Architect of water privatisation defends resolution amid Thames Water turmoil
L
ord Michael Howard, one of many architects of water privatisation, defended the choice amid questions over Thames Water’s future.
The former Tory chief, who served in Margaret Thatcher’s authorities, admitted that with “hindsight” firms ought to maybe have been prevented from taking up extreme debt.
The chief government of Thames Water stepped down this week amid severe questions over the debt-laden agency’s future, with some suggesting re-nationalising the system as an answer.
The Government has tried to calm the waters by saying the utility has “secure and committed” funding and reassuring clients their provide won’t be interrupted.
Water when it was in public possession was approach down the queue
Lord Howard, a Conservative peer, rejected solutions {that a} return to public possession is a viable resolution.
“The point about public ownership is this: if you have the industry in the public ownership it has to compete for resources with health, with education, with the police, with all the other legitimate demands on the public purse, and water when it was in public ownership was way down the queue.
“When you release it into the private sector you have recourse to private capital. You can make the investment that’s needed,” he advised BBC Radio 4’s Today programme.
Questions have emerged in regards to the debt taken on by companies.
Total debt within the sector hit £60.6 billion final 12 months, rising by greater than £1 billion from the earlier 12 months, Ofwat stated.
Late final 12 months, the watchdog flagged 4 different companies whose monetary well being it was most apprehensive about.
These have been Southern Water, Portsmouth, Yorkshire, and SES Water.
The peer stated Ofwat has powers to manage the business within the pursuits of customers however steered the regulator was maybe caught “off guard” by rising rates of interest.
“When interest rates were very low, borrowing seemed a reasonable thing to do, and perhaps Ofwat should have paid more attention to that. But they’re not the only people who have been caught off guard, to some extent, by the recent increase in interest rates,” he stated.
“It’s easy to look at these things with hindsight and I think I would accept that with hindsight some of the companies have been allowed to borrow too much and should have been raising more of their capital through the issuing of equity,” Lord Howard stated.
“I think it is arguable that the companies have been allowed to take on too much debt.”