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Emma Lewell (in the Chair)
I thank all hon. Members who were eagle-eyed enough to spot that my name has changed. The nameplate in front of me is correct and accurate.
Luke Taylor (Sutton and Cheam) (LD)
I beg to move,
That this House has considered Government support for Thames Water.
It is again a pleasure to serve under your chairship, Ms Lewell. I thank the Backbench Business Committee for granting me this important and extremely topical debate. I also thank hon. Members from across the House for joining me this afternoon. I hope that we are all of the same opinion on the problem, although we might well differ slightly on the solution.
Sixteen million Britons are gaslit daily by Thames Water. The company has unleashed filth in our waterways and homes, while cutting deeper and deeper into our personal finances. When I think about the performance of Thames Water, I imagine the very excrement it fails to manage. Despite all the years of historic under-investment in favour of profit, the business has been run into the ground. It now finds itself on the brink of collapse, counting down its days of cash remaining, as we all saw in the recent documentary. It makes an absolute mockery of the water utility industry that fat-cat shareholders are enjoying obscene payouts and company executives rake in sky-high salaries and bonuses, all while our rivers and our wallets suffer. River ecosystems are dying, and our children are denied the joy of swimming in nature because of the threat of swallowing human waste.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
I congratulate the hon. Member on securing this important debate. It is beyond clear that my Slough constituents are not happy with Thames Water—in fact, recent figures demonstrate that this company is one of the worst scoring for customer satisfaction for the fourth year in a row. We all know that the last Conservative Government had a rotten record on water companies: they were laden with debt and there were ridiculous executive bonuses and sky-high bills. That is not a sustainable future. Does the hon. Member agree that the Government must ensure that customers and our environment are at the heart of future reform and regulation in the sector?
Luke Taylor
I completely agree that customers and residents, our constituents, must be put at the heart of any solution. We must find a way to ensure that people do not have to endure this anymore. As the hon. Member correctly says, there customer satisfaction ratings have been absolutely awful, which alone gives us a credible excuse to raise their concerns in this place.
To go beautifully back on to the script, just this Tuesday Thames Water customers were slammed with a 31% hike in their bills, in the middle of a cost of living crisis, to pay for this utterly appalling service. I say “customers”, but those of us unlucky enough to call Thames Water our provider are more like prisoners. I say that because choice in this market is an illusion. In this country, taxpayers cannot choose their water utility company. They are trapped. This afternoon I shall argue that the only way this Government can support Thames Water is by saving it from itself.
Calum Miller (Bicester and Woodstock) (LD)
I am very grateful to my hon. Friend for securing this debate. My constituents in Bicester and Woodstock are fed up of Thames Water providing a poor service yet continually hiking the charges for it. I am thinking of constituents like Martin, who lives in Bladon, whose toilet floods regularly because of a collapsed sewer and who now has a tanker parked outside his house 24/7 because Thames Water has so delayed making the repairs. Does my hon. Friend agree that we need a reset at Thames Water after years of financial and operational failure? Does he further agree that the Government are quite wrong to be resisting special administration, which would be the best way to ensure that the financial mismanagement of the past sits rightly with the vulture funds and bondholders and not with future bill payers?
Luke Taylor
My hon. Friend is absolutely right to say that the burden must lie on the vulture funds, and his comments are as wise as the residents of his Bicester and Woodstock constituency.
We Liberal Democrats have long called for action to reform this lousy company. It has been clear to us for a very long time that the current position is untenable. Recognising that it is fundamentally broken, we have no fear in stating exactly what we need: to rip it up and restructure it, so that it can finally work for our constituents.
To make my argument, I will begin by touching on the sheer mess that the company is in. Naturally, many of the points I make will come as no shock to the hon. Members across this House whose residents are flooding their inboxes as Thames Water floods our rivers with sewage. I will then outline why the Government must, with the utmost urgency, put this failing water company into special administration. Finally, I will argue that the only way that this Government can support Thames Water is by scrapping Ofwat and finally getting a regulator that uses its teeth.
Thames Water is knee-deep in a nightmare of its own making. In 2024, it set a new record by pumping 50% more untreated sewage into our waterways. In 2023, the company was named the worst performer in England and completely failed to meet its own performance metrics. In 2022, it made an extra £500 million in profit despite pipe bursts during a heatwave that caused a regional drought and a hosepipe ban. Untreated sewage now pumps through waterways in southern England like it is part of the furniture.
I fear that, were it not for the new Thames Tideway tunnel, which I was fortunate enough to visit recently, our river would be destined for the unmanageable decline that turns waterways into open sewers, like something straight out of a Dickens novel. Humans can choose not to go in the water, but flora and fauna have no such luxury. We are advised not to let our dogs swim in the river, because they may die from the pollution. Rare chalk stream habitats are being decimated by floods of untreated waste. These precious ecosystems are dying. They have no choice but to endure the toxic chemicals from Thames Water’s outflow pipes.
Thames Water’s sewage problems stem from a systemic failure to update its outdated, mostly Victorian infrastructure. High-risk infrastructure is given ad hoc fixes, with zero communication to customers. The company’s approach to fixing water facilities in Southwark, in London, is a prime example of this reckless approach. Last year, the chief executive had the audacity to blame excess storm overflows on climate change. Yes, climate change is real, and it is causing more intense rainfall and more regular storms, but let me ask Thames Water this question: how long have we known about this, and why did Thames Water not invest annually in its crumbling infrastructure to handle this well-known challenge?
Instead of prioritising the environment and local communities, Thames Water chose to line the pockets of its executives, its shareholders and the vulture funds that owned it. In 2023, the company paid £196 million in dividends, and over the past four years £62 million has been paid out to company executives in bonuses. This has been done at a time when the company is drowning in debt, which currently stands at a whopping £19 billion. Startlingly, more than 25% of customer water bill payments are spent on paying interest on the company’s debt. That is our money paying for the company’s mistakes.
Now, we are told not to worry; everything is in hand because US private equity group KKR—Kohlberg Kravis Roberts & Co.—has been selected as the preferred bidder to take control of Thames Water. This is not a British company, and it has no stake in British communities. We have no reason to believe that a private equity group based in the United States will act as though it has any obligation other than to itself. Northumbrian Water, in which KKR has a significant stake, was responsible for more than 40,000 sewage spills in 2024. What will change if it takes over Thames Water? Enough is enough. The Government must step up.
Mr Dhesi
The hon. Member is making a hard-hitting speech. The scale of the water bill increases has left many of my more vulnerable Slough constituents very anxious about how they will pay their bills. As he rightly points out, in recent years, while customers struggle, water companies including Thames Water have pumped record amounts of sewage into our rivers, paid their bosses millions in bonuses and failed to invest adequately in vital infrastructure. Does the hon. Member agree that the Government must take firm steps to stop this exploitation of the environment and of our people, and that water companies must now step up to the plate to protect their most vulnerable customers?
Luke Taylor
I absolutely agree, but I fear Thames Water’s lack of ability to do that, simply due to the debt pile and the situation in which the company finds itself. The hon. Member’s words on behalf of his vulnerable residents clearly come from a deep wish to serve them.
The Government must step up. They must not support Thames Water—the motion is somewhat misleading—but they must support customers throughout the south by finally doing what has long been necessary. Indeed, the first draft of the debate title I submitted to the Backbench Business Committee was, “10 things I hate about Thames Water”—my researcher will appreciate me getting that in—but alas, we were not able to bring it forward.
