High court london protestors gather to protest against Thames Water at the start of high court case (Image: Ian Vogler)
MPs have urged the High Court to avoid saddling Thames Water’s customers with an extra £250 a year by allowing it to take on an extra £3billion debt.
The parent company of England’s largest water company is set to run out of cash by March 24 and risks entering special administration if a judge does not approve its plans to inject up to £3 billion to keep it afloat.
Liberal Democrat MP Charlie Maynard submitted a witness statement to the court, urging them to reject this plan because it was not in the public’s or customers’ interest.
He said: “Successive governments have watched on as Thames Water has plunged themselves into billions of pounds of debt. Thames Water is running out of money, it is operating in breach of its licence, it is unable to pay its debts and its customers are suffering for it.
“The deal the creditors are pushing for serves their interests only; it is a short term fix at the expense of the company, Thames Water customers and UK taxpayers.
“Households in my constituency and so many others have no choice but to pay towards Thames Water’s debts in their bills. Around a third of customer bills are already being spent on paying down the interest on the water company’s debts. This cannot continue.”
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Labour MP John McDonnell also joined Mr Maynard, clean water groups and campaigners outside the court to protest against the plan.
Organisers We Own It have warned the private-sector plan will saddle its more than 16 million customers with an extra £250 a year. Thames Water denied this.
A spokesman for the firm said: “This is an untrue and misleading claim that risks needlessly worrying our customers. This plan will not lead to any increases in customer bills. Ofwat has already determined the cost of bills for the next five years.”
Allowing Thames Water to run out of money by not approving restructuring plans is “a risk which cannot be run”, the High Court was told on Monday.
The restructuring scheme is supported by the majority of the utility’s leading creditors and is being considered over a four-day hearing in London.
Thames Water serves around 16 million customers – around 25% of the UK’s population – and owns more than 20,000 miles of water mains and more than 68,000 miles of sewers across London, the Thames Valley and the Home Counties.
The company, which has repeatedly come under fire for its sewage pollution, is in about £16 billion of debt and needs £3.3 billion over the next five years to keep running.
The restructuring bid marks an attempt to shore up its finances without a bailout from investors.
In written submissions, Tom Smith KC, for Thames Water Utilities Holdings Limited, said: “If the present plan was not to be sanctioned, the directors would therefore be faced with a situation where the existing plan, which had been the product of many months of negotiation and work, had been rejected, and where the group’s cash (is) due to run out in around six weeks’ time.
“Further, this is the context of the group being a provider of essential infrastructure services to millions of people in one of the major cities in the world.”
He continued: “Given the importance of the role of the group, it is simply not possible to take any risk at all that it may run out of cash which would cause it to cease operations.
“For reasons which barely require stating, that it is a risk which cannot be run.”
said: “If the present plan was not to be sanctioned, the directors would therefore be faced with a situation where the existing plan, which had been the product of many months of negotiation and work, had been rejected, and where the group’s cash (is) due to run out in around six weeks’ time.
“Further, this is the context of the group being a provider of essential infrastructure services to millions of people in one of the major cities in the world.”
He continued: “Given the importance of the role of the group, it is simply not possible to take any risk at all that it may run out of cash which would cause it to cease operations.
“For reasons which barely require stating, that it is a risk which cannot be run.”
A Thames Water spokesman previously said the company was “focused on turning round the business”.
He said: “We have a robust plan that we are confident delivers on this objective, and this court process is an important step on the path to putting the company back on a stable financial footing.”
The hearing before Mr Justice Leech is due to conclude on Thursday, with a judgment expected in writing at a later date.