The government has reportedly lined up an insolvency firm in a bid to prepare should Thames Water collapse.
According to Sky News, environment secretary Steve Reed has agreed to appoint business advisory firm FTI Consulting to advise on plans for the utilities giant if it needs to placed in a special administration regime (SAR).
A SAR is an insolvency process for companies that provide a statutory or critical public service or supply.
Thames Water, which covers a large area of London and the Thames Valley as well as Oxfordshire, Berkshire, Wiltshire and Gloucestershire, slumped to a £1.65bn annual loss in July and saw its debt mountain balloon to £16.79bn.
The government’s agreement to appoint FTI Consulting does not indicate Thames Water is about to collapse however.
It is understood that Britain’s biggest water supplier has been in talks with lenders for months over a multi-billion finance deal that includes injecting £5bn of new capital and writing off a further £12bn of value across the business.
A Thames Water spokesperson said: “Our focus remains on a holistic and fundamental recapitalisation, delivering a market-led solution which includes targeting investment grade credit ratings and returning the company to a stable financial foundation. Constructive discussions with our many stakeholders continue.”
A government spokesperson said: “The government will always act in the national interest on these issues. The company remains financially stable, but we have stepped up our preparations and stand ready for all eventualities, including applying for a Special Administration Regime if that were to become necessary.”
Andy Prendergast, GMB Union national secretary, has called on the government to protect Thames Water’s customers – and its workers.
“Thames Water has been sacrificed on the altar or privatisation. It’s sinking without a trace under a deluge of debt, while huge amounts of cash from inflated customer bills have flooded out to directors, shareholders and loan servicing,” he said.
“[The government must give] immediate guarantees for the thousands of the loyal workers and their pensions,” he added.
Last week, a Swindon MP urged Thames Water to make improvements after slamming the company for its “spectacular” failure to serve the people of the town.
Will Stone (Swindon North), alongside MPs Yuan Yang of Earley and Woodley, and Crawley’s representative Peter Lamb, have demanded the utilities firm makes “significant” reforms.
Mr Stone said at the time: “Thames Water needs to be held to account for their persistent failings. My constituents deserve answers to their concerns, and I hope that increased scrutiny on the company from Parliament will help get it to them.”