The Government must place Thames Water under special administration. I do not lay all the blame at the feet of the current Government. We all know that for far too long the Conservative Government stood idly by while Thames Water poisoned our waterways. But with each passing day this Government must surely recognise the growing urgency of action; if they do not, it will become their fault.
Under special administration the state can temporarily take control of this collapsing company. The day-to-day operations would carry on as normal, but the board that has bled the business dry would be gone—restructured and replaced. The greedy executives who have pocketed millions in bonuses while running the company into the ground would be stripped of their bonuses. There can be no more fat pay cheques while they fail customers. Taxpayers would no longer be forced to watch helplessly as their bills rise like the water level, slowly drowning them just to cover the company’s massive and foolish debt.
With new leadership there is a chance for a new direction. Under special administration the company could finally implement a meaningful plan to tackle the sewage crisis that has plagued our waterways for far too long. No longer would our streams, rivers and lakes be seen as expendable. The £3 billion debt lifeline that Thames Water has just secured will not last forever. All it serves to do is to preserve a broken status quo. The company has proven time and again that it is not fit for purpose. If this Government do not act now, how much more of our constituents’ money will be flushed down the drain? I am begging the Government—literally begging —to listen to our anger, save us from Thames Water’s incompetence, and take steps to ensure that the next iteration of Thames Water, and other water companies across the UK, cannot get away with this kind of behaviour.
It all starts with setting up a proper water company regulator that actually does its job. Ofwat is an utter disgrace. It is asleep at the wheel and complicit in the chaos caused by the company. The regulator has sleepwalked through the mess that is Thames Water, now greenlighting a 35% hike in bills over the next five years. It has turned a blind eye to the outrageous profits and bonuses pocketed by Thames Water shareholders. It has sat leisurely by as the water companies refused to properly update their crumbling infrastructure. It has repeatedly refused to set meaningful environmental targets for water companies to improve the quality of our water. The regulator is, through its inaction, helping Thames Water to fleece the taxpayer and carry out its dirty work.
It is time to scrap Ofwat and replace it with a new regulator, one with real teeth that, in the great tradition of anti-trust and community-first capitalism, is not afraid of a fight and will square up firmly to those who benefit most from a broken system. We need a regulator that is not afraid to be bold and ambitious in fighting for the best for the British people. We expect nothing less from the Government, so why should we shrink from demanding it from the regulatory arms of the state? Indeed, if the Government hold themselves to that standard, why should they hold their agencies to anything less?
The fact is that our constituents are being utterly let down. We cannot go on like this. Across the board, the water industry needs wholesale reform, but right at the heart of the scandal, wallowing in a stinking mess of its own making, is Thames Water—a company that was set up to serve the public but has instead become a paragon of failure, debt and daylight robbery. The Government do not have long. They must act swiftly to rescue the idea at the heart of the company—the idea, which I hope has not been fully eroded or caked in sludge, that a utility company, working in collaboration with Government, can be a force for good governance.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
I am sure the hon. Member is wondering why a Scottish MP is speaking in a debate about Thames Water. I absolutely agree with his concerns about Thames Water, but the model he seems to be proposing is very close to what we have with Scottish Water, which I am sure he has done a lot of research on. He will know that sewage was dumped into Scotland’s rivers and lochs for over 600 hours a day in 2023, and we do not monitor our water discharges anywhere near as closely as England. I therefore urge caution. The model he is proposing does not work in Scotland. The Scottish Environment Protection Agency, despite having the powers, does not use them in the way he might want.
Luke Taylor
I genuinely thank the hon. Member for his intervention. It highlights that there is no silver bullet. The solutions that we propose are complex and difficult; they require monitoring and oversight of infrastructure plans, and properly phased, long-term planning and investment to prevent the discharges that we see under the current system. Only through the proper process—upgrading holding tanks, for example, or upgrading the technologies used to filter and clean the water before the effluence is put back into the river—can we see improvement. His challenge is fair and welcome; the solution not a silver bullet.
To conclude, a utility company, working in collaboration with Government, can be a force for good governance and good management of our environment, and give good value to bill payers. Imagine looking at a water bill and thinking, “This is good value!” I promise that there is a future like that, but that is what is at stake. The Government must act now to sort out the mess and establish that in this country, utility companies can thrive only when they take seriously their responsibilities to the environment and to us, rather than solely the pursuit of profit.
Bell Ribeiro-Addy (Clapham and Brixton Hill) (Lab)
It is a pleasure to see you in the Chair, Ms Lewell. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing the debate and for not supporting Thames Water; I am very pleased to hear that.
I do not think anyone has been deluded into thinking that Thames Water is doing a good job—certainly not me or my constituents. Since I was elected to this House, hardly a year has passed without another major water infrastructure issue that leaves hundreds of my constituents without water for days on end. That is not to mention the years that I have lived in my constituency and been a victim of Thames Water’s extremely shoddy service. Apart from three years in Yorkshire, I have had to endure Thames Water for the entirety of my life, and it has shown very little concern for the impact that it has.
In 2023, a burst water pipe on Brixton Hill left residents without water for three days. Last July, on one of the hottest days of the year, residents of Clarence Avenue had their water shut off without any prior notice. As recently as December, faulty valve pumps in Brixton left homes without water for more than four days. Those are just the most recent incidents—as I said, there have been a number of them since I was elected.
The residents of Clapham and Brixton Hill are not the only ones who will have experienced those disruptions in service, so Members can imagine my constituents’ outrage when, in the wake of poor service and increased bills, they see Thames Water’s shareholders and directors receive millions of pounds in dividends. In October 2023, Thames Water made interim dividend payments totalling £37.5 million to its holding company, Thames Water Utilities Holdings Ltd, while the pipes were literally rotting under our feet. In March 2024, the company made further dividend payments amounting to £158.3 million, from which shareholders received non-cash benefits, all while the quality of water has continued to decline every single year.
Thames Water chairman Sir Adrian Montague was accused of a conflict of interest over the £37 million in dividend payments that were made to shareholders in February 2025. Under his tenure, Thames Water paid £195.8 million in dividends, breaching Ofwat rules. Ofwat fined it just £18 million, but Thames Water paid zero pounds of that £18 million fine. I agree with the hon. Member for Sutton and Cheam that Ofwat is also unfit for purpose.
Others may have a better understanding of how such things work, but I do not understand how a company that is in debt and failing, and that has damaged infrastructure, has the money to pay dividends to its shareholders. While my constituents’ taps run dry, the fat cats of Thames Water are literally turning theirs on—but not to drink the water of course, because they know better.
The cherry on the sewage-filled cake? On Tuesday, my constituents and millions of Thames Water customers woke up to what would have been the world’s worst April fool’s day joke—the grim reality of a 31% bill increase. One constituent wrote to me because they are experiencing a 45.8% increase in their monthly bill, from £36.55 to £53.30 a month. The service will remain shoddy, but the price that customers are made to pay will rise. Thames Water is rinsing my constituents, pouring sewage into our waterways and siphoning off money to shareholders, and hiking up bills to pay for it.
It is fair to say that Thames Water’s management are comparable with what the company is dumping in the Thames—crap. They are just crap. They are running the company’s finances into the ground and relying on the Government to bail them out, all the while leaving my constituents in the vulnerable position of having no running water at times. If they are relying on the Government to bail them out, we taxpayers are literally paying them twice. Clearly, they cannot be trusted to operate such a vital service legitimately, and they certainly should not be allowed to pocket thousands of pounds in the process.
