Labor ministers will hold urgent talks with water chiefs today as they prepare for a regulatory decision on their finances.
Executives from Thames Water, South East Water and Severn Trent are among those invited to meet Environment Secretary Steve Reed.
It comes as regulator Ofwat prepares to outline how much indebted firms can increase their bills over the next five years.
End of the line: Royal Mail’s owner International Distribution Services has confirmed it will scrap rail freight services and sell its trains in October
In another sign of the sector’s dire straits, South East Water yesterday reached out to investors for an emergency cash injection.
The company, which has 2.3 million customers in Kent, Sussex and Surrey, said it was running out of cash.
This followed Thames Water’s warning on Tuesday that it only had the 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 Labor is preparing to take a tough line against Britain’s ailing water companies.
A source close to Reed said the election was a “reset moment” for the sector and promised Labor plans to reform the sector.
It comes after sewage spills into England’s rivers and seas more than doubled last year. According to the Environment Agency, there will be 3.6 million hours of leaks in 2023, which equates to about 400 years.
Not a single river in England is in good overall health, and iconic places such as Windermere in the Lake District have seen sewage discharges.
The matter has sparked outrage among the public and activists as water firms continue to pay huge bonuses to bosses and dividends to shareholders.
Thames Water said this week it paid out £196m in dividends and £754,000 in executive pay to its parent company last year.
Today’s draft Ofwat decision on business plans for the next five years is particularly important for Thames Water, which needs to know whether it can raise bills by 44 per cent before it can hold formal talks with shareholders to raise new cash.
If it is unable to secure the extra money, it could trigger a major industrial crisis for the government.
Meanwhile, South East Water yesterday said it needed more money from its shareholders.
It wants to increase customer bills by 22 percent and “expects” to secure additional funding, but has yet to close a deal, prompting fears 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 railroad jobs
Opposition: International Distribution Services chairman Keith William
The chairman of Royal Mail’s owner faced fresh backlash last night over his plans to stop rail mail.
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 £3.6bn.
It is now facing further criticism after Royal Mail announced it will stop moving mail by train in October.
That’s because he is also the chair of the Great British Railways Transition Team (GBRTT) and co-wrote a report on the future of the railways with the then transport minister, Grant Shapps.
The GBRTT website states: ‘The growth of rail freight is hugely important to wider rail reform.’ He adds that the use of rail “brings economic benefits across the country”.
But under Williams, Royal Mail is selling its 15 trains. This could prove uncomfortable for rail minister Lord Hendy, chairman of Network Rail and Williams’ deputy on the GBRTT board.
“On behalf of rail freight, bring us boss Keith Williams,” said an industry source. “It wouldn’t be ironic if Lord Hendy’s first order of business was 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 for the biggest rail overhaul in a generation, Great British Railways will have an obligation and targets to increase the use of freight.’
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