Overhaul of Thames Water Comes Amid Privatisation, Foreign Ownership Scrutiny

The government estimates that the renationalisation of the water sector could cost more than £200 billion.

A household water tap in a file photo. Rui Vieira/PA

A proposed financial overhaul of Thames Water by a group of its U.S. and UK creditors has emerged against the backdrop of a wider debate over foreign ownership and public accountability in the water sector.

Major institutional investors including BlackRock, Aberdeen, and Elliott Management have put forward a plan to restructure Thames Water’s £17 billion debt. It would involve injecting £3 billion in new equity and £2 billion in additional funding, as well as writing off several billion pounds of existing debt.

“The plan seeks to break from the patterns of the past by delivering customers’ priorities and improved outcomes for the environment in the shortest possible timeframe,” a spokesperson for the creditors told The Epoch Times.

However, the group asked for regulatory flexibility in return. They want Ofwat to take a “pragmatic approach” by easing performance targets and compliance expectations.

It comes in contrast to the recommendation by the Independent Water Commission to expand the regulator’s supervisory role and urge clearer direction from the government to safeguard long-term water resilience.

According to Thames Water, “constructive discussions” with many of its stakeholders are ongoing, while its board is expected to review the turnaround plan in the coming weeks.

In response to the creditor’s proposal, Ofwat confirmed it is conducting a thorough review.

“Our focus is on assessing whether the plans are realistic, deliverable, and will bring substantial benefits for customers and the environment,” an Ofwat spokesperson told The Epoch Times.

The rescue plan by creditors comes after U.S. private equity giant KKR last week pulled out of a rescue deal to inject much-needed cash into Britain’s biggest water supplier, which has 16 million customers and is sinking under £19 billion of debt.

Foreign Ownership

Since the Thatcher-era privatisation of water in 1989, all major regional suppliers in England and Wales have been privatised, promising increased investment and efficiency.

However, in the last decade alone, water companies have awarded over £112 million in bonuses and incentives to shareholders. In response, the government enforced a ban on “unfair bonuses” for six water companies that failed to meet environmental and customer service standards.

This applies to Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities, and Southern Water.

A tanker pumps out excess sewage from the Lightlands Lane sewage pumping station in Cookham, Berkshire, England, on Jan. 10, 2024. Andrew Matthews/PA Wire

Campaigners from We Own It, a public ownership advocacy group, noted that over 70 percent of English water company shares are held by overseas investors. Thames Water’s ownership reflects this trend.

Its largest shareholder is the Ontario Municipal Employees Retirement System (Canada), with a 32 percent stake. Other investors include the UK’s Universities Superannuation Scheme (20 percent), China Investment Corporation, Abu Dhabi Investment Authority, and Hermes.

Elsewhere, foreign capital dominates the landscape. Anglian Water is owned by Canadian, Australian, Abu Dhabi, and UK funds.

Northumbrian Water—recently fined £15.7 million by Ofwat for excessive sewage spills—is three-quarters owned by Hong Kong-based CK Hutchison Holdings, with the rest held by KKR.

Southern Water is majority-owned by Australian investment giant Macquarie, while Yorkshire Water is split among investors from Singapore, Hong Kong, Germany, and Australia.

Only a handful of water companies remain publicly listed, such as Severn Trent, United Utilities, and South West Water (via the Pennon Group).

In contrast, water companies in Scotland, Wales, and Northern Ireland remain publicly owned or operated as not-for-profits.

Nationalisation Debate

Amid growing financial distress and record fines levied by Ofwat, political pressure has intensified for Thames Water to be brought into public ownership.

Liberal Democrat MP Charlie Maynard called for the company to be placed into special administration and eventually transformed into a mutually owned entity.

Labour MP Clive Lewis echoed those sentiments, accusing the company of “profiteering” and “criminal neglect.” His proposed Water Bill seeks to address water ownership, introduce strategic climate goals, and establish a Citizens’ Assembly on the issue.

Despite growing political momentum for public ownership, the government hasn’t confirmed any nationalisation plans.

The Water Bill failed to secure government backing in March, as environment minister Emma Hardy warned it could cost more than £200 billion to renationalise the water industry.

Speaking at the House of Lords last year, Baroness Hayman of Ullock said the government “has no intention to nationalise water companies.”

“It would take years to unpick the current ownership model, during which time the sector’s issues would only get worse. The government instead wants to tackle the situation as quickly as possible by improving the privatised regulated model,” she added.

Speaking about official plans to nationalise the water industry, the Department for Environment, Food and Rural Affairs told The Epoch Times that “it would be inappropriate” to comment on specific commercial cases.

PA Media contributed to this report.