Thames Water warns on Burnham factor as customer complaints surge 101% | Money News

Thames Water has warned funding is due to dry up by the year’s end and further money will be dependent on the policies of incoming PM Andy Burnham, as its major lenders seek to shore up its future.

The company said it had £1.1bn to tide it over and creditors were holding out on further funding pending the handover of power to Mr Burnham.

It made the remarks amid the release of annual results that showed Thames had only met 55% of its regulated targets and that customer billing complaints had risen by 101%.

The figure was likely driven by gripes over inflation-busting increases, allowed by the regulator to fund record but overdue investment in infrastructure including pipes and storm drains.

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The financial hole engulfing Britain’s biggest water utility, which has been slapped with record fines for poor performance, was laid bare through a growing debt pile to £18.5bn over the 12 months to 31 March.

Thames revealed its progress hours after a story by Sky News that the creditors had agreed further funding, pending a decision on their planned £10bn rescue that would see the consortium take control under a new business called London and Valley Water.

The terms are being reworked after recent criticism from the environment secretary that they represented a poor deal for the company’s 16 million customers.

Failure to agree the package would likely push Thames into a Special Administration Regime, a move that could potentially pave the way for nationalisation under a government led by Mr Burnham.

He has previously voiced support for public ownership of the long-criticised water sector.

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Thames said in its results statement that it was in a “strong position to accelerate the delivery of the biggest upgrade of our infrastructure in 150 years”.

It is aimed at bolstering its operational and environmental performance following a series of penalties for missing targets and failures including sewage discharges.

Thames said that total pollution incidents over the 12 months fell to 386 from 470 the previous year but it admitted that it represented a new missed target, alongside those covering leakages and supply disruptions.

The statement suggested that Thames was preparing for further fines ahead as a consequence, with proposals for an £800m up front payment in place to avert years of crippling penalties.

It pointed to a 40% hike in the likely fine for missing its pollution obligations despite the fall in the number of incidents.

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Chief executive Chris Weston said: “Bills alone cannot fund the required investment: Thames Water still needs debt funding, creditor support, and ultimately a recapitalisation.

“This is taking longer than originally expected, because of its scale and complexity. Nevertheless, it is moving forward and teams continue to work with our stakeholders to reach a position that delivers the best outcome for customers, communities and the environment.”