THAMES Water has continued to accrue debt and could run out of funds by next summer, the company has said.
The company has amassed more than £15bn in debts, a jump of more than £1bn in the last year, and could collapse next year if it doesn’t see any further funding.
Its financial reports indicate it has around £1.8bn in funding, which it says will fund its operations for only 11 months, which means the company would collapse in May.
The report, which include finances up until the end of March this year, show that revenue has increased by 10% as a result of increased charges– charges the company says are linked to inflation.
This in turn meant that its profits rose by 21%– more than a fifth– which the company attributed to the higher revenue and “discipline” in costs.
Reports suggest that Keir Starmer has been briefed on the risks to public water and finance posed by the company’s precarious position.
Ofwat, the water regulator, is set to lay out its response to the plans put forward by a number of water companies last year, including Thames Water.
The company has stated its intentions to seek further funding from investors following Ofwat’s publication this week, which will indicate how much the company can raise bills for customer.
Thames has expressed intentions to raise bills by just under 60%.
It will also rule on whether to approve the business plans set out by Thames Water, which would see just under £18bn of investment aimed at steadying the ship.
Stakeholders have said that while new investment in the company is possible, it “should not be assumed.”
The Guardian reported last week that Thames Water’s board approved a £150m payout to “top-up” pensions and alleviate tax burdens– a move that the GMB union’s national officer Gary Carter described as “financial chicanery.”
While this payout didn’t reach investors, it still left the company’s ringfence, despite efforts on behalf of Ofwat to stop the weakening of company finances.
Ofwat will publish its draft response on Thursday, July 11, ahead of the deadline for Thames Water’s publication of its annual results, due on July 15.
