Thames Water CEO says disaster ‘a long time within the making’; US inflation hits four-year low – enterprise reside | Enterprise
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Thames CEO: Disaster is a long time within the making
MPs then flip to the BBC’s current (revealing) documentary into the Thames Water disaster.
Q: Why did CEO Chris Weston inform the BBC that “I received’t know the way it received this manner”, after 10 months on the firm? What’s his evaluation right this moment?
Weston replies that he has a fairly clear concept now, and was additionally fairly clear then, however questions the worth of “speaking about it publicly and pointing the finger” [in which case, why allow TV cameras into the company?!].
Weston tells the EFRA committee there are “many authors” accountable.
He says:
I’m clear how we received right here. This has been a long time within the making, the disaster we face at Thames.
I believe all actors had a task to play on this.
Completely, the corporate and administration has received one thing mistaken. 5 chief executives in 5 years will not be a recipe for achievement, and I might argue consistency in management is an important a part of what we have to do now.
However, Weston additionally takes purpose on the UK’s regulatory regime, saying it’s flawed.
Regulators want to draw funding into the sector, and permit corporations who’re in hassle to show round and enhance – Weston argues that it doesn’t try this in the meanwhile.
Key occasions
Starling Financial institution probed over reporting failings
Kalyeena Makortoff
Starling Financial institution has been ordered to launch an exterior assessment and enhance compliance coaching after CMA mentioned it had issues about an “underlying weak spot” within the on-line lender’s procedures.
The challenger financial institution’s breaches associated to information it fed into buyer satisfaction surveys, which it repeatedly tops.
It was discovered to have excluded 17% of non-public account clients from information handed to a market analysis firm in each 2023 and 2024, and likewise overstated the full variety of accounts held by clients to the competitions regulator between 2020-2023.
It comes months after the financial institution was hit with a £29m high-quality by the Monetary Conduct Authority in October 2024, over “shockingly lax” controls that the FCA mentioned left the monetary system “extensive open to criminals”. That included failures in its automated screening system for people going through authorities sanctions.
The CMA mentioned on Tuesday that excluding numerous clients from the info was a “materials breach”, and whereas the impression on the rankings was probably “negligible”, it risked undermining client confidence within the survey outcomes.
The CMA mentioned it was “involved that there could also be an underlying weak spot in Starling Financial institution’s procedures.” It added:
“The CMA has issues that formal motion could also be obligatory to forestall a recurrence. It is because Starling Financial institution has now breached the necessities to supply full information on present account holders twice and we’re not satisfied that Starling Financial institution is able to stopping additional breaches via the initiatives talked about above.”
Starling mentioned that the exclusions had been resulting from a scarcity of applicable oversight, and that the over-reporting was a misunderstanding of the regulatory requirement. Starling itself notified the CMA of the breaches final yr and was referred to as into the regulator in November to debate the matter.
The financial institution has now been issued with instructions that embrace hiring an exterior agency to hold out a assessment of its processes and procedures, and can now have to supply additional compliance coaching for workers.
Starling mentioned in a press release:
“Final yr we recognized some reporting errors associated to the CMA’s buyer satisfaction surveys. We knowledgeable the CMA of our findings, we apologised, and we modified our processes to forestall a recurrence. We’re happy that the CMA has now decided that the impression on clients was ‘negligible’ and that the financial institution has overpaid quite than underpaid its dues.
We’ll proceed to work constructively with the CMA as a result of we share their objective of making certain that folks can see which banks are listening to their clients and assembly their wants.”
MPs additionally heard right this moment that Thames Water’s senior executives will obtain giant “retention incentives” funded via the £3bn emergency mortgage it agreed just lately.
Chair Sir Adrian Montague informed the EFRA committee that the deal “required” Thames to create a retention plan for its senior administration workforce, which he referred to as “our most valuable useful resource”.
That plan can pay out in three installments – when the primary restructuring plan is agreed, then when the second restructuring is agreed, after which a bigger quantity on the finish of the method.
The primary two installments are value 50% of wage, which Montague agrees is “very substantial”.
He reveals its the primary time he’s encountered this kind of deal.
And he denied that Thames was swayed to decide on the funding supply from its A-class collectors, quite than a rival supply, at a decrease rate of interest however no such retention scheme, from B-class shareholders.
Clients ought to take into consideration that they aren’t paying these bonuses, Montague insists:
This quantity might be funded by the lenders, and on the finish of the day borne by the lenders.
It’s laborious to see a lot impression from Trump’s tariffs in right this moment’s inflation report, says Heather Lengthy, the Washington Publish’s economics columnist.
You’ll be able to see the 0.2% inflation improve in April.
