Thames Water cannot be trusted to assess its performance – regulator

The utilities regulator has dealt a further blow to Thames Water’s reputation by saying it cannot trust the company’s statements about its own performance.

Ofwat criticised Thames Water alongside three other companies for “shortcomings in the data handling” that mean customers and the watchdog “cannot be sure the information presented is complete and accurate”.

Aileen Armstrong, Ofwat’s senior director of finance and governance, said: “As customers, we want to be able to trust what we get from our water company, be that the water out of the tap or what they tell us. Unfortunately, on the second of those, our checks suggest we might not be able to take everything at face value.”

The other water companies criticised by Ofwat were Bristol Water, Dee Valley Water and Southern Water.

Ofwat’s report comes days after Thames Water admitted letting down customers by failing to meet its leakage targets and said it would halve planned price increases next year. This means the average annual bill will be about £8 less than it would otherwise have been for 5 million households.

Ofwat said there were “serious concerns” over Thames Water when it came to two categories: following the regulator’s financial monitoring framework and a broad assessment of “outcomes” – meant to measure whether consumers, politicians and regulators can understand what companies are doing to meet customer expectations.

“We concluded that the significance of our concerns in two assessments meant that the company did not instil sufficient confidence about its ability to deliver, monitor and report performance,” it said.

Thames Water said it was “disappointed” by the regulator’s decision to classify the company in its lowest assessment category, arguing that it had made “extensive efforts … to be open and transparent about the performance of our business”.

“We will be working hard to rebuild trust and achieve self-assured status as quickly as possible,” the company said.

Ofwat recommended that Thames Water develop better assurance plans, which are designed to give customers confidence in the accuracy of company data. It expects Thames Water to release the results ahead of a consultation by the end of January, and publish an action plan online by the end of March.

Armstrong said: “These businesses provide essential public services and they need to assure customers they are doing the right things in the right way. If they are to gain and keep the trust of customers, they need to have high-quality checks on their information and present it fairly, clearly and completely.”

Thames Water has faced a series of negative headlines this year. In March, it was fined a record £20m for allowing 1.4bn litres of raw sewage into the Thames between 2012 to 2014. The company has also come under pressure over excessive executive pay.

The group is bringing in Ian Marchant, the former chief executive of the big six energy company SSE, as chairman to clean up its corporate governance failings. He will replace the long-serving Sir Peter Mason in January.

The company also announced that it would close its Cayman Islands subsidiaries. Thames Water, which has not paid corporation tax in the UK for the past 10 years, said there was no tax advantage from the two Cayman subsidiaries, but management is understood to accept “it just looks wrong”.