No 10 must get hands dirty to clean up Thames Water

Another rescue plan is in tatters the government has to act

- JAMES MOORE

The latest twist in the perma-crisis that is Thames Water came courtesy of the withdrawal of KKR from a rescue plan that now lies in tatters. The US private equity firm would have overseen a much-needed £4bn recapitalisation of the debt-ridden company, likely involving some of the existing lenders.

Consumers may well have looked askance. KKR already has a substantial stake in Northumbrian Water, which has itself faced plenty of controversy – and fines – over sewage spills and overcharging and the other sins common to this industry. But at least it wasn’t looking to renegotiate their bills, which are already due to rise by more than a third over the next five years.

The FT reported that it was hoping to reduce the vast fines faced by the firm – and the obvious problem with that is the message it sends to an industry that has done a rotten job. But it actually made some sort of sense given the company’s financial difficulties, so long as strings were attached. The problem with fines like the record £123m penalty imposed on Thames last week is that they will ultimately reduce the resources available to fix its problems (the money typically goes to the Treasury).