Payment plan for Thames Water’s £128m fine still 'holds company to account’, Ofwat says

Thames Water has been given up to five years to pay off a £123million fine as part of a payment plan agreed with industry watchdog Ofwat.

Britain’s biggest water company was hit with the record fine earlier this year for failures with its sewage pollution control and for paying out big dividends.

The new payment plan gives Thames Water room for manoeuvre as it battles to stay financially afloat, with worries compounded after it announced a £1.65billion loss this financial year.

Thames Water oversees wastewater in Maidenhead and Windsor, and freshwater supplies and wastewater in Slough and South Buckinghamshire.

Ofwat’s senior director of enforcement Lynn Parker said the plan ‘continues to hold Thames Water to account for their failures’ while balancing the company’s ‘financial resilience’.

But the plan has been met with criticism from environmental campaigners who accused it of ‘kicking the fine down the road’.

Thames Water’s £123million fine was issued after an investigation by Ofwat found it guilty of failing to stop sewage spills.

The company was also found to have broken rules on payments to its shareholders.

Then Ofwat chief operating officer David Black described the record fine as a ‘clear-cut case where Thames Water has let down its customers and failed to protect the environment’.

As part of the newly agreed payment plan, the company will fork out £24.5m towards its total fine by September 30.

The remainder of its eyewatering bill will need to be paid by March 31, 2030.

It could be paid before this date, according to Ofwat, depending on whether a financial restructuring plan can be agreed to improve its balance sheet.

Or – if the company falls into administration – 30 days after it exits administration.

Ms Parker said: “This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process.

“Our focus remains on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers.”

A statement from Thames Water on the London Stock Exchange said: “These penalties will not be funded by customer bills.”

While the new payment plan gives Thames Water some room for manoeuvre amid its ongoing financial struggles, it has been met with some criticism.

Chief executive officer of River Action James Wallace claimed the company had secured a ‘sweetheart deal’ with Ofwat.

River Action is pro-environmental charity campaigning for better protection of waterways.

Mr Wallace said: “It is outrageous that Thames Water has been allowed to kick its fine down the road.

“This fine must be paid by those responsible, not future owners and investors.

“Ordinary people do not get to walk into court and say, ‘I’ll pay the rest of my penalty if I get a better paying job.’

“Yet that is exactly the sweetheart deal Thames Water has secured.

“Eighty per cent of its fine can be delayed for up to five years and only paid if a rescue package is agreed.”