Thames Water on road to state rescue amid investor standoff with Ofwat

Thames Water appears to be on the road to nationalisation after its investors signalled they were unwilling to pump more money into the debt-laden utilities company, amid a standoff with the regulator and the government over raising customers’ bills.

However, in words understood to reflect the view in Downing Street, the communities secretary, Michael Gove, described the leadership of Thames as a “disgrace” and said they should not pass on the cost to households in the form of higher bills.

Gove said the company had acted in an “arrogant way towards the consumers who pay their bills”, adding: “I think for years now we have seen customers of Thames Water taken advantage of by successive management teams that have been taking out profits and not investing as they should have been.”

Ofwat is due to give its first public view on private water firms’ business plans in June, at which point Thames is expected to attempt to secure extra equity from new and existing shareholders.

A statement on behalf of investors said: “After more than a year of negotiations with the regulator, Ofwat has not been prepared to provide the necessary regulatory support for a business plan which ultimately addresses the issues that Thames Water faces.

Thames’s financial woes are likely to draw further attention to the stewardship of the company by Macquarie, the Australian bank that previously owned it and which has been criticised for building huge debts at the utility firm to pay dividends to shareholders.