Quizzed about leaks, Thames Water bids to ‘clarify’ away a £400m profit
Council bosses accused the company of undermining “trust”
Friday, 26th January — By Anna Lamche
Flooding on Belsize Road following a burst water main in December 2022 [Simon Lamrock]
COUNCIL bosses this week accused Thames Water of undermining “trust” after the company stated it was running at a loss – despite its accounts showing it was making hundreds of millions in profit.
Thames Water reps appeared before the culture and environment scrutiny committee on Monday evening, tasked with explaining the lack of investment in the leaky pipes that lie beneath Belsize Road, South Hampstead.
Scrutiny committee chair Councillor Awale Olad told Thames Water’s engagement manager Michael Benke: “It says quite clearly you made a profit of £400million… given that there seems to be that there’s a lot of massaging of figures going on here. How do we actually trust that you’re going to invest properly in Camden and invest properly in the improvements that need to be made across our pipes and across our network, when we can’t even get the facts or the truth?”
Thames Water’s London director Martin Padley appeared at the Town Hall committee last year following a series of floods just days before Christmas in 2022.
In the meeting, the New Journal reported that Mr Padley claimed his company had not made a profit in 2022, and was therefore unable to invest in upgrading the pipework. He said: “In fact, we made a small loss of about £11million.”
Mr Padley told the meeting any money for further investment in the borough’s pipes would have to come from either increased taxes or higher customer bills.
Private Eye later published a report correcting Mr Padley’s statement in the New Journal – showing how the company had posted a profit of almost £400m in the last six months of 2022.
In an attempt to clarify the situation on Monday night, Mr Benke said: “In real terms, yes, we did… report those profits… but the £11m that Martin Padley was referring to was cash, straight cash that was available.”
He told the meeting: “The £400m refers to gearing, and values-worth of debt, so I think the point was we didn’t have a profit of £400m worth of cash, we take our annual turnover is about £2.1billion, those were half-year results, so we don’t take a profit of £400m, do you know what I mean? In half a year, we wouldn’t be able to make a profit like that. It’s to do with gearing and the value of debt to company.”
Simon Moore, Thames Water’s head of London planning, added: “There’s a difference between making a profit and paying out dividends. The year before that we’d made quite a substantial loss. I don’t have the number with me, but as I say this is accountancy, it’s looking at the value of assets, it’s not someone taking £400m out of the business.”
Cllr Olad pointed out Thames Water had not attempted to “set the record straight” following the Private Eye report, adding: “I’m just saying it’s strange, it’s very strange that a company of your size comes to a committee meeting, makes a claim, and when somebody else sets out the facts, you don’t refute it at all. It’s just very strange.”
Discussing specifics around the Belsize Road floods, the council agreed to investigate the geology of the road and explore its potential impact on the pipework beneath. Mr Moore pledged that Thames Water would consider the results of Camden’s investigation.