I do believe that the Government should be supporting Thames Water—supporting it back into public ownership. That is the only support that they should give it. Rather than a US private equity firm being allowed to take it over, it should be taken over by the Government and made accountable to its service users, the British public. Those who are against nationalisation on an ideological basis will say that competition is needed to ensure innovation and the best service, but there is no competition for Thames Water. Which other water company can my constituents switch to when the service is poor?
It makes no sense to me that a new private company should be allowed to take over and reap the profits with little incentive to provide a better service. My constituents deserve a better service, and the continued private ownership of Thames Water will not bring that. Public ownership will not solve every single issue with Thames Water, but it will certainly solve more than allowing an American company to take it over and profit off the backs of my constituents.
Sarah Olney (Richmond Park) (LD)
It is a pleasure to serve under your chairmanship, Ms Lewell. I thank my hon. Friend the Member for Sutton and Cheam (Luke Taylor) for securing this debate and for his stirring opening remarks.
The Government have repeatedly referenced the £22 billion black hole that they inherited, but there has been far less reference to the debt accrued by Thames Water, which is comparable with that figure. Company executives have received hefty bonuses, and shareholders have taken billions of pounds in dividends out of the company, but Thames Water customers are seeing their bills rise by an average of 35% over the next five years. During a cost of living crisis, and on top of other mounting bills, this rise is extremely concerning for many of my constituents. What is even more alarming is that Thames Water does not believe that the bill hike is sufficient to meet the targets set by Ofwat, and it has since referred the final determination to the Competition and Markets Authority.
The Liberal Democrats have been calling for Thames Water to be placed into special administration, as it has shown that it cannot be trusted to provide a service that does not degrade our environment or line the pockets of its shareholders. In response to those calls, the Government have implied that Thames Water is not breaching its statutory duties, and therefore that intervention is not under immediate consideration.
Thames Water has repeatedly shown an inability to undertake its basic duties. In my Richmond Park constituency, Kingston Vale residents have had to endure almost constant traffic chaos in their neighbourhood, as Thames Water has repeatedly had to attend to a burst sewage pipe. A constituent reported to my office that sewage spills over the road following a leak. Thames Water recently agreed to replace the pipe, having resisted it for years. I am sure that the Government would agree that people should not have to put up with unfiltered sludge spilling on to their pavements.
Senior managers at Thames Water acknowledge that many departments are understaffed and, by their own admission, do not have the funds to invest in critical infrastructure to prevent leaks and sewage-dumping into our rivers. In a recent BBC documentary, some staff members even admitted to presenting favourable statistics when measuring the concentration of E. coli in the Thames. The cleanliness of our rivers should not be a public relations exercise. It is extremely important that Thames Water is held to account for polluting our rivers.
In 2024, Thames Water was responsible for 298,081 hours-worth of sewage spills. A freedom of information request by the Liberal Democrats discovered that Ofwat has collected not a penny of fines for that disregard of our environment. By not replacing Ofwat with a regulator with teeth, the Government are not installing a sufficient deterrent to ensure that Thames Water takes action to prevent such environmental incidents.
Given Thames Water’s current financial situation and operational capacity, as well as recent reports that KKR—which boasts a similarly poor environmental record with Northumbrian Water—plans to buy the company, does the Minister believe that Thames Water has the capabilities to prevent serious environmental hazards from repeatedly occurring?
Will Stone (Swindon North) (Lab)
I thank the hon. Member for Sutton and Cheam (Luke Taylor) for bringing forward this debate. I am a little surprised that there are only 10 things he hates about Thames Water; my list is significantly longer. It is a really important debate. I wanted to come into it with a balanced view, and not just slate Thames Water, but it is incredibly hard. I feel that Thames Water is systematically failing the public on pretty much every level. We have seen a lack of investment in infrastructure, which has resulted in mass pollution, the needless deaths of thousands of animals and fish and destruction to our natural habitat, which is completely unacceptable. At the same time as not investing, Thames Water has been paying out astronomical fees to its chief executive, and to its shareholders in dividends—that is completely ridiculous, and it is being passed on to my residents. We need to look at changing that.
Let me flip the page to other Thames Water failures and look at its customer service: it was attempting to charge a resident in Swindon North over £11,000, saying he was using an Olympic-sized swimming pool of water weekly. He battled for over a year, getting nowhere. It took one email from me to get Thames Water to come out and look at it—shock horror, he was not using an Olympic-sized swimming pool. Thames Water actually owed him money. It should not take a Member of Parliament emailing to intervene—that is completely wrong and unacceptable. Thames Water needs to be more accountable to the public.
In Swindon we also have flooding, like in every constituency. We have it from Priory Vale to Stratton St Margaret. Thames Water has agreed that it is at fault and that this is its problem, yet has done nothing about it. That is unacceptable. Residents cannot remortgage their house or move on, and are trapped in a situation where they have to accept that every year their house will flood while, once again, Thames Water makes more profit. That is completely shoddy and unacceptable.
We have also heard today about the increase in prices. I urge Ofwat to reject Thames Water’s new claim to increase prices. As we have said, Thames Water is not delivering and not accountable. What metric is it actually succeeding on? This is unacceptable. I am sure that everybody in this room would say that Thames Water should not increase its prices. I am pleased that the Government are planning to introduce more regulation, to monitor the sewage systems more and to give Ofwat more power. I just want to see it use that power.
I again thank the hon. Member for Sutton and Cheam. I thought that the debate would be a bit busier so I did not plan a long speech, but this issue is vitally important, and I look forward to hearing what the Minister has to say.
Munira Wilson (Twickenham) (LD)
It is an absolute pleasure to serve under your chairmanship, Ms Lewell. I congratulate my hon. Friend the Member for Sutton and Cheam (Luke Taylor) on securing this important debate. It is being held only a short time after we found out that Thames Water pumped an incredible 298,081 hours-worth of sewage into our waterways in 2024, attacking our natural environment and undermining public trust. All this was at the same time as continuing to pay significant bonuses to its bosses and dividends to its shareholders, while demanding that taxpayers foot the bill. It beggars belief.
The slew of scandals, the lack of trust and concerns about water quality, not to mention the parlous state of Thames Water finances that my hon. Friend the Member for Sutton and Cheam so eloquently outlined, are exactly why I and local campaigners are fighting Thames Water’s controversial proposals to pump treated sewage into the river at Teddington in my constituency. The Government have the power to take that scheme off the table, as the shadow Minister, the hon. Member for Keighley and Ilkley (Robbie Moore), knows from when my hon. Friend the Member for Richmond Park (Sarah Olney) and I lobbied him before the last election. The new Minister, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Kingston upon Hull West and Haltemprice (Emma Hardy), also has the power to take the scheme off the table. I will outline why the scheme should not go ahead, which links to the subject of the state of Thames Water’s finances.
The river is at the very heart of the community in my constituency, with paddle boarders, rowers and wild water swimmers from not only our local community but from further afield coming to use the river, and residents are extremely worried about the environmental impact of the proposals, including on human health, biodiversity, wildlife, and of course water quality.
Sarah Olney
My constituents in Ham and north Kingston on the opposite bank of the river from my hon. Friend’s constituency in Twickenham are particularly concerned about how the construction impacts will affect the Ham Lands nature reserve. We have not heard enough from Thames Water about exactly what its plans are for that. Does she agree that Thames Water needs to be much more up front about what exactly it plans to do?
