Ministers weigh contingency plan for collapse of Thames Water

Published

2 years ago

June 28, 2023

admin

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

Russia’s clear warning that it can easily chip away at Europe’s defences

Published

57 seconds ago

September 28, 2025

admin

Russia's clear warning that it can easily chip away at Europe's defences

The brutality of Russia’s drone assaults on Ukraine’s towns and cities shows no let up.

“Savage strikes, a deliberate targeted terror” is how the Ukrainian President Volodymyr Zelenskyy described the latest overnight bombardment.

Some 595 attack drones and 48 missiles were involved and even if only a small fraction made it through Ukrainian air defences, the destruction – in Sumy and Odessa, Zaporizhia and Kyiv – is significant.

Also overnight, Denmark reported yet more drone sightings.

It has not named Russia directly but after a week in which unidentified drones have resulted in the temporary shutdown of military and civilian airports, it is banning all civil drone flights and describing the threat as a hybrid attack.

Germany is also raising the alarm over unexplained drone activity along its border with Denmark.

Germany’s interior minister said on Saturday: “We are witnessing an arms race, an arms race between drone threats and drone defences. It is a race we cannot afford to lose.”

NATO is having to deploy extra assets to beef up its Baltic Sea defences and its Eastern flank.

European nations are working to establish a drone wall along their borders with Russia and Ukraine.

Germany is setting up a drone defence centre to make sure it has what it needs to protect itself.

The Kremlin is forcing NATO to divert assets to protect its airspace and sub-sea infrastructure at a time when Europe is trying to work out how best to support and finance Ukraine.

With drones an inexpensive element of its hybrid warfare arsenal, Russia is sending a clear warning that it can relatively easily chip away at Europe’s defences and that Europe had better focus on protecting itself.

“If NATO begins to look too rattled, that actually is encouragement for Putin precisely to step up the pressure,” says Mark Galeotti, a specialist in Russian security. “So really we need to be holding our nerve.

“Yes, reserving the right to shoot things down that look like direct threats, but otherwise actually talking down, not talking up, the nature of the threat while of course we arm so that we are even more prepared.”

Last week, Estonia said its fighter jets had escorted three Russian MIG fighter jets out of their airspace after a 12-minute incursion, which Russia denies ever took place.

On Saturday, Estonia pledged €10m (£8.7m) to NATO’s “Prioritised Ukraine Requirement List” or PURL programme, which sees US-produced weapons, paid for by NATO’s European partners, fast-tracked to Ukraine.

Zelenskyy posted on Sunday after speaking with the NATO secretary general that PURL is moving forward well. And that is just what Russia is trying to prevent.

World

Contact with two hostages ‘lost’ during Israeli operations in Gaza, Hamas’s armed group says

Published

3 hours ago

September 28, 2025

admin

Contact with two hostages 'lost' during Israeli operations in Gaza, Hamas's armed group says

Hamas’s armed group has claimed it has lost contact with two hostages as a result of Israel’s operations in Gaza – after it called on air deployments to be stopped for 24 hours.

In a statement, Hamas’s armed al-Qassam Brigades said it had demanded that Israel halt air sorties for 24 hours, starting at 6pm, in part of Gaza City, to remove the hostages from danger.

It comes a day before Israeli Prime Minister Benjamin Netanyahu is due to meet US President Donald Trump and as the number of those killed in Gaza surpasses the 66,000 mark, according to the enclave’s Hamas-run health ministry.

Its figure does not differentiate between civilians and fighters.

A total of 48 hostages are still being held captive by Hamas, the militant group which rules Gaza, with about 20 believed by Israel to still be alive. A total of 251 hostages were taken on 7 October 2023, when Hamas launched an unprecedented attack on Israel which killed 1,200 people.

Situation on the ground

In Gaza, a war-torn enclave where famine has been declared in some areas and where Israel has been accused of committing acts of genocide – which it has repeatedly denied – the almost two-year war raged on.

