Tuesday, July 02, 2024
Time to rein in the water companies
The Guardian reports that Thames Water has been urged to show greater transparency over its finances and accused of “financial chicanery” after it emerged its board had approved a £150m dividend hours before its shareholders U-turned on providing emergency funding.
The paper says that the board of the struggling water supplier agreed to the payout at a meeting on 27 March. The following day, the debt-laden company said its investors were no longer willing to provide £500m of funding they had previously pledged, raising the prospect that the company may be temporarily nationalised. Thames Water made no mention of the dividend payment at that point:
The water industry regulator, Ofwat, planned to investigate the circumstances around the dividend paid by Thames, sources said. The company was already under investigation over its decision to pay a separate £37.5m dividend at the time the £150m dividend was paid.
Britain’s biggest water supplier said the payment was made from the regulated company to an intermediate parent company, Kemble Water Eurobond, to “settle a pension top-up payment” and “surrender relief” on tax losses.
Gary Carter, GMB national officer, said: “Thames Water has once again shown an alarming lack of transparency.
“Of course GMB wants our members’ pension pots to get back in the black – but shareholders should be topping it up.
“Instead they’re taking money out of the regulated company, money needed to stop spills and pay our members’ wages.”
He added: “Thames Water needs to front up about its financial chicanery, while shareholders need to cough up to fill the pensions black hole – not customers or taxpayers.”
The Liberal Democrat Treasury spokesperson Sarah Olney, who has called for Thames Water to be put into special administration by the government and for it to be reformed as a public benefit company, said: “This is a scandalous payout while our rivers are polluted with sewage and the company stands on the brink of bankruptcy.
“It is concrete evidence of why we need to abolish Ofwat and create a new water regulator with real teeth and power.
“The public will never forgive the Conservative party for how they have let water firms get away with financial mismanagement and environmental vandalism.”
Thames Water is just the tip of an ongoing scandal in which water companies are putting profit before the environment. That is why the Liberal Democrats have put in place a policy to bring these companies to heel. This involves:
* Setting meaningful targets and deadlines for water companies to end sewage discharges inIntroduce a Sewage Tax on water companies profits to fund the cleanup of waterways.to waterways.
* Introducing a Sewage Tax on water companies profits to fund the cleanup of waterways.
* Reducing the number of licences given to water companies permitting them to discharge sewage into rivers.
* Strengthening Ofwat’s powers to hold the companies accountable for discharging raw sewage into rivers.
* Adding local environmental groups onto water companies’ boards.
At the end of the day, however, the obvious solution is to renationalise the companies and have them working for the public benefit once again.
