Thames Water has set a crucial judicial decision

The answer depends largely – but not entirely – how much it is estimated that a governmental rescue would cost taxpayers.

Thames itself presented an estimate of up to 4 billion pounds. While Charlie Maynard presented a figure of 66 million pounds. Others have said that it would not cost taxpayers a long -term money. An amazing range.

Offat, the regulatory authority, seems to have ended with the company. In the presentations of the courts of the courts, OFWAT presented the figure of 4 billion pounds, and 66 million pounds of Mr. Maynard and only chose to comment that Mr. Maynard’s figure was the least highlighted.

Secretary of State Steve Reed said that the involvement of the government “will cost billions and will take years.”

Eminent economist and expert in infrastructure, Professor Sir Dieter Helm, claims he could cost the zero government, because the revenues of a sales back to the private sector would eventually cover the costs incurred in the short term by the Government.

A person close to the situation said: “The idea that SAR is free is fantasy and dangerous. It is time for reality to be recognized. Sar is not a good result. “

Most importantly, the BBC understands that a billion figure can be included in the official forecast of the OBR in the “Risks for Perspective” section.

The correct answer is that no one can be enough.

What is undisputed is the fact that in such a -called special administration regime (SAR), the financial and operational risks of the company are transferred from private to the public sector.

In the short term to the environment, the taxpayer will bear substantial financial risks. Thames has a plan to invest nearly 20 billion pounds in the next five years, while it has revenues of only 2.3 billion pounds a year.

The additional money comes from advance loans that the company pays through customer invoices for several years. In a jump, the advanced cost would be borne by the taxpayer.

In the longer term, when the company is sold back to the private sector, this money could be recovered – plus interest – from the sale revenues.

It is very difficult to estimate for what to sell Thames. Performing well -performance water companies sell for about 50% of the value of their assets. Thames assets are worth around 18 billion pounds on paper – which would give a figure of 9 billion pounds.

Given the age of those assets, the high operational costs of work around the high density of the population and its miserable history, it is very unlikely that Thames is sold for anywhere.

Whenever the government saves something with the intention of selling back in the private sector – it is always possible, probably, they can get less money than they put. There are many examples in this regard – including British steel and RBS.

As for the government, saving Thames comes at a cost that would negatively affect public funding during this Parliament.

Given the well-publicized, but self-imposed constraints on the chancellor, it is not difficult to see why the government would like to avoid it if possible.

The other advanced argument by Mr. Maynard in his call against the private rescue line of 3 billion pounds – is that he will be paid by customers. Ofwat again decided to intervene in this regard, writing to the court that the company will be prevented from recovering the financing costs from customers.

Thames itself claims that there are other reasons why an SAR would not be in the public interest. The new administrators have parachute to take care of a vast extension business would be poorly equipped to assume the task of turning around a company whose new management insists on formulating a clear plan.

Thames would be a company in Limbo with a small impulse to continue the task of mammoth. People close to this plan are afraid of the suppliers could also be protected from the payment conditions under the supervision supported by the Government.

These arguments can be stupid.

Attempts to prolong life in its current form of a company established with years of sub -institution, excessive salaries and dividends, weak regulations and climate change can be doomed.

But what many, including government officials and ministers, ask themselves – what is to be lost, leaving the company to go to restructuring and redemption of potential in the next few years?

If he fails, he fails, and the special administration is a mechanism that has been incorporated into the privatization system and will continue to be there in six months, one year – until we know if I can do it or not.