How come Thames Water makes such big profits?
We’re set up to make profits so we can carry out massive, much-needed and long overdue improvements to our water pipes, drains and other facilities. But our profits alone are not enough to pay for the investments we need to make. We also need to borrow a lot of money to help fund this work. If you look just at cash flow, we’re actually making a loss. We’ve got more cash going out than coming in from customers. For every £1 of profit we make, we invest £2.26. We do this by borrowing. If the money we spend on improving our water pipes and drains came solely from customers, bills could be about £1,000 a year rather than £300. When the UK water industry was privatised in 1989 the Government set up water companies so they could make reasonable profits and also borrow the large sums needed to pay for their investments. The fact that we made pre-tax profits of £435m last year and still need to raise bills reflects the scale of the work we need to do.
