Water bills: Thames closer to end game as UK pays high price for failure of industry oversight

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Sky's Paul Kelso writes there are no winners from Ofwat's draft verdicts on water firm business plans, with the largest supplier now tipped to find it even harder to raise the new investment it says is desperately needed to ensure its survival.

Ofwat's determination that customer bills must rise 21% on average to keep the water industry afloat amounts to an admission of a torrent of failures; of regulation, of foresight, and the management of regional monopolies that at times appear to be competing only to prove that the 35-year privatisation regime has been a mistake. The fact that bills will increase is not the problem.

The era of low interest rates and cheap money is long gone too, making it more expensive to borrow and returns less competitive, particularly if investments come with intense political and public scrutiny. The challenge is most acute to Thames Water, up to its neck in debt, burning through cash and struggling to replace £3.5bn of new equity promised by shareholders who have now declared they are out.

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