Munira Wilson
Absolutely. A lot of those environmental and social impacts have yet to be set out in detail. My hon. Friend and I are both eagerly awaiting, as are thousands of our constituents, the environmental impact assessments and the statutory consultation, which I believe will start later this year.
Thames Water keeps telling us that water quality will not be compromised, yet it has failed to assure us that dangerous compounds and chemicals, including PFAS— perfluoroalkyl and polyfluoroalkyl substances, or so-called “forever chemicals”—which I have talked at length to the Minister about, will be filtered out. Its environmental track record tells a different story and residents are understandably sceptical. Thames Water insists that the proposals represent the best value option, yet it has failed to show to the community and elected representatives its workings on how it has got to that best value definition.
The company has a proven history of failing to invest in infrastructure and in the essentials, while pouring millions of pounds of bill payers’ money into short-term fixes that do nothing but produce new assets for the company to borrow against. Indeed, that is what many residents are suspicious the scheme is about: trying to load up its balance sheet to be able to leverage yet more debt.
Just as Thames Water declared itself to be on the verge of collapse, the Government approved a £300 million infrastructure project that, by the company’s own admission, will be used only once every two years and save only one tenth of the hundreds of millions of litres of water that Thames Water loses every day through leaks. This is after Thames Water spent some £250 million on the Beckton desalination plant back in 2012, which was meant to improve water resilience in London, but has barely been used. When I questioned Thames Water’s chief executive officer about it, he told me that it did not work as well as it was meant to—I kid you not. This leaves Thames Water customers in my constituency rightly asking why they should pay the price for its mismanagement. If the Teddington direct river abstraction does get the green light from Government, will it deliver the benefits that Thames Water claims it will to warrant the environmental impact, both on our river and indeed on its shores?
It is the issue of trust that is so important to public confidence in our water companies and our water infrastructure. The public ought to have confidence that the companies responsible for our most basic human need, clean water, are acting in their best interests, not in the interests of shareholders and executives. Time and again Thames Water has eroded that trust and proven itself unworthy of the public’s confidence, and throughout it has been our constituents who have been asked to pay up for the failures and the mismanagement of the company. Over a quarter of bill payers’ money is spent simply on servicing water company debt. Worse still, while Thames Water pleads poverty, its executives slip out the back door with eye-watering bonuses.
Where is the accountability? Where is the justice for those who suffer the consequences of their negligence? As my hon. Friend the Member for Sutton and Cheam has set out, the Liberal Democrats have a strong record on this issue. I pay tribute to my hon. Friend the Member for Witney (Charlie Maynard) and his attempts to hold Thames Water to account in the courts and challenge it for its horrendous behaviour. He has been absolutely outstanding. I thank him for everything he has done with his tremendous campaign.
We must put an end to the cycle of environmental negligence and financial mismanagement. Thames Water is on the brink, and placing it into special administration is the only way to prevent a full-scale collapse. Meanwhile, Ofwat lacks the authority to hold failing water companies to account, and unless the Government take decisive action, they risk the same weakness. It is time, as my hon. Friend the Member for Sutton and Cheam has already said, to replace Ofwat with a regulator that has real enforcement powers and the full backing of the Government behind it.
The bottom line is that we need to crack down on failing water companies, not prop them up. With customers paying ever higher bills and our precious environment at risk, the Government must go much further, much faster, in reining in these companies.
Daniel Francis (Bexleyheath and Crayford) (Lab)
It is a pleasure to serve under your chairship, Ms Lewell. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing this important debate. Like all of us here today, I have been contacted by dozens of constituents who have been affected by problems with Thames Water’s service and, of course, the recent increase in their Thames Water bills. A family of four in my constituency have been in touch to say that their water bill alone has increased by almost £300 a year because of the recent increases. That increase for working families is unsustainable and causes more financial instability for families across my constituency of Bexleyheath and Crayford.
Alongside that increase, as we have heard, the service that has been provided to constituents continues to not be good enough and is affecting residents on a daily basis. Years of under-investment, particularly in infrastructure, due to the previous Government’s weak regulations have created an unreliable system for which the public are now expected to foot the growing bill. It is not unusual for Crayford High Street, in the second main town centre in my constituency, to be closed for a month or two due to water leaks, as has happened on several occasions in recent years, diverting hundreds of residents who use that road for the school pick-up, commuting to work, visiting the shops in the town centre and getting on with their lives.
Many constituents, while finding the closure of the road inconvenient, would support the occasional closure if it improved services—but the problems continue. In my 20 years as a local councillor until last year, I saw the situation get worse as that infrastructure got worse year on year. Leaks due to poorly maintained infrastructure are common across roads in each part of my constituency —in Barnehurst, Bexleyheath, Crayford, Northumberland Heath and Slade Green. As a result, we see constant road closures and great inconvenience to residents across the constituency.
I was pleased to support the Government’s Water (Special Measures) Act 2025, which became law earlier this year, and the announcement of an independent commissioner for the water sector and its regulation will be welcomed by many constituents across Bexleyheath and Crayford. However, I look forward, after the stories we have heard, to hearing the Minister’s feedback on what further action can be taken to ensure that Thames Water delivers valuable upgrades to both its infrastructure and its work to stabilise prices, which continue to cause great concern for my constituents across Bexleyheath and Crayford.
Charlie Maynard (Witney) (LD)
It is a pleasure to serve under your chairmanship, Ms Lewell. I thank my hon. Friend the Member for Sutton and Cheam (Luke Taylor) for securing this debate on Government support for Thames Water. What does Government support for Thames Water look like? Our current Government support Thames Water by letting it breach the terms of its operating licence, letting Ofwat ignore its own rules, letting consumers take the pain of higher bills for no gain, letting financiers make out like bandits and letting our rivers continue to be filled with sewage. What is shocking about that is that a Labour Government are doing it. This Government are turning out to be every bit as bad as the Conservatives were at protecting our rivers. They are completely ducking their responsibilities. It is within the Minister’s powers to take action: she is the Parliamentary Under-Secretary of State for Water and Flooding at DEFRA, DEFRA oversees Ofwat, and Ofwat issues operating licences to water companies.
Here are some of the key requirements that Thames Water needs to comply with, per its Ofwat-issued operating licence. First, there is an operational requirement to comply with environmental and health standards. Thames Water is failing that requirement. As per Environment Agency data, and as my hon. Friend the Member for Twickenham (Munira Wilson) said, in 2024 Thames Water discharged nearly 300,000 hours of sewage, which is 50% up on 2023. It is illegal to dump sewage in dry conditions, but it is happening repeatedly. Professor Peter Hammond, who lives in my constituency, monitored the Stanton Harcourt sewage treatment works in my constituency, and found that there had been 266 illegal spills in just a single sewage treatment works in a four- year period. That is a complete failure of that operating requirement.
Secondly, Thames Water is failing the financial viability requirement, under which it is required to have two licences of investment-grade credit ratings. Currently, it has no credit ratings that are investment grade. Standard & Poor’s has the company’s debt 12 notches below investment grade, and Moody’s has it nine notches below. That is as far deep into junk bond territory as one can get. In the last financial year to March 2024, Thames Water had £19 billion of debt but only £1.2 billion of cash in. Everybody knows that that is not a sensible way to run a company.
