Key events
Thames Water’s interim co-chief executive, Cathryn Ross, has rejected criticisms that regulators and the water industry are too cosy.
“I don’t accept that,” she said. Ross highlighted her three and a half years at BT between working at Ofwat and Thames Water.
I can honestly say the thought [of working for Thames Water] had never occurred to me when I worked at Ofwat. In fact, I thought I would stay in the public sector at the time that I was there.
Ross said she is “deeply passionate about the water industry”, but added that all senior public officials who join the industry within a few years must seek assent from Acoba, or the Advisory Committee on Business Appointments. The committee can object or ask for conditions on employment by former public servants, although it has long been criticised as a toothless regulator. Ross said:
I think the experience I gained at Ofwat is actually standing me in good stead and is helping us to deliver more for customers.
I can see why people are asking the question, but with all public servants, we are all subject to the Acoba rules.
Ross was also asked about a finding last week by a judge that the company had made a “deliberate attempt” to mislead the Environment Agency after pumping millions of litres of sewage into rivers near Gatwick airport. Thames Water was fined £3.3m.
However, Ross said she did not agree with that finding:
I don’t believe that our people at Thames Water had a deliberate intent to mislead.
We have to accept those findings, we have to learn the lessons and move on, and that’s what we’re doing.
Thames Water’s boss has defended the company against accusations that shareholders are benefiting from interest payments on its big debt pile, saying the company has the “lowest level of indebtedness in a decade”.
Thames Water paid £45m to service the debt held by shareholders in the last year, Cathryn Ross said, comparing it to revenues of £2.3bn. She said:
The vast majority of our debt comes from bondholders in the open market.
We have £14bn of debt. That is a large sum, but you have to remember our assets are worth £19bn.
“It is an option the government has, but it’s a very high bar and we are not close to it,” said Thames Water boss Ross.
Thames water boss: We are not close to emergency nationalisation
Thames Water interim co-chief executive Cathryn Ross has said the company is not close to needing temporary nationalisation.
Speaking on BBC radio’s Today programme to explain the new injection of £750m in equity funding, Ross said the company now has enough money to pay its debts for the next year and into the future.
Asked whether Thames was in a financial hole, Ross said: “Not at all.” The company’s £4.4bn in cash and credit facilities would tide the company over, she said:
That’s absolutely enough to pay everything we need to pay this year, next year and into the future.
Special administration – in which the government would take temporary control of the company in order to make sure homes and businesses still received their water – would be the “nuclear option”, with a “very high bar”.
The company is “absolutely not” close to that bar, Ross said.
Struggling Thames Water gains £750m from shareholders
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Shareholders in Thames Water have agreed to provide £750m in new funding for the struggling utility as it tries to stay afloat without government intervention.
The new money will be delivered by Thames Water until March 2025, the company said in a statement to investors. It adds to £500m in funding received last year.
Ian Marchant, Thames Water’s chair, said it was the “largest equity support package ever seen in the UK water sector”. Yet the company also acknowledged that “significant additional funding” of as much as £2.5bn will be required between 2025 and 2030.
That is a reflection of just how badly things had gone at the utility, which provides water to 15m homes in London and the Thames Valley. Thames Water announced the shock resignation of former chief executive Sarah Bentley late last month, and hours later it emerged that officials were drawing up contingency plans to temporarily renationalise the company.
The company has been caught out by rising interest rates, which have threatened its ability to pay interest on its £16bn debt pile.
Cathryn Ross and Alastair Cochran, interim Co-CEOs of Thames Water, said:
This announcement is a major milestone for Thames and all our stakeholders.
The substantial equity support package announced today will underpin the delivery of a more focused turnaround plan that builds on the foundations that have been put in place over the last two years and focuses expenditure on a smaller number of initiatives, which will deliver material and sustainable improvements in key performance metrics over the next three years.
BT boss Philip Jansen to leave in next year
BT has confirmed that it is looking for a successor to its boss Philip Jansen, after he told the board he was planning to leave the FTSE 100 telecoms company.
Jansen will step down “at an appropriate moment over the next 12 months he intends to step down from his role”, BT said in a stock market announcement on Monday.
Adam Crozier, BT Group chairman, said BT would be in “business-as-usual” mode. He said:
Philip has done an excellent job in his time at BT and the board is fully supportive of our long-term strategy which he and his team are pursuing. Whilst we are still in the early years of that transformation we are on track to deliver.
The succession process to replace Philip is something that the board was well prepared for. All appropriate candidates are being considered and we expect to be able to update the market on progress over the course of the summer. In the meantime, it is business as usual, and we are focused on executing our plans and delivering for all our stakeholders.
Jansen’s successor will have the task of carrying out a major job cuts programme as the company seeks to be more efficient – once it has completed the rollout of 5G mobile infrastructure.
Jansen said:
We’ve made a lot of progress over the last four and half years and I’m proud of what we’ve achieved to date. We’re investing heavily in both BT’s and the UK’s future. We’re building like fury, have now passed over 11m homes with fibre, have got 5G service to 68% of the country and our customer service is much improved.
This is creating a much stronger BT Group which is starting to drive growth for both investors and the UK. But there’s a lot more to do and I am fully committed to driving the business forward until I hand over to my successor.
Also coming up today
The great and the good of the City will gather at Mansion House in London tonight, to hear from the chancellor and the governor of the Bank of England.
Jeremy Hunt is expected to reveal plans for British pensions to release billions of pounds to help fund fast-growing companies, as part of wider government efforts to boost growth and attract more business to the UK.
Hunt is expected to tell an audience of City leaders and chief executives that the government has reached a so-called “compact” deal with some of the UK’s largest investment firms that could see about 5% of pension fund investments reserved for early-stage businesses in sectors including life sciences and fintech.
In his first Mansion House speech, Hunt is likely to say:
“I want to lay out plans to enable our financial services sector to increase returns for pensioners, improve outcomes for investors and unlock capital for our growth businesses.”
The agenda
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2pm BST: Bank of Israel’s interest rate decision
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4pm BST: Bank of England governor Andrew Bailey’s Mansion House speech to be pre-released
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Evening: Mansion House event
