Michael Gove blasts Thames Water's 'arrogant' leadership

The Communities Secretary accused the executives of Thames Water of falling short in their investments and acting in an "arrogant" fashion towards their customers.

Mr Gove, who served as environment secretary between 2017 and 2019, said he had called out the behaviour of the company while in post, but claimed they “haven’t changed their ways”.

Thames Water is in financial difficulties (Image: Andrew Matthews/PA)

The company, which supplies 16 million households across London and the South East, has found itself in financial strife following their shareholders' refusal to provide additional capital.

Initially, Thames Water was relying on a £500 million fund set aside by investors which was due to be paid at the end of this month, but it was withdrawn.

Thames Water has directed blame towards Ofwat, the regulating body, claiming it made their business plan "uninvestible".

It is understood that investors backed out following Ofwat’s refusal to acquiesce to Thames Water’s demand for a 40 per cent customer bill increase, an easing of capital spending requirements, as well as leniency on penalties for failing to meet targets.

Mr Gove said: "I think the leadership of Thames Water has been a disgrace.

"I think for years now, we have seen customers of Thames Water taken advantage of by successive management teams that have been taking out profits and not investing as they should have been."

Mr Gove claims he had previously highlighted the company's issues, but saw no change.

Thames Water apologised to residents after a pumping station in Berkshire flooded following heavy rainfall earlier this year (Image: Andrew Matthews/PA)

He added: "The answer is not to hit the consumers, the answer is for the management team to look to their own approach and ask themselves why they are in this difficult situation, and of course the answer is because of serial mismanagement for which they must carry the can."

Jeremy Hunt, the Chancellor, said the government will continue to closely observe Thames Water in the upcoming months.

Despite its current liquidity of £2.4 billion being sufficient for the next 15 months, if additional funding cannot be procured by the end of next year, Thames Water could face emergency nationalisation.

This scenario would likely result in taxpayers absorbing the company’s costs.

Mr Hunt said: "Our understanding is that the company is still solvent and today’s news should not have an impact on the services received by customers.

“Obviously, there are parts of the country where the service has not been up to scratch, including in my own constituency, and local MPs will continue to hold Thames Water to account in those situations, but overall we will continue to watch the situation very carefully."

Sir Ed Davey (Image: Aaron Chown/PA)

Meanwhile, Liberal Democrat leader, Sir Ed Davey, suggested a special administration regime for Thames Water.

He blasted the Conservative government for failing to tackle the issue, and insisted swift action is needed.

He said: "People are fed up of this sewage problem across our country – Thames Water is one of the worst examples of it – and they’re looking to the Government to take some action."