By allowing Thames Water to breach that rule, we introduce moral hazard into the water sector and all other regulated sectors. Other water companies take note that there has been no material sanction of Thames Water and realise that they can also likely get away with it. Of the nearly £1.4 billion of funding due to come into the company, £900 million is going straight out in interest expenses, sweet financial goodies for hedge funds, and advisory fees. That is not fair on our bill payers. Customers are being royally stuffed, and Ofwat and the Minister’s DEFRA team are standing by.
Thirdly, there is a requirement to demonstrate fairness, transparency and affordability to customers—the fair pricing requirement—and Thames Water is failing at that too. Bills have gone up by a headline of 31%. Many Witney constituents have written to me with increases of 50% and 70%—in one case, it was even 93%. On top of that, to add insult to injury, Thames Water has an application to the Competition and Markets Authority to increase bills even higher, by 59%.
Fourthly, there is the ownership requirement. This one really gets my goat. Thames Water must inform Ofwat of any change to control. Ultimate controllers are defined in Ofwat’s papers as being
“in a position to control or in a position to materially influence the company”.
Thames Water’s own advisers have publicly stated that the company is de facto controlled by its creditors. Ofwat is ignoring this. Extraordinarily, Ofwat, wrote to me in the last month to say that, despite it being publicly stated in the press that Omers, a shareholder in Thames Water, had written its stake down to zero and pulled its board representation off last May, it is still actually controlling the company. Why is this going on? What could be going on here? It smells—
Charlie Maynard
Yes, it does. I think Ofwat is doing exactly what the company’s creditors want it to do, and I wonder why that is happening, because it should not be.
Finally, there is a failure to innovate. There are a host of technologies out there, and far too often we hear the same old lines about Victorian sewers, cameras and how impossible it all is. There is a huge range of leak detection, pipeline monitoring, protective maintenance, trenchless pipe repair and pressure management technologies. I hear from Oxfordshire firms that it is easier to sell sewer technology solutions into the US and Europe than into the UK, so something is going seriously wrong. We could start by looking at whether the incentives are effectively aligned; I do not believe they are.
What are the consequences of this failure to act? It is easy to lay a lot of the blame at the last Government, but the Water (Special Measures) Act 2025 was more window dressing than action. I am new to Parliament, but I was particularly dismayed that not a single word of a single proposed amendment from any party was accepted by the Minister. I wish that in Parliament we all had enough confidence to accept good ideas where we found them—I live in hope.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
On that point, the hon. Gentleman is incorrect. Actually, compromise amendments were reached on a few occasions, so I want to gently push back on what he says. Cross-party amendments in the other place, where the Bill began, were discussed and accepted, so it is factually incorrect to say that no amendments were accepted.
Charlie Maynard
None of the 60 amendments in the Commons, or however many there were, was accepted. The rejected proposals included putting flow meters on the outflows of sewage treatment works, which is sort of logical; establishing targets to reduce pollution over time, using existing benchmarks of hours of spilled sewage; making sewage treatment works’ calculations more transparent; and bringing environmental experts and consumer representatives on to water boards.
The Labour Government are now allowing a public utility company to line the pockets of bankers and hedge funds at the expense of bill payers. As someone said in the Financial Times this week,
“with water, it’s a total monopoly and a total shambles. A shambopoly if you will”.
The Government’s support for Thames Water essentially amounts to unconditional support for the company’s creditors, at a direct and massive cost to its customers.
What do we need to do instead? First, we need to put the company out of its financial misery and put it into special administration. We should allow its debt to be massively written down to something like three times the cash flow or thereabouts. If the debt is reduced, the company will have a sufficiently strong balance sheet to allow it to invest in the infrastructure we desperately need and to spend our bill payments on fixing treatment works and pipe networks, rather than paying interest. We should allow water companies coming out of special administration to be mutually owned by their customers and professionally managed. We should set pollution baselines and pollution reduction targets and get serious about putting transparency targets and technology to work to clean up our rivers.
Special administration is clearly the most logical option at the moment, but I believe that the Government are shying away from it because of threats of legal action against them, phantasmagorical scenarios of financial Armageddon, or both. Please do not let Thames Water’s lobbyists, including Ruth Kelly, the ex-Labour Minister who is now chair of Water UK, to scaremonger you out of taking the action that 16 million consumers—your electorate—need. Those scenarios are patently not true, and it is best to ask Thames Water about that. As per page 92 of the independent expert report from Thames Water’s adviser, Teneo, the net cost to the Treasury of taking the company into special administration, even in the worst-case scenario, is zero—please look it up.
Instead, we now have this bizarre situation whereby a Labour Government are cheerleading the American hedge funds and private equity funds taking over our largest water company and making a massive profit out of its customers. What goes for Thames Water will very likely go for the rest of the sector, so the signal that you and your Government are sending the sector—
Emma Lewell (in the Chair)
Order. I do not wish to spoil the hon. Gentleman’s flow, but we use the same conventions in Westminster Hall as in the main Chamber. You should not use the words “you” or “your” unless you are referring to me.
Charlie Maynard
Many apologies to you, Ms Lewell, and to the Minister.
The signal that the Minister and the Government are sending to this and other regulated sectors is simply terrible. All that customers in my Witney constituency and across the whole catchment really want at this point is reliable, affordable, clean water to our homes. We want local rivers and lakes not to have sewage poured into them on a near-daily basis. We want a Government who are serious about putting the interests of customers and our rivers before the interests of hedge funds and private equity funds. Please stop letting us down.
Robbie Moore (Keighley and Ilkley) (Con)
It is a pleasure to serve under your chairmanship, Ms Lewell. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing this really important debate. It was good to listen to all the contributions. As we all know, water is vital and we use it every single day, so it is deeply concerning that we have such great challenges in our water industry, particularly those that have been highlighted with Thames Water.
Under the last Government, we uncovered the true extent of the issues with our water system by increasing the monitoring of storm overflows, which no political party or Administration had previously attempted. Back in 2010, just 7% of storm overflows were monitored, but when we left office, 100% were monitored. That gave the Government and our regulators a proper and true understanding of the way in which those storm overflows were being used by our water companies.
John Lamont
I pay tribute to all the work that my hon. Friend did as a Minister. He has highlighted the percentage of overflows that are now being monitored in England. I am sure he is aware of research by Surfers Against Sewage confirming that 100% of storm overflows in England are now being monitored. In Scotland, the figure is only 4%. Does that not show the huge difference between what is happening here in England, which is not ideal by any stretch of the imagination, and what is happening in Scotland, which is far, far worse?
Robbie Moore
I thank my hon. Friend for his intervention. Yes, that is the point: for any Government, regardless of political colour or make-up, to deal with the challenge, they need to understand the true extent of what they are dealing with.
It is frustrating that north of the border only 4% of storm overflows are being monitored. In reference to what is happening with Scottish Water, and to what the devolved Administration north of the border are doing in the Scottish Parliament to tackle challenges of pollution, how can any proper strategy be put in place with no reference point? That is why it is important to get to the 100% level of monitoring that we now have in England, which resulted in the last Administration being able to roll out the plan for water, which was about stronger regulation, tougher enforcement and more investment.
The hon. Member for Sutton and Cheam mentioned the Thames tideway, which has 25 km of underground capacity that has now been extended from Acton to Abbey Mills. A £5 billion investment has been put into the project, which is now fully operational, having opened in February; I was lucky enough to visit and to go down into it before it was opened. The great thing about the project is that it is now draining about 34 of the most polluting combined sewer overflows in the Thames area, which will help to improve the quality of the water in the Thames.