Sure, it is a leap from March, however April was in keeping with current traits.Commodity costs up simply 0.1% in April
New automobile costs flat
Used automobile costs down -0.5%
Attire costs down -0.2%It is laborious to see a lot impression from Trump’s… pic.twitter.com/Ny0k3bLvHW
— Heather Lengthy (@byHeatherLong) Might 13, 2025
CPI inflation was 0.22% MM in April. Core CPI grew 0.24% MM. Attire costs (-0.2%) & new automobile costs (-0.01%) each fell in April. Core commodity costs grew extra slowly than general CPI, such that relative core commodity costs ticked down barely. Not a lot signal of tariffs right here pic.twitter.com/Ghqyo2gmT4
— Ernie Tedeschi (@ernietedeschi) Might 13, 2025
The drop in US inflation in April means that the tariffs are but to feed via to inflation, says Seema Shah, chief world strategist at Principal Asset Administration, including:
But, it’s questionable whether or not or not right this moment’s CPI print actually strikes the needle after the rollercoaster experience of the previous month. In any case, not solely is the April CPI report unlikely to have totally captured the tariff impression post-Liberation Day, however inflation numbers will now be additional whipsawed by the US/China commerce truce announcement.
An inflation impulse will probably come via throughout late Q2, however could also be partially and shortly eroded if container visitors quickly resumes in gentle of the drop in US/China tariffs. The implication is {that a} clear learn on the inflation development received’t be seen for a number of months but. This extended inflation uncertainty probably implies a protracted Fed pause. “
Donald Trump might be happy to see inflation has managed to ease barely within the US, says Lindsay James, funding strategist at Quilter.
However the US is “removed from out of the woods” in relation to inflation, James provides:
The primary quarter of the yr noticed companies ramp up their inventories as they seemed to stockpile forward of ‘Liberation Day’. As such, value rises are very a lot delayed, and we will nonetheless count on inflation within the US to spike due to these insurance policies. That is, in fact, why the Federal Reserve is reluctant to chop rates of interest at this level.
The reprieve for Chinese language items will probably result in some extra re-stocking earlier than the tip of the 90-day interval. However whereas tariffs are a lot diminished since yesterday, they continue to be markedly larger than earlier than the twond April. The ‘Artwork of the Deal’ means no-one is aware of how everlasting these tariffs could turn into, if in any respect, or if they are going to be reintroduced in a much less harsh kind. Nevertheless, companies will turn into more and more cautious of the shifting sands beneath their toes as these deadlines method. Given we’re already virtually on the midway level of Trump’s 90 day pause for the ‘reciprocal tariffs’ on different nations, we could quickly see them constructing in additional margin via value rises to guard themselves from sudden modifications in coverage making.
Tariffs should not the one factor weighing on inflation both, nevertheless, and there stay another underlying components that aren’t altering as shortly. Meals costs within the US stay elevated regardless of Trump’s campaigning to decrease these pressures for shoppers.
In the present day’s inflation determine could paint considerably of a sanguine image, however scratch calmly underneath the floor and it’s clear the US faces quite a lot of dangers. With financial development slowing on the similar time, the Fed is left in a bind of the place to go from right here. Threat of coverage misstep, subsequently, is rising and as such market volatility stays very a lot on the desk.”
US inflation drops to four-year low
Newsflash: US inflation was decrease than anticipated final month, regardless of fears that tariffs will push up prices.
On an annual foundation, US client value inflation fell to 2.3% in April, down from 2.4% in March, the bottom studying since February 2021. Economists had anticipated the speed could be unchanged.
This would possibly cheer Donald Trump, and bolster his declare that he’s easing the value pressures hitting US households.
The Bureau of Labor Statistics (BLS) studies that meals costs rose by 2.8% over the yr, whereas power costs had been 3.7% cheaper than a yr in the past. Shelter (housing prices) rose by 4% year-on-year.
Throughout the month, costs rise by 0.2% in April, having dropped by 0.1% in March.
The BLS says:
Indexes that elevated over the month embrace family furnishings and operations, medical care, motorized vehicle insurance coverage, schooling, and private care. The indexes for airline fares, used vehicles and vans, communication, and attire had been among the many main indexes that decreased in April.
Heather Stewart
The Financial institution of England’s chief economist, Huw Capsule, has underlined his issues about wage development, suggesting it would imply charges have to remain larger for longer.
Talking at a convention on the London Faculty of Economics right this moment, he mentioned he was involved in regards to the upside dangers to inflation, which could get caught above the Financial institution’s 2% goal.
Capsule mentioned that would, “imply that the response of financial coverage, with a view to make sure that we get again to our goal inside an inexpensive cycle, must be considerably extra aggressive or extra persistent in itself.”
