Government will not be lenient with Thames Water creditors, suggests Reed
Environment Secretary Steve Reed has suggested that the Government will reject calls from Thames Water creditors for leniency from fines and penalties.
Taking questions in the Commons on Tuesday, Mr Reed said the Government had 'stepped up our preparations and stand ready for all eventualities', amid Thames Water's search for a rescue plan.
The troubled utility company's lenders put forward proposals to pump cash into it.
But they have also demanded leniency from regulators over performance targets and fines for environmental failings.
The creditors argue that without regulatory leniency, the utility's 'pollutions, asset health deterioration, and customer service levels are likely to worsen'.
Labour MP for Monmouthshire, Catherine Fookes, told the Commons: 'I am really concerned by reports of Thames Water seeking regulatory easements.
'Can the Secretary of State assure me that this Government will continue to crack down on water pollution from all sources, including in the Wye and the Thames and all across the UK?'
Mr Reed replied: 'The Government will always act in the national interest on these issues.
'Thames Water must meet its statutory and regulatory obligations to their customers and to the environment.
'It is only right that the company is subject to the same consequences as any other water company.
'The company remains financially stable, but we've stepped up our preparations and stand ready for all eventualities, as I've said before, including a special administration regime if that were to become necessary.'
It comes after US private equity giant KKR recently pulled out of a rescue deal to inject much-needed cash into Britain's biggest water supplier, which has 16 million customers and is sinking under £19 billion of debt.
The move threw the future of Thames Water into doubt once more and raised the threat of temporary nationalisation by the Government if a deal cannot be agreed.
A Thames Water spokesperson said: 'Thames Water is committed to improving outcomes for the environment and its customers.
'We are investing billions of pounds in our network and any recapitalisation of the business will need to ensure that is maintained for the benefit of all our stakeholders.
'Our focus remains on a holistic and fundamental recapitalisation, delivering a market-led solution which includes targeting investment grade, credit ratings.'
The creditors are the bondholders who now effectively own Thames Water after the High Court, earlier this year, approved a financial restructuring through a loan of up to £3 billion to ensure it can keep running until the summer of 2026.
As part of their plans, the creditors would commit to spending £20.5 billion over the next five years, as agreed under the current five-year plan with Ofwat.
But they are calling for a 'pragmatic approach' to regulation – including 're-basing incentives and performance targets' – and 'realistic levels of compliance'.
It is understood they have been holding intensive talks with regulator Ofwat in the hope of securing approval for their deal in early July.
A spokesman for the creditors said: 'Broad regulatory support is needed to unlock a market-led solution for Thames Water that will secure billions of pounds in fresh investment for its aging network, allowing a world class leadership team to start the intensive turnaround and deliver better outcomes for customers and the environment.
'This investor group is committed to working with the Government and regulators to agree a pragmatic plan that recognises what Thames Water can realistically deliver and they expect to be held accountable for an ambitious trajectory for the company's return to compliance.
'More than £10 billion would be written off to get the company back to investment grade, expected to be the largest financial loss on an infrastructure asset in British history.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
2 hours ago
- Reuters
World Bank urges 'radical' debt transparency for developing countries
LONDON, June 20 (Reuters) - The World Bank is urging "radical" debt transparency for developing countries and their lenders to stave off future crises, it said in a report released on Friday. The Bank wants to broaden the depth and detail of what sovereign countries disclose regarding new loans, as more of them enter complex, off-budget borrowing deals due to global market turmoil. "When hidden debt surfaces, financing dries up and terms worsen," World Bank senior managing director Axel van Trotsenburg said in a statement, adding: "Radical debt transparency, which makes timely and reliable information accessible, is fundamental to break the cycle." The Bank wants countries to make legal and regulatory reforms that mandate transparency when signing new loan contracts and to share more granular debt data. It also wants more regular audits, the public release of debt restructuring terms, and for creditors to open their loan and guarantee books. It is calling for better tools for international financial institutions to detect misreporting. The World Bank and other multilateral banks have been pressing for years to improve lending transparency. The proportion of low-income countries reporting some debt data is now above 75%, up from below 60% in 2020. But only 25% of them disclose loan-level information. As financing costs spike due to trade wars and geopolitical risk, more countries are using arrangements such as central bank swaps and collateralized transactions that complicate reporting. Senegal has used private debt placements as it negotiates with the International Monetary Fund over misreporting of its previous debts, and Cameroon and Gabon have also used what are known as "off-screen" deals. Angola recently had to pay a $200-million margin call after a rout in its bond prices. In Nigeria, the central bank disclosed in early 2023 that billions of U.S. dollars of its foreign exchange reserves were tied up in complex financial contracts negotiated by the previous leadership. The Bank said broader loan coverage and deeper loan-by-loan disclosures would enable the international community to fully assess public debt exposure.