The hon. Member for Sutton and Cheam rightly raised the concerns about increasing water bills, the lack of trust in Thames Water and the poor level of service that his constituents are experiencing. The hon. Member for Twickenham (Munira Wilson) picked up on the same issues and referred to the meeting that I had with her and with the hon. Member for Richmond Park (Sarah Olney), in the short period for which I was lucky enough to be a Minister in the Department, about the challenges with the Teddington project. I urge the Minister to address those concerns, because challenges arise when there is no proper environmental impact assessment. Concern about the project is rightly being raised—it was certainly a concern that I had—so I urge the Minister to continue to put pressure on Thames Water.
The hon. Member for Clapham and Brixton Hill (Bell Ribeiro-Addy) rightly raised the concerns of constituents on Clarence Avenue and in Brixton, relating to water shortages resulting from Thames Water not carrying out its duty to the level of quality that her constituents expect. She also raised concerns about the bill increases of approximately 30% or 31% for some of her constituents.
The hon. Member for Richmond Park mentioned the statutory duties that a water company is bound to meet and referred to the poor satisfaction levels that Thames Water is delivering. The hon. Member for Swindon North (Will Stone) rightly raised the challenges that his constituents are experiencing with flooding, and Thames Water’s refusal to take responsibility. Finally, the hon. Member for Bexleyheath and Crayford (Daniel Francis) mentioned challenges relating to Thames Water’s bill increases and the poor service that his constituents experience.
Thames Water is probably the most distressing example of our water system going wrong. Bills are rising by about 33% this year, but unfortunately the Government have failed to take serious action and consumers are paying for it. That comes in addition to the pressures of the cost of living, council tax rises and so on. Rightly, there is huge frustration that Thames Water shareholders have simply wrung the business dry of capital, failed to invest to expand its supply, and failed to invest to clean up sewage spills. Thames Water’s exceptionally poor level of service deliverability has already been mentioned.
The last Administration took steps to address the challenges that constituents and residents face not only in the Thames Water area, but across England. We blocked bosses’ bonuses for water company executives, we ensured that dividends had to be linked specifically to environmental performance and we introduced unlimited civil fines by removing the £250,000 cap. More power was awarded to Ofwat so that it could impose levies on water companies in the circumstances. In August last year, Thames Water was fined £104 million for its failure to avoid sewage overflows. In other instances Thames Water was put under a cash lock-up, which prevents any dividends from being paid out without Ofwat’s approval.
Bell Ribeiro-Addy
How much of the fine that the hon. Gentleman mentioned has Thames Water actually paid? How was it allowed to pay out all these dividends in previous years, given the measures that he is setting out? I genuinely cannot understand how that was allowed to continue for so long.
Robbie Moore
That brings me nicely to my next point, which is the strength of the regulator. Ofwat has the powers to link dividends to environmental performance —a measure that was awarded to Ofwat—and to ban bosses’ bonuses for executives, but those powers are there should Ofwat wish to use them. What is the Minister doing to ensure that Ofwat is using the powers that it has been awarded, and to ensure that it is being robust in its actions as the regulator? Many hon. Members have rightly raised concerns that Ofwat has not been robust enough.
Much has been said in this debate about nationalising our water industry and particularly Thames Water, but it is false to assume that a struggling private company will cease to struggle purely because it changes hands. Indebtedness does not go away because a company is nationalised—not without a taxpayer-funded bailout, which would mean redress for the failures of Thames Water executives coming out of the pockets of working people. I mention again the example of Scottish Water, north of the border. There have been myriad mistakes at Thames Water, but it is the responsibility of the independent regulator, Ofwat, to right those wrongs and use the powers that have been awarded to it.
Bell Ribeiro-Addy
I have to ask the hon. Member why he is so against the idea of nationalising water. I am sure he agrees that the whole idea of privatisation is that there is some sort of competition, but there cannot be competition with water, and therefore we cannot guarantee a good service. We are seeing that at the moment, and we saw it under the Conservative Government for a number of years. Does he understand why privatisation cannot really work in this instance?
Robbie Moore
I thank the hon. Lady for her intervention, but I simply refer to the fact that since privatisation about £250 billion of private investment has been put into our water companies, not only to improve infrastructure but to help with service delivery—£250 billion that would otherwise have had to come from the taxpayer.
My second point is that the system should work if the regulator is being robust enough. The point that I come back to is that there is a clear argument that the regulator, Ofwat, has not been sufficiently utilising the powers awarded to it by the Government, and therefore it is right that the Government hold it to account to make it as robust as possible. North of the border in Scotland, with Scottish Water, only 4% of storm overflows are even being monitored, and the service and delivery that Scottish residents are facing is in some cases far worse than what we are experiencing from Thames Water. Simply having a nationalisation strategy does not demonstrate better roll-out and service delivery for customers.
There have been myriad mistakes at Thames Water, but it is the responsibility of the independent regulator, Ofwat, to right those wrongs.
Charlie Maynard
Could the hon. Member elaborate a little bit on that £250 billion number and where it comes from?
Robbie Moore
It is a figure that has been referenced since nationalisation initially took place, and has been well recognised as the amount of money that has been invested into our water companies by the private sector, for the benefit not only of Thames Water but of all the water companies across England.
What is the Minister doing to ensure that Ofwat is utilising the powers awarded to it, and does she have confidence in Ofwat being able to exercise its function? If not, what is the Minister doing about it? Furthermore, the Government need to take action to further protect consumers from the Thames Water fallout. The court settlement that Thames Water secured in February is designed to give everyone involved time to come to a sustainable plan, but I hope that the Minister will be able to reassure us today that her efforts are firmly going towards ensuring that the plan protects consumers.
Finally, I would like to talk about the broader reforms and support that we can offer our water industry. As I and others have rightly said throughout this debate, our water industry is crying out for further investment. We need to think further about how to utilise the opportunities for the water sector across the country. To that end, what consideration is the Minister giving to providing more opportunities for individuals and organisations outside of major water companies to influence improving the water sector, and has she considered the untapped potential to increase water supply and capacity to the thousands of people who are utilising water, and the hundreds of landowners out there who, with the right financial and planning incentives, may choose to further invest in the water industry? That may be an avenue that the Minister may wish to explore.
I again thank the hon. Member for Sutton and Cheam for securing this important debate.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)
It is a real pleasure to see you in the Chair, Ms Lewell. I wish you, and anybody celebrating, a very happy Easter—I hope that it is a peaceful and enjoyable day. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing this debate and giving us space and time to discuss this important issue.
I hope that I can use this debate as an opportunity to address some of the concerns being voiced around Thames Water and the water industry. Since I am feeling rather positive and getting ready for Easter, instead of “10 things I hate about”, I would rather come up with 10 things that might give us reason for hope and renewal in the water industry. To give 10 reasons for hope, since we have been elected we have: one, introduced the Water (Special Measures) Act 2025 to ban bonuses; two, with the Water (Special Measures) Act, introduced criminal liability; three, introduced automatic penalties; four, set up the independent commission; five, changed the articles of association; six, ringfenced money for investment; seven, doubled the compensation for burst pipes, which has come up through the guaranteed standards scheme; eight, created customer panels for water companies; nine, passed bathing water reforms; 10, published storm overflow guidance just last week. And this new Labour Government have not even been in office for a year.