Jaguar Land Rover has welcomed the US-UK commerce deal introduced final week, after reporting its highest annual revenue in 10 years.
JLR posted a £2.5bn pre-tax revenue within the yr to 31 March, its highest revenue in a decade.
The corporate is happy that the UK has negotiated down tariffs on vehicles exported to the US, saying:
In April, at the beginning of the brand new monetary yr, we applied a sequence of short-term actions to deal with the instant impression of commerce tariffs launched by the US Administration on the worldwide automotive sector. On 8 Might 2025 we welcomed the constructive announcement of a US-UK commerce deal. This reduces US commerce tariffs on UK auto exports to the US from 27.5% to 10%, inside a quota of 100,000 automobiles. This deal brings better certainty for our sector and stakeholders.
We’ll proceed to interact with the UK Authorities on the element of the commerce deal. Our precedence is to make sure we ship for our world shoppers and shield EBIT via supply of transformation and effectivity initiatives.
Thames Water’s CEO concedes that the corporate has run up “extraordinarily excessive” prices on advisors, which complete round £159m.
That invoice displays the very fact Thames is the “largest restructuring of a steadiness sheet in British historical past”, Chris Weston says.
Life could be “extraordinarily tough for everybody” if Thames Water falls right into a particular administration regime (successfully nationalisation), its chair informed MPs.
Adrian Montague instructed that suppliers would possibly surprise how for much longer they wished to work for Thames; senior administration may also take into account their place, and there could be a substantial burden on authorities, who may face £5bn of additional prices, and would want to finally discover a purchaser for the enterprise.
Touching once more on Thames’s money squeeze, Sir Adrian Montague says the corporate’s liquidity was very tight when it was negotiating with lenders just lately.
Having solely 5 weeks liquidity “is a nightmare” for a big firm corresponding to Thames, Montague says.
However, he insists, Thames was in a “beggers can’t be choosers scenario” when it was negotiating the deal to supply a £3bn lifeline.
Montague provides:
We had been working alongside the sting of the precipice, and we needed to safe the monetary way forward for the corporate.
MPs have additionally quizzed Thames Water’s high brass about its future possession.
Chief govt Chris Weston informed the committee it was nonetheless a “very fluid scenario”, regardless of funding agency KKR having been chosen as the only bid to put money into the corporate.
He says there may be nonetheless a risk that Thames may return to different curiosity events if “if the present course of fails”. Different choices are that collectors step in, and execute a debt-for-equity swap.
Or, there’s a risk the corporate may nonetheless fall into public possession.
Weston says:
“It’s a really fluid scenario however these each are potentialities.”
“There’s no assure we’d not keep on a market-led resolution versus a particular administration, however it’s a very fluid scenario and people are all potentialities.”
Montague: We’re right here to place issues proper
Sir Adrian Montague then refuses to offer a dedication to Helena Dollimore MP that the Thames Water high workforce on the committee listening to (him, CEO Chris Weston, and CFO Steve Buck) will stay in place via this parliament.
We reside in a aggressive market, Montague factors out, including:
We’ve got to reside in the true world. No-one offers you a dedication that might be no change within the management workforce over 5 years. It’s merely not doable.
Q: So how can we’ve got any religion within the commitments you make?
“We’re the brand new youngsters on the block,” Montague declares, including “We’re making progress. We’re right here to attempt to put issues proper.”
We received’t stop till the job is finished, however it isn’t real looking to say there might be no modifications within the workforce over 5 years.
Q: Why would headhunters recruit from a failing firm?
“It’s not a failing firm”, Montague fires again, “it’s an organization in restoration”.
We’re making progress. It is a good workforce. You’ll be able to see how the progress is beginning to turn into obvious.
Committee chair Alistair Carmichael appears unimpressed, asking:
Q: If a 40% rise in air pollution incidents is an indication of success, what does failure appear like?
Montague says “We should return into these air pollution incidents”.
Thames Water chair Sir Adrian Montague then defends the corporate’s controversial determination to pay dividends, quite than investing in bettering its infrastructure.
Montague says Thames determined to pay the ‘intergroup’ dividend, of £157m, in October 2023 so it may maintain discussions about future capital injections with then-shareholders alive.
“Within the occasion, that failed”, he admits. However on the time, Thames didn’t comprehend it wouldn’t work.
Helena Dollimore MP factors out that a greater use of that will have been to fix pipes, or to fund the 100 infrastructure tasks that had been delayed in summer time 2023.
UPDATE: Montague could have his dates blended up right here. The Guardian reported final June that this £150m dividend was agreed in March 2024, having already confronted investigation for paying a £37.5m dividend in October 2023, for which it was fined.
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