UK water giant 'should be allowed to collapse into administration' - £20m debt
Embattled Thames Water should be allowed by ministers to go into special administration, a Labour-linked think tank has suggested. Under-fire Labour Together, which is at the centre of a storm over a probe it conducted into journalists investigating its funding, said the Government should reject a "fudged deal" with the water firm's creditors.
Dan Mead, economics adviser at Labour Together, said: "Allowing Thames Water to go into special administration is not only the right option for bill payers, it is also essential for maintaining wider investor confidence in the UK.
"The Government has worked hard to get companies investing in the UK, but the terms cannot be 'heads', investors win, 'tails', bill payers lose. Our approach can demonstrate that Labour is charting a different course."
Thames Water, Britain's biggest water supplier with around 16million customers, is on the brink of collapse with nearly £20billion of debt.
Labour Together said the "easiest path" for the Government is a deal with creditors that writes down some debt in exchange for softened pollution targets and forgiveness on fines.
But its paper argued this would be a "political mistake", with consumers left to deal with high bills, missed pollution targets and the company "limping on as a running sore for Labour".
The research argued that putting Thames Water into administration would demonstrate to voters that companies failing to meet their regulatory obligations will face consequences.
The Government was last month accused of "indulging criminal organisations" with concerns at Westminster that water firms were dodging paying fines for sewage spills and pollution.
Parliament heard it was "shameful" that offending utility companies were able to negotiate the settling of penalties.
The criticism comes after it was agreed last year that troubled Thames Water could make an initial payment of £24.5million on its record £122.7million in fines, given its financial difficulties.
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The outstanding 80% does not have to be paid back until a "backstop date" of March 31, 2030.
Campaigners at the time condemned the "sweetheart deal", arguing that it allowed Britain's biggest water firm "to kick its fine down the road".
There has been ongoing public anger over the performance of the embattled industry, particularly after it appeared that failing companies were evading a ban on executive bonuses.
It has been confirmed that household water bills across England and Wales will rise by an average of 5.4% from April.
A Government spokesman said: "The Government will always act in the national interest on these issues.