Utility Week understands the move was prompted by mounting board-level discontent at the progress of the turnaround plan. The company is also locked in long-running discussions about servicing its £14 billion debt pile.
According to Sky News the government and Ofwat have even discussed the possibility of using the special administration regime (SAR) – effectively nationalising the company.
High churn in senior management teams have left divisions and elevated stress across the organisation, a source told Utility Week.
An insider said the board had instructed management consultants to report on the company’s eight-year turnaround plan devised by Bentley, which concluded that it would not deliver the required transformation. Thames Water confirmed it had worked with external consultants to review the plan.
A spokesperson told Utility Week: “Progress has been made and we’ve always said the process will not be linear. As is normal in any turnaround it is important to review, take stock and adapt the plan every so often. Over the last few weeks we have been working with a consultancy firm to review the plan and help us ensure that our plan going forward is set up for success.
“When Sarah took over at Thames Water in 2020, she transformed the senior management team and put transparency and integrity at the heart of the Thames Water culture. Sarah has set Thames Water back on track to recovery. She feels this is the right time to step away now and allow a new CEO to take the reins on the next phase of this journey.”
But what will this next phase entail – and how much of Bentley’s turnaround plan will survive?
How Bentley’s tenure played out
When Bentley joined in 2020, she was initially welcomed throughout the sector and organisation as a breath of fresh air following Steve Robertson’s departure in 2019. However concerns quickly arose about her ability to lead the large organisation as cracks showed in the executive team.
Bentley joined from Severn Trent where she had transformed customer service as chief customer officer. Prior to that, she was managing director of Accenture’s digital business unit in the UK and Ireland. However, taking on the country’s largest water company was her first chief executive job. Prior to her appointment, UK Power Networks chief executive Basil Scarsella – who had already turned around the previously poorly performing electricity network – was reportedly offered the job but had declined.
Bentley brought in a whole new executive team and a huge number of senior managers also departed in the past two to three years. One commentator suggested it was not a cohesive team and tension was high across the organisation as everyone worked to turn it around.
Her detailed programme of work started with getting the basics right to bring the laggard of the water sector back into the pack performance-wise. Bentley recently told Utility Week it would take every day of those eight years to hit the goals.
She had just passed the second year of the plan, in that time complaint numbers were slashed, customer care teams were brought back inhouse from South Africa and the organisation completely upturned its approach to capital delivery.
However, pressure over pay and performance – particularly related to pollution incidents and combined sewer overflows – resulted in Bentley forgoing an annual bonus on the grounds that progress was slower than expected on the turnaround plan. This did little to appease critics.
Leakage was recently reported to be at its worst levels for five years. Bentley had written to the environment minister Rebecca Pow to indicate droughts last summer and the freeze thaw in December caused a far higher number of bursts than average.
The negative media coverage did not stop there, pollution incidents and publishing data on combined sewer overflows attracted press, public and political scrutiny. Last week, the Daily Star’s front page (‘You big drip’) was a personal attack on Bentley for explaining how weather impacts buried pipes and raises leakage rates.
The fallout
The company said Bentley was stepping down with immediate effect but remaining involved to ensure a smooth transition for her successor. In the interim, not one but two executives will cover the position. Cathryn Ross – strategy and regulation director – and Alistair Cochran – chief financial officer – will jointly take on the responsibility. Now all eyes will be on Cochran and Ross to see whether they continue with the plan, or change tack.
The suggestion that placing Thames in SAR, as had previously been considered for Southern Water, has been discussed shows the scale of the task now facing the duo.
Just two months ago, Utility Week revealed that chairman Ian Marchant – who guided the company between Robertson’s departure and Bentley’s arrival – was to step down. Will Ofwat and the government now seek to convince him to stay to help steady the ship while a fresh plan is put in place?
The timing, both for Thames and for the wider sector, could not be worse. Just over three months remain until its PR24 business plan needs to be submitted yet there are clearly significant concerns about the strategy underpinning it. This is all happening against the backdrop of increasing public and political pressure on the sector to invest in tackling pollution while keeping bills affordable. Having Thames back in the headlines for the wrong reasons will only provide further ammunition for the sector’s increasingly vocal critics.
Once again Thames finds itself in need of a white knight to ride to its rescue. But given the sheer scale of the task, the height of the stakes and the failings of the past, who would be qualified? And, perhaps more pertinently, who would want the job?