Thames Tideway Tunnel

The views expressed in this page do not represent those of the Planning Inspectorate. This page consists of content submitted to the Planning Inspectorate by the public and other interested parties, giving their views of this proposal.

Thames Tideway Tunnel

Received 19 April 2013
From Thomas Martin Blaiklock


I am a customer of Thames Water, a private sector monopoly supplier of water services.
I am an infrastructure project finance banker with over 30 years experience in the UK and internationally. I have also undertaken more than 100 2-3 day Training Courses on this topic for Governments and banks around the World over the last 5 years.
Over the last 5 years I have studied closely the financial performance of Thames Water and other UK water utilities since Year 2000. Hence, my interest in the Tunnel.

I am particularly concerned in this proposal because:-

(a) the cost. I understand the estimated cost is around £4bn (2011 prices), giving £5bn today. If you add interest payable during the 4-5 year construction period, then the funding needed will be around £6 - 7bn.

(b) Thames' current Balance Sheet is highly leveraged. They are not strong financially. Much of this is due to shareholders paying too high dividends over the last 10-12 years. The rate of return for investors has been higher than NAO would normally expect.

(c) Thames would probably only be able to raise the funding needed if they structured the Tunnel project as £3bn new equity and £4bn of debt in round numbers. Given Thames financial weakness, this seems unlikely to happen.

(d) £7bn is a lot of money to put at risk in one project, in which you will not be able to judge success for 5-7 years. The financial risk is too high (& in the end the customer pays!).

(e) the Tunnel will bring only limited employment benefits. The UK does not make tunnelling machines!

(f) the financially lower risk option is to forget the Tunnel and implement SUDS. This can be implemented as a series of (lower risk) projects, spread over a number of years and provide more UK employment opportunities. It also provides more immediate results. Thames should be able to fund that, provided shareholders are constrained by OFWAT.

Note: under Condition F of their Licence, Thames has a responsibility to fund and manage wastewater investments.