Consumers pay for Covid delays to London ‘super sewer’

Water regulator has warned of a ‘modest increase’ in bills after all but essential work was halted on the Thames Tideway Tunnel

Families could be hit by higher water bills after the builders of London’s £5bn “super sewer” warned it will be finished late and over budget due to coronavirus.

The 15 mile Thames Tideway Tunnel will not be complete until the first half of 2024, nine months later than planned, and building costs will rise by around £233m. 

Bosses have begun talks with water regulators over recouping some of the costs by increasing ’ bills. Thames Water, which take charge of the new sewer when it is finished, has said that annual customer charges will not rise by more than £25 per household.

Customers currently pay £19-a-year to fund the project.

Work started in 2016 on the under-river tunnel from Acton in the west to Abbey Mills in the east, and was expected to be completed within seven to eight years. It is designed to prevent raw sewage and rainwater flowing into the Thames. 

The project is backed by infrastructure investors such as listed firm International Public Partnerships and fund manager Dalmore Capital, whose portfolio also includes a 30-year licence to oversee operations on the M25.

In March, Tideway announced that all but essential operations would be halted over health concerns.

The company's official name, Bazalgette Finance plc, is a nod to London's original 19th-century sewer designer Sir Joseph Bazalgette, who designed London’s original sewerage system in the mid-19th century.

Workers in the tunnel boring shaft at Thames Tideway's Carnwath Road site in Fulham Credit: Heathcliff O'Malley  

It said: “Tideway is in discussions with [regulator] Ofwat on a package of measures that would mitigate the financial impact of Covid-19 on the company.

"We are making progress in these discussions and we expect to reach a full agreement in the coming months."

Tideway will hand the project over to Thames Water when it is completed. Its cost is already being funded by the water firm’s 15m customers.

Thames Water spent £1.1bn preparing for the works, with Tideway budgeting an additional £3.8bn to complete the tunnel. This is now expected to cost £4.13bn.

A spokesman for Thames Water said there would be no change to its original estimate that bills will rise by £20 to £25 per customer.

A spokesman for Ofwat said: “When the lockdown came, Tideway acted to find a pragmatic balance between protecting water customers, while safeguarding workers and the wider community.

"We are investigating the impact of Covid-19 on the project, which might mean a modest increase in cost. But, if Tideway hadn’t acted when it did it is possible that the cost and the impact on water customers would have been much higher.”

It comes days after bosses of fellow London mega-project Crossrail said the rail scheme's cost has ballooned by another £450m - taking the total bill to £18.7bn.