Thames Water urges Andy Burnham to clarify Labour's water plans as funding deadline looms

Thames Water chief Chris Weston has urged Andy Burnham to provide urgent clarity over Labour's plans for the water industry as the struggling utility firm races to secure funding before October.

The boss of Britain's largest water supplier warned the company faces mounting financial pressure unless a rescue agreement can be reached, saying certainty from the incoming Government is needed as negotiations with creditors continue.

Mr Weston told the Press Association: "The big unknown is what the new prime minister wants to do when he comes in.

"We've had no conversations with him and it would be better to know what he's thinking."

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Mr Burnham, who could take office as early as next Monday, has indicated he wants to introduce a decade-long programme of renationalising water companies, arguing the industry should place greater emphasis on serving the public interest.

While Mr Weston described Thames Water's situation as "not terminal", he stressed the company's current funding position was "not sustainable" and said additional certainty was required as talks with lenders continue.

The company is negotiating with creditors in an effort to extend its financial runway into 2027 while seeking a longer-term recapitalisation deal.

Thames Water's latest annual results showed a return to profit, with pre-tax profits reaching £226.4million for the year ending March 31 compared with a loss of £1.65billion in the previous financial year.

Despite that improvement, the company's debt continued to increase, rising from £17.73billion to £19.77billion as it borrowed further to finance major capital investment projects.

Cash outflows totalled £1.1billion before any new borrowing, with income from household bills continuing to fall short of the level needed to fund its investment programme despite bill increases introduced in April.

Thames Water said: "Bills alone cannot fund the required investment: Thames Water still needs debt funding, creditor support, and ultimately a recapitalisation."

The company supplies water and wastewater services to around 16 million customers across London and the South East.

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Its performance against regulatory targets improved during the year, with Thames Water meeting 55 per cent of its benchmarks for the year ending March 31, compared with 38 per cent in the previous year.

However, customer satisfaction continued to decline, with overall complaints increasing by 77 per cent compared with the previous 12 months.

Complaints relating to billing doubled year on year following the tariff increases introduced in April, reflecting growing frustration among customers facing higher household charges.

The company is attempting to balance significant investment in ageing infrastructure with pressure to improve operational performance while addressing its financial position.

Creditors returned to negotiations last month after Environment Secretary Emma Reynolds rejected their £10billion rescue proposal, saying it did not provide sufficient protection for customers or the environment.

The annual report also revealed Mr Weston's remuneration increased to £1.06million from £1.04million in the previous year.

That package included a £99,000 deferred retention payment.

Mr Weston said the payment had been awarded before the Water (Special Measures) Act came into force in May last year, legislation which banned performance-related bonuses for senior executives at water companies.

As discussions with lenders continue, Mr Weston said Government direction remains critical to securing the company's future funding arrangements.

He said clarity over the incoming administration's intentions is needed "the sooner the better" as Thames Water works to secure additional time to finalise a long-term rescue deal.

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