The collapse of Thames Water could have severe repercussions for both taxpayers and the pension schemes of Thames Water workers, according to warnings from the water regulator and the pension trustees. Ofwat has acknowledged that if the UK’s largest water company was temporarily nationalised in the event of a collapse, it could potentially cost taxpayers billions of pounds. Additionally, about 12,000 current and former employees may face reductions in their future pension entitlements, as revealed in documents seen by the BBC.
Currently, the fate of Thames Water hangs in the balance as the Court of Appeal deliberates on whether a crucial £3bn emergency loan to the financially struggling utility giant can be approved. With a massive debt pile of £20bn, Thames Water and most of its lenders have endorsed a proposal that would entail borrowing an additional £3bn to sustain the company long enough to carry out a restructure. Should the loan not go through, Thames Water, which serves approximately a quarter of the UK’s population and employs 8,000 individuals, is expected to run out of cash completely by mid-April.
Environment Secretary Steve Reed has cautioned that government intervention in Thames Water could come at a substantial cost and take years to resolve. Furthermore, if the company were to collapse, the trustees for the 12,000 members of the Thames Water pension scheme anticipate significant negative impacts, with members likely being transferred to the Pension Protection Fund, which offers lesser future benefits compared to the initial scheme. Despite the ongoing financial and operational challenges faced by Thames Water, services to households will remain uninterrupted regardless of the company’s future
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