The Mayor of London today admitted that he and his team are “seriously worried” over the potential cost of London’s proposed ‘super sewer’ to Thames Water customers. When pressed on the issue by Murad Qureshi AM at today’s Mayor’s Question Time, the Mayor revealed he is looking “very carefully” at the financial terms of scheme.
Thames Water plans to establish a separate company that will own the tunnel, and this company is expected to be owned by a collection of sovereign and pension funds. Investors in the scheme will receive generous returns reported to be between 14.7% and 24.1%, paid for by an 11% increase in water bills, up to £80 per year, over the next ten years.
Responding to Murad Qureshi raising the issue, the Mayor said (we) “need to be extremely wary of the system by which this is being financed and run……it is down to Ofwat and the government to see that (excessive burden on consumer bills) does not happen”. He closed by stating “I am seriously worried there is no disincentive built in to cost overruns”.
Murad Qureshi AM, Labour Londonwide Assembly Member, said:
“The delivery of the new ‘super sewer’ will be one of the biggest infrastructure projects undertaken in London this decade. And at a time when people across the capital are struggling with the rising cost of living, it is crucial that Thames Water customers are not treated as cash cows to entice investors.
“The Mayor clearly shares my concerns over rising costs, but his statement that this is a purely matter for Ofwat and the Government will do little to put Londoners at ease.”
- Murad Qureshi is a Labour Londonwide Assembly Member.
- The details of the returns to investors were modelled by Bloomberg New Energy Finance in their Water White Paper.
For more information please contact Research Support Officer Nikki Salih on 0207 983 4400. Number not for publication.