought advice from restructuring experts in recent weeks, although their identity was unclear.

Taking Thames Water into temporary public ownership would inevitably fuel calls from critics of the privatised water industry to renationalise all of the country’s major water companies.

Thames Water is owned by a consortium of pension funds and sovereign wealth funds, many of which are understood to be sceptical about delivering additional funding.

Its largest shareholder is Ontario Municipal Employees Retirement System (Omers), a vast Canadian pension fund, which holds a stake of nearly 32%, according to Thames Water’s website.

Others include China Investment Corporation, the country’s sovereign wealth fund; the Universities Superannuation Scheme, the UK’s biggest private pension fund; and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority.

Hermes, which manages the BT Group pension scheme, is also a shareholder.

Thames Water employs about 7,000 people, and serves nearly a quarter of Britain’s population.

Ms Bentley’s exit, which came soon after a row about her declaration that she had surrendered a controversial annual bonus, also reflects deeper divisions about how to address the mounting crisis at the company.

Earlier this year, she said she was “heartbroken” about the company’s historical failings, blaming “decades of underinvestment”.

Alastair Cochran and Cathryn Ross have been named joint interim chief executives as a search for Ms Bentley’s replacement is conducted.

Thames Water has been fined numerous times, and is facing a deluge of regulatory probes.

In 2021, it was hit with a £4m penalty for allowing untreated sewage to escape into a river and park, while in August 2021, it was ordered to pay £11m for overcharging thousands of customers.

The range of financing options available to Thames Water’s board – whose chairman, the former SSE chief Ian Marchant, is also due to step down imminently – appears to be limited.

Nearly £1.4bn of the company’s bonds mature by the end of next year, with Ofwat price controls meaning water companies have little scope to generate additional income.

In an investor update published last September, Ms Bentley said that “the difficult external environment has increased the challenge of our turnaround”.

A year ago, the company said it had agreed with shareholders the injection of £500m of new equity funding, with a further £1bn expected to be delivered by the end of next year.

The additional shareholder funding formed part of a £2bn expenditure increase, taking its total spending during the current five-year regulatory period to £11.6bn.

In its September announcement, Thames Water said shareholders had “further evidenced their support for [Thames Water] and its business plan through an Equity Support Letter where the shareholders have committed to hold investment committee meetings (for their respective institutions) as a path to obtaining approval (in the discretion of the investment committee) for funding their pro rata share of conditional commitments in respect of the further £1bn of additional equity which is assumed in TWUL’s business plan”.

“Whilst this is not a legal commitment to fund…the [Thames Water] board believes it is reasonable to incorporate this additional £1bn of equity funding in its assessment.”

The company has not paid a dividend to its owners for the last six years.

Thames Water is not the only major water company to face questions about its financial resilience and operational track record.

Ofwat has also been in talks with others, including Southern Water and Yorkshire Water, in recent years about strengthening balance sheets amid performance issues.

The financial collapse of Britain’s biggest water company, and its implications for the model of water ownership, would inevitably become a major political debating point in the run-up to the next general election.

Some critics of privatisation have demanded that the government consider mutual ownership structures, which would prohibit returns to shareholders and guarantee that profits would be reinvested in improving the sector’s dire performance, while upgrading water infrastructure assets.

In total, tens of billions of pounds have been handed to shareholders in water utilities across Britain since privatisation, stoking public and political anger given the industry’s frequent mishaps.

DEFRA, Ofwat and Thames Water were all contacted for comment on Tuesday evening.

World

US envoy meets Putin for talks – as Trump urges Russia to ‘get moving’ on Ukraine

Published

8 hours ago

April 11, 2025

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US envoy meets Putin for talks - as Trump urges Russia to 'get moving' on Ukraine

Donald Trump’s special envoy Steve Witkoff has met Vladimir Putin for talks in Russia – as the US president called on Moscow to “get moving” with ending the war in Ukraine.

Mr Witkoff, who has been pressing the Kremlin to accept a truce, visited Mr Putin in St Petersburg after earlier meeting the Russian leader’s international co-operation envoy Kirill Dmitriev.

Mr Putin was shown on state TV greeting Mr Witkoff at the city’s presidential library at the start of the latest discussions about the search for a peace deal on Ukraine.

Before Friday’s meeting, Kremlin spokesman Dmitry Peskov played down expectations of a breakthrough and told state media the visit would not be “momentous”.

Follow the latest updates on the war in Ukraine

However, Sky News Moscow correspondent Ivor Bennett said he believes the meeting – Mr Witkoff’s third with Mr Putin this year – is significant as a sign of the Trump administration’s “increasing frustration at the lack of progress on peace talks”.

Earlier on Friday, Mr Trump issued his latest social media statement on trying to end the war, writing on Truth Social: “Russia has to get moving. Too many people ere [sic] DYING, thousands a week, in a terrible and senseless war – A war that should have never happened, and wouldn’t have happened, if I were President!!!”

Dialogue between the US and Russia, aimed at agreeing a ceasefire ahead of a possible peace deal to end the war, has recently appeared to have stalled over disagreements around conditions for a full pause.

Secondary sanctions could be imposed on countries that buy Russian oil, Mr Trump has said, if he feels Moscow is dragging its feet on a deal.

Mr Putin has said he is ready in principle to agree a full ceasefire, but argues crucial conditions have yet to be agreed – and that what he calls the root causes of the war have yet to be addressed.

The Russian president wants to dismantle Ukraine as an independent, functioning state and has demanded Kyiv recognise Moscow’s annexation of Crimea and other partly occupied areas, and pull its forces out, as well as a pledge for Ukraine to never join NATO and for the size of its army to be limited.

