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Labour does not want Thames Water to fall into public ownership, shadow business secretary Jonathan Reynolds has said, as the UK’s biggest water supplier teeters on the brink of collapse.
Reynolds, who would play a leading role in Labour’s relations with business if the party won the July 4 UK general election, said he “wouldn’t want to see a nationalisation” of Thames Water.
“I think there should be a solution that involves [something] short of that,” he said at an event in the City of London, without specifying the approach he would take.
The utility company, which provides water and sewage services to about 16mn households, is struggling under the weight of £18bn of debt. The government has drawn up contingency plans for Thames Water to be placed into special administration — a form of temporary renationalisation.
Labour has identified a potential Thames Water collapse as one of six risks that leader Sir Keir Starmer may have to grapple with immediately if the party returns to power for the first time since 2010.
Reynolds declined to discuss the matter in detail because of the company’s sensitive position but said: “On any issue, investment can involve losing as well as gaining money and people should not expect the state to bail out bad investments.”
He also refused to say whether Labour had spoken to any potential buyer of Thames Water after the current shareholders, which include Canadian pension fund Omers and a clutch of sovereign wealth funds, called the company “uninvestable” given the current regulatory regime for the sector. Omers has already written down the value of its stake to zero.
The prospect of attracting private investment, and avoiding a special administration, is likely to depend heavily on the extent to which regulators allow water companies to increase customer bills, with a draft decision expected on July 11.
The company is planning to run an equity raising process later this year. It needs at least £3bn of cash from shareholders as well as steep rises to bills to keep running and to make improvements to its infrastructure.
Labour last week said water companies failing to tackle pollution should be put in “special measures”, with powers for regulators to block bosses’ bonuses.
Labour’s plan includes independent monitoring of water quality, severe fines for illegal sewage discharges, and bringing criminal charges against executives “who continue to oversee law breaking”.
Reynolds’ comments came in a debate against Conservative business secretary Kemi Badenoch at Bloomberg’s City of London office.
Badenoch said Thames Water’s travails showed that the regulatory regime for UK utilities was “not working that well”.
She hit back at Reynolds’ claim that the Tories were to blame for the level of sewage in British waterways, saying: “We are not pumping more sewage into the waters because of Conservatives. We just need to deal with an infrastructure issue.”
