Thames Water rescue deal should be rejected - MPs

A group of MPs has called for the rejection of a proposed £10bn takeover of Thames Water, owned by the UK's largest water company. The Environment, Food and Rural Affairs (EFRA) Committee suggests the government consider placing the water company into special administration, a temporary nationalisation. Thames Water serves 16 million customers and has debts of around £20bn.

The MPs argue that the proposed takeover by creditors does not prioritize the public, the company, or the environment. The current plan emerged as the final realistic option to prevent the need for a special administration regime, following the collapse of a previous deal with a US private equity firm. The report highlights that Thames Water, along with other underperforming water companies, is caught in a cycle of fines for poor performance, which leaves less money to invest in improvements.

The company is expected to accrue over £900m in penalties over the next five years. The MPs urge the government to change laws, allowing it to trigger special administration based on performance alone. They also warn that the primary goal of the bidders, London & Valley Water, is to extract immediate value from Thames Water, not to steer it towards long-term success.

Alistair Carmichael, the committee chairman, stated that Thames Water can be turned around, but not by returning the keys to those who have mismanaged it. The government should reject offers from the creditors in exchange for relief from fines for pollution and poor service. Carmichael added that the chaos of a future Thames Water-style crisis should be avoided.

London & Valley Water's spokesperson maintains that their group of investors has never controlled the company or received dividends and that their enhanced proposal addresses feedback from Ofwat and ministers. They assert that their proposal is the fastest route to fix Thames Water's complex problems.