Thames Water investors pull plug on £500m of funding amid standoff with regulator

Investors in Thames Water have pulled the plug on £500m of emergency funding amid a standoff with the industry regulator over attempts to raise bills, increasing the prospect that the heavily indebted company may be nationalised.

The beleaguered utilities company said on Thursday that its shareholders had refused to provide the first tranche of £750m funding to secure its short-term cashflow, after the company had failed to meet certain conditions.

Britain’s biggest water company has been lobbying the regulator, Ofwat, to increase bills by 40%, pay lower fines for breaches and keep paying out dividends. The watchdog has been examining the company’s business plan for 2025 to 2030, and Thames said Ofwat’s initial assessments of the plan make the company “uninvestible” for shareholders.

Michael Gove, the communities secretary, said Thames should not pass on higher bills to consumers. He added: “The leadership of Thames Water has been a disgrace. I think for years now we have seen customers of Thames Water taken advantage of by successive management teams that have been taking out profits and not investing as they should have been.”

The GMB union, which represents many of Thames Water’s workers, accused the company’s shareholders of “essentially blackmailing” customers and Ofwat.

The funding failure heightens the possibility that Thames Water could be placed into special administration, which would result in the government stepping in and temporarily renationalising the company.

Chris Weston, the chief executive of Thames Water, said on Thursday that this was a “long way off” but did not rule out the possibility.

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