Thames Water Has Found Someone To Sit Above The Problem

The people owed most of Thames Water's money have found a new chairman for the rescue plan. The rivers, unfortunately, don't get a comparable appointment.

Reuters reports that the London & Valley Water creditor group has chosen former cabinet minister John Hutton as independent chair-designate. The consortium holds about £17 billion of the utility's roughly £20 billion debt. Its ten-year plan includes debt writedowns and fresh equity, aiming to avert government control.

There's the transaction. Creditors are prepared to change the financial terms to preserve a privately arranged rescue. The chair's experience may help. It does not turn the creditors' interest in recovering value into the public's interest in reliable water service. Those interests can overlap without being identical twins.

Thames is also dealing with fines and anger over sewage pollution. Meanwhile, the government has promised legislation allowing public ownership. Suddenly the private rescue has an especially persuasive feature: it would remain private.

The plan still has to go through. Debt reductions and new investment could matter; a new name at the top is not evidence that the underlying failures are fixed. As in the supermarket industry's extremely precise accounting of its own losses, who defines a successful outcome deserves attention.

The creditors have £17 billion of reasons to get this arrangement right for creditors. Customers should be allowed to inspect the rest of the arrangement before being asked to admire the chair.