Former Ofwat boss calls for the break-up of Thames Water

Ian Byatt says the issues in the various supply areas are very different from each other

Thames Water, is “too big” and should be broken up, the former boss of Ofwat has insisted.

Economist Ian Byatt – who led the regulator from its creation in 1989, until 2000 – told Utility Week it is “about time” the company was broken up.

Thames is the UK’s largest water company, and is responsible for the public water supply and wastewater treatment in large parts of Greater London, the Thames Valley, Surrey, Gloucestershire, Wiltshire, Kent, and some other areas of the UK.

Byatt said that “the issues in London are quite different from the issues in rural Oxfordshire”, and should not be covered by one large company.

He argued that Thames does not maintain its water or sewerage networks properly, and that it has a “long way to go to turn itself around” as a corporate enterprise, adding that breaking the company up “might help” with this process.

Before becoming Thames Water, the Thames Water Authority was one of 10 regional water authorities created in the UK in 1975 to bring together all the water management functions of the region. The authorities were privatised in 1989, and the river regulatory functions they previously held were handed to the Environment Agency – formerly the National Rivers Authority.

Byatt said that, as the river regulatory functions were taken away from Thames, it no longer needs to be one large company. “The issues in London are quite different from the issues in rural Oxfordshire,” he added.

Thames Water declined to comment.

Byatt’s comments come off the back of an article published in the Financial Times last week, which criticised the company’s finances and corporate structure.

In response to the article, Ofwat chair Jonson Cox wrote to the newspaper to insist that the regulator takes the regulation of Thames Water “very seriously”.

“We have had recent concerns about maintenance by Thames of its water mains in London,” he said. “Following our intervention, we are pleased that the company proposes injecting up to a further £100 million to improve these assets. We require that companies’ financial structures are resilient so they can fulfil their responsibilities.”

Australian infrastructure fund Macquarie announced in March the sale of its 26 per cent interest in Thames to Borealis Infrastructure and Wren House Infrastructure Management. Cox said Ofwat is now “engaged in robust and constructive dialogue” with the new investors to “ensure that the company meets its responsibilities to customers”.