Thames Water talks break down, raising spectre of bankruptcy

Talks between Thames Water and the regulator Ofwat have broken down, raising the likelihood of bankruptcy if the company continues to push for a higher cap on bills.

Thames has warned that Ofwat’s guidance, which ruled that bills should rise by a third, would not be enough to restructure debts and remain a going concern, forcing ministers to effectively renationalise the business.

With losses of around £2 billion a year, taking Thames onto the public balance sheet is a situation that could leave consumers even worse off. It could also spook international investors. A source close to the company quoted in the Times accused Ofwat of “rolling the dice and gambling with the UK’s reputation with the debt markets”.

Thames has asked for the average bill to increase by £232 between now and 2030 to pay for infrastructure and restructuring. It says the £152 limit suggested by the regulator failed to count the cost of debt interest.