Expert economist argues for break up and refocus of Thames

Thames Water should be split into two and each part made an independent, standalone company whose sole job it is to deliver water and sewerage services. That’s according to Professor Sir Dieter Helm, who in a new article offered his view on What to do about Thames Water.

Helm first rejected the possibilities of nationalisation or licence removal, before arguing there is a “very strong case for reverting to the simple single-company structure of the original privatised companies". These should be quoted, independent and solely focused on water and wastewater service provision. He said a split cost of capital would be required, with catchment regulation to oversee competitive, integrated works.

The most sensible approach to split up Thames would be to form London Water plc, with the London Mayor’s office on the board; and Upper Thames plc to concentrate on river quality and natural capital projects which would also help on net zero and flood risk. Helm observed: “A break-up of Thames could provide a template for other disaggregation. The argument that water companies need to be ever bigger has limited evidence to support it. For now, breaking up Thames would be a good start.”

Finally, Helm said Thames could probably “limp on” without courageous intervention, but that investors may avoid throwing good money after bad by limiting the future capital programme. “The result of a ‘do as little as possible’ strategy would leave the River Thames and its tributaries in a bad way. It would not be sustainable or publicly acceptable. It is even possible that Thames limping on might bring down the rest of the industry with it.”

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