Thinking of fairness and justice, I generally have an aversion to criticising people who cannot be here to defend themselves, so I want to reflect on the comment made about Ruth Kelly. She works for Water UK; she does not work for Thames Water, so characterising her as a defender of Thames Water is not entirely correct.
Emma Hardy
I am happy to, if the hon. Member wishes to retract his comment.
Charlie Maynard
To be clear, I said that Ruth Kelly is the chair of Water UK—I said exactly that.
Emma Hardy
Perhaps I misunderstood the hon. Member as also saying that she is a defender of, or a spokesperson for, Thames Water. I am happy for him to retract his comment.
Charlie Maynard
I said that she is the chair of Water UK, which is the trade body for water companies, so I think that follows.
Emma Hardy
I am pleased by what I believe I have heard: that no reference was made to Ruth Kelly with regard to Thames Water; instead, the comment was solely about her representing Water UK.
Further to my point about people who are not here and unable to defend themselves, as a trade unionist I want to talk about the people who work for water companies, including those who work for Thames Water and go out to fix the broken pipes, clean up sewage and deal with the sewage overspills. I have had reports from some unions that those people often face abuse for doing so. They are often on the frontline facing people angry with the company. I would like to say—and I hope we have unity on this point—that the people going out, cleaning up the mess and dealing with the difficulties are not responsible. They are not Thames Water; they are people who work for it. I thank them for the work that they do in incredibly difficult circumstances.
Luke Taylor
I think we would all agree on that. It was interesting to see, in the BBC documentary, that the people who work at Thames Water clearly wanted to do a good job. They wanted to improve things for residents—their neighbours, family and friends—but just did not have the chance to do so because of the structure of the company and the difficulties that it is in. This debate is about the need to help not only the customers—our residents—but the workers who want to be doing so much better and find it so dispiriting to be part of that failing organisation.
Emma Hardy
I completely agree. They are trying to do a good job. I add that it is a good industry to work in; the people in it have long careers and, I might add, excellent trade union representation. I am not sure that I will have complete support from everyone in the room on that point—just when I was doing so well—but I want to echo that it is not those people’s responsibility.
My hon. Friend the Member for Slough (Mr Dhesi), who is no longer in his place, was right to say that customers and the environment should be at the heart of reforms. As I mentioned, we changed the articles of association to put customers on to the boards. My hon. Friend is always incredibly caring about his residents, so I wanted to mention to him and to all the other hon. Members that we are holding the water companies to account to end water poverty by 2030. We are just about to consult—we have to wait for purdah—on changing the rules around WaterSure to extend eligibility for it.
I am pleased that my hon. Friend the Member for Clapham and Brixton Hill (Bell Ribeiro-Addy) enjoyed her three years in Yorkshire. It is a fine and wonderful part of the country, and she is always welcome to come back. She is an incredible champion for her community. I am sure that she will never need my assistance in standing up for that community, but I am always happy to give it if she does.
My hon. Friend the Member for Swindon North (Will Stone) highlighted the role that MPs can play. He showed what a good choice was made in the last election to send him here as a representative for his community. I thank him for his support for the Water (Special Measures) Act and for the further work that we are doing on regulators.
The hon. Members for Twickenham (Munira Wilson) and for Richmond Park (Sarah Olney) talked about the Teddington abstraction scheme. Without going into loads of detail, there will be a consultation, and they will be able to feed in the concerns of their residents and environmental concerns. But if either of the hon. Members feel that their concerns, or those of their residents, are not being listened to, I am happy to make arrangements for us to sit and have a longer conversation about that.
My hon. Friend the Member for Bexleyheath and Crayford (Daniel Francis) mentioned a family of four struggling with their water bill. I again highlight WaterSure. We are looking to expand eligibility for it, but at the moment, if a family has three or more children under the age of 18 living at the property and they claim child benefit, they will be eligible for WaterSure, so I urge my hon. Friend to pass that information on to his constituents. I thank him for his support for the Water (Special Measures) Act, the commission and our desire to introduce change.
Before turning to Thames Water, I want to emphasise that as a Government we recognise that the water sector is facing many challenges, and we have set out ambitious plans to tackle those challenges head-on, but it is important also to emphasise that resolving them will require long-term and transformative change. One thing mentioned here—I think by the loyal Opposition—is that there is no silver bullet or quick fix for some of the problems that we face.
We recently took the Water (Special Measures) Act through Parliament; it was amended in the other place. It will drive meaningful improvements in the performance and culture of the water industry and act as a first step in enabling wider and transformative change across the water sector. The Act delivers on the Government’s manifesto commitments by blocking bonuses for executives who pollute our waterways, enabling the bringing of criminal charges against persistent lawbreakers, enabling automatic and severe fines for wrongdoing, and ensuring monitoring of every sewage outlet.
In October we launched, in collaboration with the Welsh Government, an independent commission on the water sector regulatory system. This is the largest review of the water industry since privatisation. The commission will report in the middle of this year and make recommendations on how to tackle systemic issues in the water sector to help restore our rivers, lakes and seas to good health, meet the challenges of the future and contribute to economic growth. Those recommendations will form the basis of further legislation to attract long-term investment and clean up our waters for good.
I now turn to Thames Water specifically before moving on to the sector as a whole. I will say as much as I am able to about Thames Water, bearing in mind that it is going through a confidential process. I completely understand what has been said. Let me say at the beginning that I am not here as the hon. Member for Thames Water, and I am not here to defend the actions of Thames Water. I want to reassure and, I hope, send a message to the general public that we are monitoring the situation and the company remains stable. In the event of special administration, the taps will still function and the sewage will still be taken—I want that message to be heard by the general public—so there is no need for alarm. The people working for the company will continue to be paid in the event of special administration. As a responsible Government, we are preparing for every eventuality. However, at the moment the company remains stable.
I think it is incorrect to say that we are “resisting” special administration. That would be a total mischaracterisation of what special administration is and the process of entering the special administration regime. It is not that we are resisting anything. A special administration order is a well-established mechanism to ensure that the company continues to operate and that customers continue to receive their water and wastewater services, so customers need not be concerned about any disruption to their water supply or wastewater services because of the financial position of their water company. The provision of water and wastewater services will continue.
Special administration is the ultimate enforcement tool in the regulatory toolkit, and as such, the bar is set high. The law is clear—this obviously links to insolvency legislation—and states that special administration can be initiated only if the company becomes insolvent, can no longer fulfil its statutory duties or seriously breaches an enforcement order. Only in that scenario does the Secretary of State for Environment, Food and Rural Affairs or Ofwat—crucially, with the consent of the Secretary of State—have the power to request the court to place a company in a special administration regime. If that situation arises, the court must be satisfied that there is sufficient evidence to demonstrate that the water company in question is insolvent, can no longer seriously fulfil its primary statutory duties, or has seriously breached an enforcement order. It will then make a special administration order, appointing a special administrator.
That is a hypothetical situation. It is not, I stress, the situation that we are talking about now, but let us say that somebody said, “We want to put this company into special administration”; the decision then would be made by the court, and the court would need to be satisfied that there is the evidence to put that company into special administration.
Bell Ribeiro-Addy
I thank the Minister for her attention to this situation, but I have to ask on behalf of my constituents, how much more does Thames Water have to fail before we decide that it is no longer fit to operate? The level of failure is so high that, although I appreciate what the Minister says about following the letter of the law, people simply will not understand.
