FACED with an £18 billion debt mountain, the privatised Thames Water company yesterday set out its survival plans that involve increasing bills to £627 a year for its customers – an increase of 44%.
Thames Water is the largest of Britain’s monopoly water companies with 16 million customers in London and the Thames Valley region.
The company was thrown into a crisis in March after its shareholders refused to go along with a plan by its parent company, Kemble Water Finance, to raise £500 million to inject into the business.
Kemble admitted at the time that it did not have the funds to repay a £190 million loan due by the end of April.
At the same time, it admitted it only had the cash to keep the company from staggering on for 15 months without a massive increase in customer bills.
Investors in Thames Water backed out of pumping £500 million into the company after Ofwat, the government regulator with responsibility for authorising increases in customer bills, refused the company’s demand for a 40% increase.
Ofwat were clearly worried that the working and middle classes, already being hammered into the ground by a cost of living explosion, would not tolerate having another utility bill for water shooting up to keep Thames Water from collapse, and ensure shareholder dividends.
The shareholders were outraged by this decision to limit bill increases and at the same time restrict payments of dividends, saying this rendered the company ‘uninvestible’.
Thames has faced public rage over its dumping of raw sewage in rivers, a practice carried out by the rest of the privatised water companies across the UK, and the complete lack of all the investment that the privateers promised ever since the Tories privatised this crucial public utility back in 1989 with absolutely no debt for the new private owners.
Since then, the privateers have loaded the water companies with eye-watering debt to pay out millions in dividends to shareholders and their Chief Executive bosses. Even with Thames Water on the brink of bankruptcy, these financial leeches are still finding ways to make millions out of a vital public service.
It was revealed at the weekend that a company linked to Thames Water paid out £14.5 million in dividends to its shareholders. The company is Kennet Properties, which specialises in selling off land no longer needed by Thames Water.
Thanks to a complex corporate structure, Kennet is outside the ringfenced Thames Water operating structure and not regulated by Ofwat – but its parent company is Thames Water limited and is controlled by the group’s parent company Kemble Water.
Kemble Water, which cannot pay back £190 million in debt this month and is demanding householders foot the bill for its massive debts, controls a company that paid out £14.5 million to shareholders last year.
Last week it was revealed in the press that the Tories are considering plans to take back Thames Water into public ownership. The Tory idea of renationalisation is simply to transfer the £15.6 billion of debt to the public purse while creating an ‘arms-length’ water company.
In other words, the working class would still pick up the bill for all the failures and greed of the private companies and the international financial speculators who regarded the UK’s public utilities as one huge cash-cow to be milked for billions while the country drowns in sewage.
The crisis engulfing Thames Water represents the crisis engulfing the entire capitalist economy that is drowning in debt and unable to survive except through forcing the working class into the gutter.
The working class has had enough of this bankrupt capitalist system, and the time is long overdue to put an end to it.
The way forward is for the powerful working class to force the TUC to take action by calling an immediate general strike to bring down the Tories and bring in a workers’ government and socialism.
A workers government will nationalise all the privatised public sector utilities, along with the banks and major industries, without compensation and under the management of the working class.
This is the only way forward.