On Sunday, the number of those killed rose to at least 21 as five people were killed in an airstrike in the Al Naser area, local health authorities said, while medics reported 16 more deaths in strikes on houses in central Gaza.

The Civil Emergency Service in Gaza said late on Saturday that Israel had denied 73 requests, sent via international
organisations, to rescue injured Palestinians in Gaza City.

Israeli authorities had no immediate comment. The military earlier said forces were expanding operations in the city and
that five militants firing an anti-tank missile towards Israeli troops had been killed by the Israeli air force.

‘We will get it done’

In Monday’s White House meeting, President Trump is expected to share a new 21-point proposal for an immediate ceasefire.

His proposal would include the release of all hostages within 48 hours and a gradual withdrawal of Israeli forces from the Palestinian enclave, according to three Arab officials briefed on the plan, the PA news agency reports.

A Hamas official said the group was briefed on the plan but has yet to receive an official offer from Egyptian and Qatari mediators. Hamas has said it is ready to “study any proposals positively and responsibly”.

Mr Trump, who has been one of Israel’s greatest allies, said on Sunday there is “a real chance for greatness in the Middle East”.

It is unclear, however, what Mr Trump was specifically referring to.

He said in a Truth Social post: “We have a real chance for Greatness in the Middle East. All are on board for something special, first time ever. We will get it done.”

On Friday – the same day a video of diplomats walking out on Mr Netanyahu during his address to the United Nations went viral – Mr Trump said he believed the US had reached a deal on easing fighting in Gaza, saying it “will get the hostages back” and “end the war”.

“I think we maybe have a deal on Gaza, very close to a deal on Gaza,” the US president told reporters on the White House lawn as he was leaving to attend the Ryder Cup.

Mr Trump has repeatedly claimed an agreement to end the war was imminent, only for nothing to materialise.

Weeks ago, he said: “I think we’re going to have a deal on Gaza very soon.”

World

‘I’m not so careful with what I say’ – is Trump feeling more invincible than ever?

Published

9 hours ago

September 28, 2025

admin

'I'm not so careful with what I say' - is Trump feeling more invincible than ever?

It was one sentence among the many words Donald Trump spoke this week that caught my attention.

Midway through a jaw-dropping news conference where he sensationally claimed to have “found an answer on autism”, he said: “Bobby (Kennedy) wants to be very careful with what he says, but I’m not so careful with what I say.”

The US president has gone from pushing the envelope to completely unfiltered.

Last Sunday, moments after Charlie Kirk‘s widow Erika had publicly forgiven her husband’s killer, Mr Trump told the congregation at his memorial service that he “hates his opponents”.

Twenty-four hours later, he drew fierce rebuke from medical experts by linking the use of Tylenol (paracetamol) during pregnancy to increased risk of autism.

The president treats professional disapproval not as a liability but as evidence of authenticity, fuelling the aura that he is a challenger of conventions.

On Tuesday, he went to the United Nations, where his frustrations over a stalled escalator and teleprompter failure were the prelude to the most combative address.

“I’m really good at this stuff. Your countries are going to hell,” he told his audience, deriding Europe’s approach to immigration as a “failed experiment of open borders”.

Then came a U-turn on Ukraine, suggesting the country could win back all the land it has lost to Russia.

Most politicians would be punished for inconsistency, but Mr Trump recasts this as strategic genius – framing himself as dictating the terms.

It is hard to keep track when his expressed hopes for peace in Ukraine and Gaza are peppered with social media posts condemning the return of Jimmy Kimmel to late-night television.

Perhaps most striking of all is his reaction to the indictment of James Comey, the FBI director he fired during his first term.

In theory, this should raise questions about the president’s past conflicts with law enforcement, but he frames it as vindication, proof that his enemies fall while he survives.

Mr Trump has spent much of his political career cultivating an image of a man above the normal consequences of politics, law or diplomacy, but he appears to feel more invincible than ever.

From funerals to world summits, world peace to public health, he projects the same image: rules are for others.

It is the politics of the untouchable.