Andy Slaughter MP attacks “hopelessly inadequate” Thames Water record

Image above: Andy Slaughter MP

Hammersmith MP attacks record of Thames Water amid series of crises facing the water company

The Co-Chief Executive Officers of Thames Water, Alastair Cochran and Cathryn Ross are due to give evidence today (Tuesday 12 December) before the Environment, Food and Rural Affairs Committee, to answer MPs’ questions on Thames Water’s financial arrangements, in light of recent news reports surrounding the firm’s finances.

The company, which is grappling with financial instability and mismanagement, looks like it is on the verge of insolvency as it is submerged in crises on several fronts which critics say are of its own making.

In an interview with The Chiswick Calendar, Hammersmith MP Andy Slaughter was scathing about the company’s record, having dealt with them over many years as both an MP and a council leader:

“I think people are seriously worried about whether they are going to survive. If they don’t survive, what’s going to happen? Are they going to sell out to new private owners, who will somehow bail them out the debt crisis they’re in? Is the government going to step in and and take over, either temporarily or permanently? I don’t think anybody knows the answer to those questions”.

Thames Water’s recent dividend payment, its mounting debts, and concerns raised by auditors have triggered investigations by Ofwat, further exacerbating the company’s precarious financial position.

Large number of people in Hammersmith constituency left without water for several days

Andy, who is likely to become the MP for most of Chiswick after the next general election, as Chiswick has been subsumed into the new constituency of Hammersmith & Chiswick, recently spoke out about the mismanagement of Thames Water in the House of Commons after a “large number” of people in his constituency were left without water.

People in Hammersmith and Shepherds Bush were without water for three days last month – with “no communication from Thames whatsoever” said Andy.  The water company is legally required to hand out bottled water if supply is cut off, but this did not happen.

Thames Water said only approximately 650 homes were without water and due to the “complicated nature” of the burst, it was not possible to quickly shut-in the burst and re-route the water so supplies could be returned to normal while a full repair was carried out.

The Hammersmith MP has long-standing interactions with the company, dating back to his council days, and he has expressed his deep concern over the worsening situation over the last two decades. Andy says the future of the company looks bleak and uncertain.

Image above: A burst water main at Chalker’s Corner in April 2023

“We need tougher regulator”

Thames Water is consumed with a staggering debt crisis, which has ballooned from £4 billion to over £14 billion in about a decade in full view of the regulator, Ofwat.

“That’s the fact alone should have started the alarm bells ringing. Because the other villains here are the regulator, Ofwat, who have simply not been tough enough on all sorts of issues on this.”

Critics describe Ofwat as toothless. Fines handed out to Thames Water have previously had no tangible effect on how the business is managed and run, Andy told me. But is there anything the regulator can do to address the crisis?

“There is, they can certainly go in and look at the accounts. They can say what they think is wrong with the company structurally and financially in terms of what it’s doing. We need a tougher regulator in that way and that should be the absolute minimum what happens with companies when they get privatised.

“If they’re not privatised, then you can have a direct intervention from the government. In that way, the government is the ultimate owner of the business. Then the Secretary of State can step in and do things. If you’re a private company you can’t do that and therefore you have to have a strong regulatory system, and that’s what has been lacking”.

Of particular concern are Thames Water’s financial decisions. Andy says there is an alarming pattern of diverting resources, swelling debts, and rewarding shareholders and management while failing to uphold the basic service obligations of supplying fresh water and managing sewage. Asked whether dividends should continue to be stopped until the crisis is resolved, Andy said:

“They’re not paying dividends at the moment but yes they certainly shouldn’t be rewarded, because they’re not providing even a basic service. So why on earth should they be rewarding the owners of the company if they’re not even able to supply fresh water and take away sewage – which is two things we’re supposed to do!”

Image above: Sewage in the River Thames near Strand-on-the-Green

“Complacent” Conservatives not up to the challenge

Andy says the Conservatives, namely Rebecca Pow, the Parliamentary Under Secretary of State at the Department for Environment, Food and Rural Affairs, come out with some of the “most complacent stuff I can remember hearing for a long time” over the crisis.

He added: “I mean they’re not really very high quality people in charge. [Rebecca Pow] just showed no awareness of the seriousness of the problem because these things really are mortal.”

The spectre of a potential sewer flood, like the one which happened recently in Shepherd’s Bush, adds urgency to the situation, painting a grim picture of the potential consequences of inadequate management.

“You’ve got a supply network which is incredibly old prone to bursts at any time, hence what happened in beginning of November [in Shepherd’s Bush & Acton]

“Thames Water replied saying they didn’t put out any comms because ‘it might confuse people with what was happening in Surrey [another burst pipe] so they basically left us completely in the dark, which is why I was running around like a headless chicken and trying to tell people what’s happening because they deliberately decided not to to do any comms work themselves.

“I’m going to write back and tell them how it’s all hopelessly inadequate. They don’t tell me how it’s they’re going to prevent it happening next time or anything.”

Image above: A Thames Water van

Nationalisation “not a priority” for a new Labour government – but not ruled out

Asked whether a change of ownership and better financial controls would actually solve all of the problems Thames Water is facing – and whether renationalising the industry would be the answer, Andy stopped short of calling for nationalisation in the immediate future, but did not rule out a future Labour government committing to it.

“I’m not dodging your question, but Thames could act together under it’s current owners, it could either voluntarily sell out which one that’s happened three times already or be forced to by its perilous financial situation or there could be a government intervention because of that happening, so yeah this has happened with some of the rail networks have been taken into public ownership… I mean it would almost becomes handing it over because they couldn’t cope.”

But rather than waiting until that tipping point when they can’t cope, and when debts are at current levels, is intervention not merited sooner rather than later? And would it be a priority for a new Labour government?

“I think this will probably all come to a head in the next by the end of this financial year, if not it might be dragging on and therefore if if it’s a new Labour [government]…clearly the current government is sort of washing their hands of it – they’ll have to do something if Thames are saying ‘we are insolvent we can’t continue where we are.’

“I think we would all prefer, I think huge majority of the public would prefer, that they hadn’t been privatised in the first place, and asset stripped, dividends paid out things like that kind…

“I think we would all like it to be a priority, but we’re just being realistic. I don’t think nationalisation or renationalisation would be a priority just because resources are so limited and the demands are so great.

“So query then, what do you want? You want proper regulation and you want a financial stable or organisation in that way. But I would I don’t think you would it rule out [nationalisation] in the long term term. That would have several beneficial effects: one is that you wouldn’t have the asset stripping of the profit taking and the other is you would have much clearer control over the the services that operated and failures.”