Here comes Thames Water’s creditors’ “ambitious” plan to rescue Britain’s biggest and worst water company. Unfortunately, the ambition does not include obeying environmental rules in full, at least not for another decade or so. Rather, the creditors want Thames to be held to lower standards so that it can avoid a torrent of fines that would otherwise land in its lap.
This unattractive pitch is accompanied by an appeal to blunt pragmatism. The creditors’ argument runs roughly like this: “Get real, dear Ofwat, Environment Agency and government: Thames is in a proper mess. All previous turnaround plans have failed because they were fantasies. The assets will take a decade, minimum, to fix. There is no point whacking the business with a billion or two of fines along the way because the cash is needed for investment. By all means fine us for failing to hit lower targets, but make them ones we stand a chance of achieving. Look, we’re even volunteering for a £4bn, or 25%, write-off on our debt and we’ll inject £3.15bn in equity. We may be the best you are going to get.”