Zelenskyy renews support calls after attack on home city

Meanwhile, Ukrainian president Volodymyr Zelenskyy has renewed his appeals for more Patriot air defence systems after the deaths of 20 people, including nine children, who were killed when a Russian missile hit apartment buildings and a playground in his home city of Kryvyi Rih last week.

Speaking online at a meeting of the so-called Ramstein group of about 50 nations that provide military support to Ukraine, named after a previous meeting at America’s Ramstein air base in Germany in 2022, Mr Zelenskyy said recent Russian attacks showed Moscow was not ready to accept and implement any realistic and effective peace proposals.

Mr Zelenskyy also made his evening address to the nation, saying: “Ukraine is not just asking – we are ready to buy appropriate additional systems.”

The UK’s defence secretary, John Healy, has said this is “the critical year” for Ukraine – and has confirmed £450m in funding for a military support package.

World

Tech executive and his family die after sightseeing helicopter crashes in New York

Published

9 hours ago

April 11, 2025

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Tech executive and his family die after sightseeing helicopter crashes in New York

A family of five Spanish tourists, including three children, have been killed in a helicopter crash in New York City.

A New York City Hall spokesman identified two of those killed as Agustin Escobar, a Siemens executive, and Merce Camprubi Montal – believed to be his wife, NBC News reported.

The pilot was also killed as the aircraft crashed into the Hudson River at around 3.17pm on Thursday.

New York Police commissioner Jessica Tisch said divers had recovered all those on board from the helicopter, which was upside down in the water.

“Four victims were pronounced dead on scene and two more were removed to local area hospitals, where sadly both succumbed to their injuries,” she said.

The Spanish president Pedro Sanchez called the news “devastating”.

“An unimaginable tragedy. I share the grief of the victims’ loved ones at this heartbreaking time,” he wrote on X.

Rotor blade ‘flew off’

The aircraft was on a tourist flight of Manhattan, run by the New York Helicopters company.

Witnesses described seeing the main rotor blade flying off moments before it dropped out the sky.

Lesly Camacho, a worker at a restaurant along the river in Hoboken, said she saw the helicopter spinning uncontrollably before it slammed into the water.

“There was a bunch of smoke coming out. It was spinning pretty fast, and it landed in the water really hard,” she said.

Another witness said “the chopper blade flew off”.

“I don’t know what happened to the tail, but it just straight up dropped,” Avi Rakesh told Sky’s US partner, NBC News.

Video on social media showed parts of the Bell 206 helicopter tumbling through the air and landing in the river.

New York Mayor Eric Adams confirmed the six deaths and said authorities believed the tourists were from Spain.

He said the flight had taken off from a downtown heliport at around 3pm.

The crash happened close to Pier 40 and the Holland tunnel, which links lower Manhattan’s Tribeca neighbourhood with Jersey City to its west.

Tracking service Flight Radar 24 published what it said was the helicopter’s route, with the aircraft appearing to be in the sky for 15 minutes before the crash.

The Federal Aviation Administration and the National Transportation Safety Board have started an investigation.

Thursday’s incident comes less than three month after 67 people died when an army helicopter and American Airlines jet collided over the Potomac River in Washington DC.

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Ksenia Karelina: Ballerina arrives home in US after ‘nightmare’ of Russian penal colony

Published

9 hours ago

April 11, 2025

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Ksenia Karelina: Ballerina arrives home in US after 'nightmare' of Russian penal colony

A former ballerina who spent more than a year in a Russian jail for donating £40 to a charity supporting Ukraine has returned home to the US after being freed in a prisoner exchange.

Ksenia Karelina landed at Joint Base Andrews in Maryland at around 11pm, local time, on Thursday.

A smiling Ms Karelina was greeted on the runway by her fiance, the professional boxer Chris van Heerden, and given flowers by Morgan Ortagus, President Donald Trump’s deputy special envoy to the Middle East.

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Van Heerden said in a statement he was “overjoyed to hear that the love of my life, Ksenia Karelina, is on her way home from wrongful detention in Russia.

“She has endured a nightmare for 15 months and I cannot wait to hold her. Our dog, Boots, is also eagerly awaiting her return.”

He thanked Mr Trump and his envoys, as well as prominent public figures who had championed her case, including Dana White, a friend of Mr Trump and CEO of the Ultimate Fighting Championship (UFC).

Ms Karelina, 34, a US-Russian citizen also identified as Ksenia Khavana, was accused of treason when she was arrested in Yekaterinburg, in southwestern Russia, while visiting family in February last year.

Investigators searched her mobile phone and found she made a $51.80 (£40) donation to Razom, a charity that provides aid to Ukraine, on the first day of Russia’s invasion in 2022.

She admitted the charge at a closed trial in the city in August last year and was later jailed for 12 years, to be served in a penal colony.

At a cabinet meeting on Thursday, Mr Trump, who wants to normalise relations with Moscow, said the Kremlin “released the young ballerina and she is now out, and that was good. So we appreciate that”.

He said the release followed conversations with Russian President Vladimir Putin.

Russian security services accused her of “proactively” collecting money for a Ukrainian organisation that was supplying gear to Kyiv’s forces.

The First Department, a Russian rights group, said the charges stemmed from a $51.80 donation to a US charity aiding Ukraine.

Washington, which had called her case “absolutely ludicrous”, released Arthur Petrov, who it was holding on charges of smuggling sensitive microelectronics to Russia, in the prisoner swap in Abu Dhabi.

Karelina was among a growing number of Americans arrested in Russia in recent years as tensions between Moscow and Washington spiked over the war in Ukraine.

Her release is the latest in a series of high-profile prisoner exchanges Russia and the US carried out in the last three years – and the second since Mr Trump took office.

White House national security adviser Mike Waltz said members of the Trump administration “continue to work around the clock to ensure Americans detained abroad are returned home to their families”.