Jun 28, 2018

Thames Water needs investment to flow sooner rather than later

Bonuses are being held back to realign them with performance: none will be forthcoming while Thames spends two years getting its leakage levels back on target; then payouts will be linked more to water meters than to financial metrics - ie engineering better pipes rather then engineering higher earnings, or returns on capital. Dividends to Thames's new owners - pension and sovereign wealth funds - will now be suspended for another two years, having already been cut from £100m in 2017 to zero this year, to release cash for investment. Annual investment has therefore been increased, relative to the planned level, to £1.1bn, and operational expenditure raised to £80m for the past year and next - by redeploying the £300m saved on all those payouts. While more than planned, £1.1bn is no higher than the annual investment level in the past 10 years - years of pollution and leaks. Thames is planning more investment in its next five-year plan, but if wants to re-earn the trust of customers it needs to start - and start paying for it - now.

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