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Labour ministers will hold urgent talks with water bosses today as they gear up for a regulatory ruling on their finances.
Executives from Thames Water, South East Water and Severn Trent are among those who have been summoned to meet Environment Secretary Steve Reed.
It comes as regulator Ofwat prepares to outline how much debt-laden firms can raise bills by over the next five years.
End of the line: Royal Mail-owner International Distribution Services confirmed it will scrap rail freight in October and sell its trains
In a further sign of the sector’s dire straits, South East Water yesterday went cap in hand to investors for an emergency cash injection.
The utility, which has 2.3m customers in Kent, Sussex and Surrey, said it is running out of money.
That followed Thames Water’s warning on Tuesday that it only has the funds to survive until May next year without support from shareholders.
It has 16m customers in London and the South East.
Today’s meeting signals that Labour is preparing to take a tough stance against Britain’s ailing water companies.
A source close to Reed said the election was a ‘reset moment’ for the sector and promised that Labour is planning to reform the industry.
It comes after sewage spills into England’s rivers and seas more than doubled last year. According to Environment Agency figures, there were 3.6m hours of spills in 2023, which is equal to about 400 years.
Not a single river in England is in good overall health and iconic spots like Windermere in the Lake District have had sewage dumped in them.
The issue has sparked anger among the public and campaigners as water firms continue to pay huge bonuses to bosses and dividends to shareholders.
Thames Water this week said that it paid out £196million in dividends to its parent company and executive bonuses of £754,000 last year.
Today’s draft Ofwat ruling on business plans for the next five years is of particular importance to Thames Water, which needs to know whether it can hike bills by 44 per cent before it can hold formal talks with shareholders to raise fresh cash.
If it is unable to secure extra money, it could spark a major industrial crisis for the Government.
Meanwhile, South East Water yesterday said that it needs more money from its shareholders.
It wants to hike customer bills by 22 per cent, and ‘expects’ to secure the extra funding but has not yet struck a deal, which raised concerns that it is at risk of collapse.
Ofwat’s announcement will kick off six months of negotiations before a final decision in December.
Chairman faces fresh fury over railway job
Backlash: International Distribution Services Chairman Keith William
The chairman of Royal Mail’s owner faced a fresh backlash last night over its move to stop transporting post by rail.
Keith Williams leads the board of International Distribution Services and is already under fire over plans to sell the business to a Czech billionaire for £3.6billion.
He is now facing further criticism after Royal Mail said it would stop moving post by train in October.
This is because he is also chairman of Great British Railways Transition Team (GBRTT) and co-wrote a report on the future of railways with then-Transport Secretary Grant Shapps.
The GBRTT website declares: ‘Growing rail freight is hugely important to the wider reform of the railway.’ It adds that using rail ‘delivers economic benefits across the country’.
But under Williams’ leadership, Royal Mail is selling its 15 trains. This could prove awkward for rail minister Lord Hendy, chairman of Network Rail and Williams’ deputy on the GBRTT board.
‘On behalf of rail freight, bring us the head of Keith Williams,’ an industry source said. ‘Wouldn’t it be ironic if Lord Hendy’s first job would be to sack his long-time friend from GBRTT.’
The DfT said: ‘The economic and environmental potential of rail freight is significant.
‘The Government is committed to supporting its growth. Under plans to deliver the biggest overhaul of railways in a generation, Great British Railways will have a duty and targets to grow the use of freight.’
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