A letter to Chris Weston, the new head of Thames Water
Dear Chris Weston,
Congratulations on your appointment as the latest chief executive of Thames Water, and best of luck. You are going to need it, along with your proven management skills and your less obviously proven political nous. It’s two years since you left Aggreko following its takeover, so it’s probably now or never for a big, difficult job.
The timing will have irritated the committee of MPs which the day before had grilled Thames’ chairman, Adrian Montague, but at least it spared you from going in at the deep end (sorry).
The obvious first question on your long agenda is whether Thames can survive in its current form and, indeed, whether it should do. I can only presume that the interviews focused on this rather important point, especially after the auditors warned that insolvency next year is a real possibility.
The company’s PR is almost as bad as its performance; lobbying for a lower scale of fines for missing targets was asking for trouble. Stating that the shareholders would only put up new money if they could earn an attractive return from us captive customers was crass. Pretending that a £500m loan from way up the corporate chain was in fact equity merely focused attention on its complexity.
So simplification would be a good start. An admission that it will take many more years of zero dividends to repair the damage done under Macquarie would help. A realistic estimate of the cost of fixing the leaks and the sewage discharges is more contentious, since the answer might well be that there would be nothing in it for the shareholders, even in the very long term.
We would rather be spared the sort of self-serving waffle about the need for “clarity” from your regulator Ofwat that your chairman served up to the MPs’ committee this week. That “clarity” could well make it only too clear that the business has no value on any realistic pricing regime. Besides, it is not obviously against the customers’ interests to see Thames put into administration, with or without its new CEO.
As I said. Best of luck.
Neil Collins
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