The government has been accused of a “cover-up” for not disclosing details of a multi-billion-pound bailout plan for at-risk water company Thames Water.
The plan, codenamed ‘Operation Timber’, is being overseen by the Department for Environment, Food and Rural Affairs’ permanent secretary Tamara Finkelstein – but the public has been kept in the dark over the nature of any possible taxpayer bailout.
Though executives at the company have valued a taxpayer-funded bailout at £5billion in government talks, it is understood.
And Liberal Democrat MP Sarah Olney will lead the charge in a parliamentary debate on Friday to pressure ministers to come clean over plans to save Thames Water – the largest privatised water firm in England – if it were to go under.
Sarah Olney urged the government to come clean on any plan to save the ailing Thames Water
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Olney said: “This Conservative government’s refusal to make their contingency plan in the event of Thames Water’s collapse public is nothing short of a cover-up.”
“It is very clear they could easily slip into special administration. The public has a right to know what ministers plan to do.”
Thames Water is currently facing down debts of almost £15billion, and has approached water regulator Ofwat to loosen certain restrictions in order to secure a £2.5billion shareholder bailout.
It wants to be able to increase bills by 40 per cent, a cap on fines for polluting rivers, and to raise dividends to shareholders – all of which will, Thames Water thinks, push private support over the line and stop any government intervention.
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The Lib Dem MP accused ministers of 'covering up' the bailout plan
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A shareholder bailout would also likely stave off the imminent threat of a £190million loan set to be repaid by April, which senior figures at the company fear is unpayable.
Tim Whittaker, associate director at research institute EDHECinfra, said: “If this can’t be refinanced or the shareholders don’t inject more money, then there’s a very real risk Thames Water’s parent Kemble could be put into administration.”
And ministers have recently updated 30-year-old water insolvency legislation, which can be triggered if a water company cannot pay its debts.
The legislation safeguards the maintenance of drinking water and wastewater services for 15 million Thames Water customers if the company became insolvent.
Execs at Thames Water fear the company cannot pay off an impending £190million loan
PAEmma Hardy, Labour MP for Kingston upon Hull and Hessle, said the move was a sign of “the desperate and perilous situation that the sector had reached, with many companies on the precipice”.
A government spokesperson said: “Water companies are commercial entities and we do not comment on the financial situation of specific companies as it would not be appropriate.
“We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would.”
While an Ofwat spokesperson said: “Ofwat does not comment on speculation.
“Thames Water needs to continue to deliver on its turnaround plan to improve its operational and environmental performance. It is for the company to secure shareholder backing to improve its financial resilience.
“We will continue to closely monitor the company’s progress as they do so to protect customers’ interests.”