When news broke yesterday that private equity powerhouse KKR had pulled out of its bid to rescue troubled Thames Water – withdrawing £4 billion of desperately-needed cash in the process – the government sought to hide its embarrassment. Environment secretary Steve Reed boasted to Parliament that “we have worked with the water companies to secure £104 billion pounds of private sector investment to rebuild our broken water infrastructure – that means new sewage pipes, fewer leaking pipes and new reservoirs across the country”. But what about the deal…
KKR are pointing the finger of blame at Reed for deterring investment. According to the BBC, “Sources close to the situation told the BBC that the politicisation of the water industry was a major disincentive for investors to put money into the sector.” According to Sky News, one factor in their decision was the “political risk” of investing in water, given criticism of the sector from ministers, campaigners and the media, and uncertainty over the future of regulation. Shadow environment secretary Vicky Atkins told Parliament: “...according to a source close to KKR, one of the reasons they pulled out was because they were concerned about negative rhetoric directed at Thames Water and the rest of the industry in recent weeks by the Secretary of State and other ministers. In other words, the Secretary of State and his ministers have talked themselves out of this rescue deal…” Oops…
Guido has taken a look at that rhetoric in full and the pattern is pretty clear:
Reed might be regretting his careless language, which has left Thames Water on the brink. Last month, the Guardian reported Defra would have to meet the £4 billion cost of temporary nationalisation from its existing budgets – aka, from the taxpayer’s pocket. Labour talked the deal out of existence…
Sarah Pochin at Reform Scotland’s manifesto launch event: “I really wanted to come on in a Reform tartan burka, but apparently I wasn’t allowed… One day let’s do one of these events not live-streamed. We’ll do all the naughty stuff…”