Thames super-sewer adds £160 to water bills while CEO takes home extra £1.7m
More than £160 will have been added to Thames Water bills to pay for the London “super-sewer” before the project is fully operational next year, analysis by The i Paper has found.
The Thames Tideway Tunnel, spanning 16 miles (25km) from Acton in west London to Beckton in the east, will capture, store and divert sewage away from the river.
It is one of the biggest upgrades to London’s sewage network since it was built by Joseph Bazalgette in the 1860s.
The aim is to ensure less sewage is discharged into the Thames during intense rainfall. Raw sewage under normal conditions goes to wastewater treatment plants but, currently, even a small amount of rain in London can overwhelm the network, triggering overflows into the river.
The cost of the tunnel’s development was initially estimated at £3.5bn, but the pandemic, inflation and engineering difficulties delayed the project by more than a year, so that it will not be fully operational until the latter half of 2025 – raising the estimate to as high as £4.61bn.
Thames Water customers have been covering the cost of the tunnel, along with an additional £1bn in preparatory work carried out by the water company, through annual charges on their bills since 2016.
So far, bill-payers have been charged around £136 for the project, with an additional £26 set to be added before its final completion next year, pushing the total amount up to £162.
At the same time, Tideway chief executive Andy Mitchell’s pay nearly tripled between 2021/22 and 2022/23, rising from £928,000 to £2,727,000 – more than £1.7 extra.
Tideway chief financial officer Matthew Duncan also enjoyed a threefold pay rise during that period, from £468,000 to £1,444,000.
Tideway said the increases reflected the payment of a “long-term incentive plan, which was accrued over several years and was linked to the achievement of milestones including the completion of the tunnelling phase of the project”.
The figures also include the bosses’ bonuses – which more than doubled for both Mr Duncan and Mr Mitchell – as well as their salaries, pension contributions and taxable benefits.
The annual cost added to each Thames Water household’s bills since work began has risen from about £12 in 2016/17 to £26 in 2024/25.
While Tideway has pledged that Thames Water customers will not pay more than £25 a year in 2014/15 prices (£33.4 in real terms) for the project, the regulator Ofwat has said bill-payers will have to fund the project “over an extended period” until its costs are fully covered.
An Ofwat spokesperson said: “Tideway will be subject to price reviews from 2030 so we can’t say what customers will pay from then on, but the tunnel has an expected asset life of over 100 years, with the cost being spread over an extended period — much like the mortgage on a house.”
As Thames Water teeters on the brink of bankruptcy, Ofwat provisionally approved a 53 per cent increase in its annual bills over the next five years, raising them from £436 to £667, to tackle its £15.2bn debt burden and crumbling infrastructure.
A Thames Water spokesperson said: “For around £2 a month on customer bills (£25 over a year), the Thames Tideway Tunnel, combined with previous upgrades we’ve made to our London sewage works and the building of the Lee Tunnel, will capture 95 per cent of the volume of untreated sewage currently entering the tidal Thames in a typical year.”
Tideway received £764.5m in shareholder loans with 8 per interest until they mature in 2064.
David Hall, visiting professor at Greenwich University’s public services international research unit, described the interest rate paid on shareholder loans as “excessive”.
He said: “It was a very high figure when it was first put up. It’s not far short of the rates that are being demanded to bail out Thames Water, which is 10 per cent. So it’s a very high rate.”
Since 2016, Tideway has received more than £484m in Thames Water customers, despite the project set to be fully completed till the latter half of 2025.
“We’ve been paying upfront before the [tunnel is] established,” Mr Hall said. “That’s an unusual way of paying for things. We don’t do that when we’re buying cars, for example – car companies aren’t charging us for developing electric cars in advance of them actually being up for sale.”
Ashley Smith, founder of the Windrush Against Sewage Pollution campaign group, said: “The claims that water privatisation would bring good value for money for customers have been shattered by 34 years of bitter experience.
“This so-called joint venture between bill-payers and private equity, with its delays, price hikes, ridiculously high pay packages, opaque reporting and high charges should ring alarms bells about Keir Starmer’s plans to let private funds continue to exploit captive bill-payers – while he refuses to consider the much better value option: public ownership.
“If bill-payers contribute massively to the joint project, as they have, how come it is only the private shareholders reaping the rewards?”
Matthew Topham, lead campaigner at We Own It, said: “It comes as no surprise that this project has overrun its budget, as English water firms regularly spend far more on infrastructure than their publicly owned European counterparts.
“These staggering figures show why the Environment Secretary must bring Thames into public ownership via special administration, just like [Tony] Blair’s transformation of Railtrack into Network Rail.”
A Tideway spokesperson said: “A key feature of the funding model is that investors are able to take a return during construction – this has been essential in attracting competitive financing rates and ultimately this benefits bill-payers because it keeps financing costs down.
“Tideway would not have been able to attract low-cost, long-term infrastructure and pension fund investment if no return was available until the end of the project.
“Despite the challenging global context of the last ten years, the cost of the project to bill-payers has stayed well within the original estimate.
“The supersewer is one of the most complex engineering programmes in the UK. This is a vital upgrade that will serve London for generations to come by protecting the River Thames.
“The project is already delivering benefits: it has started diverting sewage away from the Thames and will be fully operational next year.”
In October, valves at four of the tunnel’s 21 sites, which operate like giant gates, opened, capturing 600,000 square metres of sewage over a 24-hour period after heavy rainfall on 23 September, according to Tideway.
