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Labour ministers will hold urgent talks with water companies today as they prepare for a regulatory ruling on their finances.
Executives from Thames Water, South East Water and Severn Trent are among those summoned to meet Environment Secretary Steve Reed.
This comes as regulator Ofwat prepares to outline how much debt-laden firms will be able to increase their bills over the next five years.
End of the line: Royal Mail owner International Distribution Services has confirmed it will phase out rail freight in October and sell its trains
In another sign of the dire situation in the sector, South East Water yesterday asked investors for an emergency cash injection.
The utility, which has 2.3 million customers across Kent, Sussex and Surrey, said it was running out of money.
This followed Thames Water’s warning on Tuesday that it only has funds to survive until May next year without shareholder support.
It has 16 million 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.
This comes after sewage discharges into England’s rivers and seas more than doubled last year. According to Environment Agency figures, there were 3.6 million hours of discharges by 2023, equivalent to around 400 years.
No river in England is in good health and sewage has been released into iconic places such as Windermere in the Lake District.
The issue has sparked anger among the public and activists as water companies continue to pay huge bonuses to bosses and dividends to shareholders.
Thames Water said this week it paid £196m in dividends to its parent company and executive bonuses of £754,000 last year.
Ofwat’s draft resolution on business plans for the next five years is of particular importance to Thames Water, which needs to know whether it can increase bills by 44 per cent before it can hold formal talks with shareholders to raise fresh cash.
Failure to raise additional funds could trigger a major industrial crisis for the government.
Meanwhile, South East Water said yesterday it needs more money from its shareholders.
It wants to increase customer bills by 22 per cent and “hopes” to secure the extra funding but has yet to reach a deal, raising concerns it is at risk of collapse.
Ofwat’s announcement will kick off six months of negotiations before a final decision is made in December.
President faces fresh anger over rail project
Backlash against International Distribution Services President Keith William
The chairman of the company that owns Royal Mail faced a fresh backlash last night over his decision to stop transporting mail by rail.
Keith Williams heads the board of International Distribution Services and is already under fire over plans to sell the business to a Czech billionaire for £3.6bn.
It now faces further criticism after Royal Mail said it would stop sending mail by rail in October.
This is because he is also chair of the Great British Railways Transition Team (GBRTT) and co-wrote a report on the future of the railways with then Transport Secretary Grant Shapps.
The GBRTT website states: “Increasing rail freight transport is of huge importance for the broader railway reform.” It adds that rail use “generates economic benefits across the country.”
However, under Williams’ leadership, Royal Mail is selling off all 15 of its trains, which could prove awkward for rail minister Lord Hendy, chairman of Network Rail and Williams’ deputy on the GBRTT board.
“In the name of rail freight, bring back Keith Williams’ head,” said one industry source. “Wouldn’t it be ironic if Lord Hendy’s first job was to sack his old 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 reform of the railways in a generation, Great British Railways will have a duty and objectives to increase the use of freight transport.”
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