Thames Water: nationalisation is not the way forward says new chairman

Thames Water's new chair has said nationalisation is not the right way forward despite the regulator warning the company has "deep-rooted" problems.

Sir Adrian Montague said he understood customer "frustration" over the UK's largest water firm's poor performance.

But he said the best way to resolve it was keeping the company under private ownership.

Thames Water has faced criticism over sewage discharges and leaks and is struggling under £14bn debts.

In June, there had been fears that the company could collapse and the government said it was ready to take it over. But since then, Thames Water has secured a £750m cash injection from its shareholders.

Appearing before MPs on Wednesday, Sir Adrian said "public ownership seems to be the answer to many questions, I think when you conduct a real evaluation, I think private ownership is still the way forward".

He added: "I can understand frustration of customers who want to see improvements, we would love to be able to deliver all those improvements overnight but it will take time."

There has been speculation that if Thames Water failed to secure fresh funds it could be temporarily taken over by the government until a new buyer is found, in what is called a special administration regime (SAR).

This route was most recently taken with energy supplier Bulb after it ran into financial difficulties.

Iain Coucher, chairman of water industry regulator Ofwat, told the committee of MPs that "at this point" he is "confident the shareholders will inject some cash".

But he warned that problems at Thames Water are "deep-rooted" and its current situation was a consequence of its under performance.

"They need to fix that as quickly as possible otherwise they will have the same problems in the future," he said.

Thames Water serves a quarter of the UK population across London and parts of southern England.

It leaks more water than any other water company in UK, losing the equivalent of up to 250 Olympic size swimming pools every day from its pipes.

Sir Adrian is the former chairman of Aviva and outgoing boss of Manchester Airports Group.