Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, what level of debt-to-equity ratio and other financial resilience thresholds her Department considers indicative of a water company's failure to manage its affairs.

Ofwat issues clear guidance on efficient debt-to-equity ratios and on higher debt-to-equity ratios which are inconsistent with good financial resilience. It considers that 55% is an efficient ratio and that gearing above 70% may present a risk to long-term financial resilience. Some water companies have significantly higher debt than these thresholds. In the Water White Paper, the Government committed to consider how the regulator can work with companies and investors to ensure companies do not accumulate unmanageable levels of debt.