The Guardian
2 hours ago
- The Guardian
Film-maker Adam Curtis on why this moment feels so weird
Adam Curtis is a journalist who delves deep into the BBC archive to make films about the ideas and feelings that define our times. In his latest series of films, Shifty, Curtis charts how Margaret Thatcher and her government transformed Britain by transferring power to the world of finance and by promoting a radical individualism. In conversation with Michael Safi, Curtis discusses the way his films try to capture what an idea feels like, how the ideas of the 1980s have led us to feelings of powerlessness and melancholy, and how new ideas are the key to a different future. Support the Guardian today:
Sky News
2 hours ago
- Sky News
Post Office Capture scandal: Sir Alan Bates calls for those responsible for wrongful convictions to be 'brought to account'
Why you can trust Sky News Sir Alan Bates has called for those responsible for the wrongful convictions of sub postmasters in the Capture IT scandal to be "brought to account". It comes after Sky News unearthed a report showing Post Office lawyers knew of faults in the software nearly three decades ago. The documents, found in a garage by a retired computer expert, describe the Capture system as "an accident waiting to happen". 11:28 Sir Alan said the Sky News investigation showed "yet another failure of government oversight; another failure of the Post Office board to ensure [the] Post Office recruited senior people competent of bringing in IT systems" and management that was "out of touch with what was going on within its organisation". The unearthed Capture report was commissioned by the defence team for sub postmistress Patricia Owen and served on the Post Office in 1998 at her trial. It described the software as "quite capable of producing absurd gibberish" and concluded "reasonable doubt" existed as to "whether any criminal offence" had taken place. Ms Owen was found guilty of stealing from her branch and given a suspended prison sentence. She died in 2003 and her family had always believed the computer expert, who was due to give evidence on the report, "never turned up". Adrian Montagu reached out after seeing a Sky News report earlier this year and said he was actually stood down by the defending barrister with "no reason given". The barrister said he had no recollection of the case. Victims and their lawyers hope the newly found "damning" expert report, which may never have been seen by a jury, could help overturn Capture convictions. 1:49 'These people have to be brought to account' Sir Alan, the leading campaigner for victims of the Horizon Post Office scandal, said while "no programme is bug free, why [was the] Post Office allowed to transfer the financial risk from these bugs on to a third party ie the sub postmaster, and why did its lawyers continue with prosecutions seemingly knowing of these system bugs?" He continued: "Whether it was incompetence or corporate malice, these people have to be brought to account for their actions, be it for Capture or Horizon." More than 100 victims have come forward More than 100 victims, including those who were not convicted but who were affected by the faulty software, have so far come forward. Capture was used in 2,500 branches between 1992 and 1999, just before Horizon was introduced - which saw hundreds wrongfully convicted. The Criminal Cases Review Commission (CCRC), the body responsible for investigating potential miscarriages of justice, is currently looking at a number of Capture convictions. A CCRC spokesperson told Sky News: "We have received applications regarding 29 convictions which pre-date Horizon. 25 of these applications are being actively investigated by case review managers, and two more recent applications are in the preparatory stage and will be assigned to case review managers before the end of June. "We have issued notices under s.17 of the Criminal Appeal Act 1995 to Post Office Ltd requiring them to produce all material relating to the applications received. "To date, POL have provided some material in relation to 17 of the cases and confirmed that they hold no material in relation to another 5. The CCRC is awaiting a response from POL in relation to 6 cases." A spokesperson for the Department for Business and Trade said: "Postmasters negatively affected by Capture endured immeasurable suffering. We continue to listen to those who have been sharing their stories on the Capture system, and have taken their thoughts on board when designing the Capture Redress Scheme."