Emma Hardy
I want to stress that although that is the legal process for entering special administration, that does not mean for one second that we are satisfied with the performance of the company as a whole. But there is a wealth of difference between the court-sanctioned process of going into special administration and the Government taking action. There are many things on which we want to take action. In fact, the whole purpose of the commission is to look at the way in which companies are set up and how we got into this position in the first place. It might interest the Opposition that some of the rules and regulations around Ofwat were relaxed in 2014—under the coalition Government.
It is not as though we are completely satisfied with everything, and that is why we are not doing SA. What I am saying is that SA is an ultimate enforcement tool; it is a serious step to take and it is sanctioned by the courts, but that does not mean that we are not doing anything else in between. We are taking a lot of other actions, but I wanted to address the specific point around why we are not pushing the company into special administration.
Charlie Maynard
I want to play back what the Minster just said. It is up to either Ofwat or the Secretary of State to apply to the court to put the company into special administration. As the Minister wrote to me last July or September, one of those conditions is whether the company is unable, or likely to be unable, to pay its debts. Given that the company has come out and said that it has only £39 million, with £19.5 billion of debt, and it is going to run out of money by 24 March, I think that we have passed that benchmark pretty clearly. The idea that we have not is simply not true. It is therefore up to Ofwat or the Secretary of State, who continues to decline—maybe that is a better word than resist—to ask the court to consider.
Emma Hardy
With respect, I think that we have different interpretations of the truth. We are saying that the company can enter SA if it is insolvent. Thames Water is not at the point of insolvency. My message to the public and to people working in the company is that the company remains stable at the moment; however, as a responsible Government, we are preparing for every eventuality.
I want to talk about broader commitments to financial stability and the independent commission. For me, this debate highlights how important it is to address the financial resilience of the water sector. We are talking specifically about Thames Water, but that does not mean that everything else is a bed of roses. Some historical decisions made by companies on debt levels have left them badly financially exposed. Those decisions often coincided with moves towards more complex ownership structures and the involvement of firms with shorter-term horizons.
We recognise that the Government have an important role to play in setting a regulatory framework that encourages a stable water sector. In hindsight, many might question the 2014 changes to make Ofwat a lighter-touch regulator. The Independent Water Commission is exploring how the Government could provide the regulatory structure that most people in the Chamber recognise that we need. The call for evidence is currently live, seeking views from stakeholders on improvements that could be made to economic regulation across a number of areas. As always, we welcome contributions from everybody across the House. The call for evidence closes on 23 April, and I encourage all interested parties to respond to the commission’s questions on these topics via DEFRA’s online consultation tool, Citizen Space.
I conclude by reiterating that both the Government and Ofwat are carefully monitoring the situation with Thames Water.
John Lamont
I want to pick up on my point about Scotland. Some Members have been advocating for nationalisation. Does the Minister have any thoughts on that, and have the current Government looked at what is happening in Scotland? Scottish Water, by many standards, is performing even less well than Thames Water. But Scottish Water is state-owned. Its chief executive is paid £290,000. The model in Scotland is not something that I would encourage the Minister to look at—I am not saying that she is—but I would be keen to have her reflections.
Emma Hardy
Water is devolved, and I completely respect the autonomy of the Scottish Parliament to make those decisions. The Government have been clear that we are not looking at nationalisation, simply because of the cost, the time it would take and the legal complications. My focus is quite simply on what I can do to improve the situation that we currently face. There is a lot of consensus around looking at regulation and how effective, or not, it is at the moment, and what can be changed. That is where I have put all my focus. Nationalisation was ruled out of the Independent Water Commission; however, all other forms of ownership are allowed within the terms of reference.
It is for the companies to resolve their financial resilience issues within the context of their licence and broader statutory obligations. However, I must be clear: the Government are prepared for all scenarios across our regulated industries, as any responsible Government would be. This new Government are committed to turning around the water sector—I refer back to my 10 reasons for hope before Easter—which will be achieved through practical measures to clean up illegal sewage dumping and attracting major private sector investment to upgrade infrastructure while prioritising the interests, as we have mentioned, of customers and our beautiful environment.
Luke Taylor
At a Sutton council meeting before the 2024 election, I made it clear that if two Liberal Democrat MPs were elected in Sutton, we would hold Thames Water to account for its mockery of our residents. I am proud to stand here today to start delivering on that promise.
I thank all hon. Members around the Chamber for their contributions. The hon. Member for Slough (Mr Dhesi) is not in his place, but his interventions about the worries of his constituents show how hard he is working for them. I thank the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont); he invites me to make a suggestion about the Administration in Scotland, and how nationalising and giving a toy to the SNP might not be the best idea in any circumstances—a change of Administration might be beneficial for all of us. I thank the hon. Member for Clapham and Brixton Hill (Bell Ribeiro-Addy) for her reports on the regular leaks and disruptions, and share her anger at the shareholders and financial chicanery used to extract money from our most important utility—although I will try to scrub my mind of the image of the cherry on the sewage cake.
I thank my hon. Friend the Member for Richmond Park (Sarah Olney) and agree that special administration is needed, as Thames Water is understaffed and utterly demoralised. I also thank the hon. Member for Swindon North (Will Stone) and agree that the company is failing on every level. That highlights the area that Thames Water covers, all the way from my constituency in south-west London to Swindon North. The destruction of natural habitats under Thames Water is heartbreaking, and the story of his intervention for his constituents shows how comprehensive the failures are.
I thank my hon. Friend the Member for Twickenham (Munira Wilson), who mentioned how public trust has been undermined as residents see an increase in bills. I note her comments about the Teddington direct river abstraction site, and am also glad to learn that the Ham Lands are safely under Liberal Democrat control once again. I also note her frustration and worry about the failed infrastructure projects under Thames Water, and I worry about any investment in infrastructure plans that are not doing what they are supposed to.
I thank the hon. Member for Bexleyheath and Crayford (Daniel Francis) and share his frustration at his town centre being blocked and closed for months due to the water leaks; I can only imagine the incredible disruption to his residents and his frustration on their behalf. I thank my hon. Friend the Member for Witney (Charlie Maynard) and agree that further support would be breaching Ofwat guidance and rules, and that Thames Water is failing on all accounts. I thank him for his hard work on holding Thames Water to account and revealing its astonishing financial situation—it is truly terrifying. I am heartbroken that I am only the second person to get into Hansard a “shambopoly”, which I hope will become a new byword for the situation that Thames Water enjoys.
I thank my old friend, the hon. Member for Keighley and Ilkley (Robbie Moore), for his contribution, and acknowledge the efforts of the last Government to monitor sewage outflows. Understanding and quantifying the problem is the first step to resolving it. Once again, I note the discrepancy with the Administration north of the border. I also thank the hon. Member for his welcome words on the Teddington direct river abstraction project.
I welcome the Minister, and thank her for coming to this place and taking part in the discussion. I admire her ability to find 10 things that the Labour Government have achieved with the water industry, but a common refrain on this side of the House will be “We need to do more, and we need to do it faster.” It is good to hear about the consultation on the Teddington project, which will reassure many of my colleagues. I also welcome her reassurance for residents that, whatever happens, their water will continue to flow, as will their sewage.
However, none of the measures implemented fundamentally changes the status quo with Thames Water or puts a permanent fix in place. I recognise that the Government and the Minister are limited in what they can do, but special administration is surely the last throw of the dice to save Thames Water. I repeat the query from around the Chamber: if not now, when?
Question put and agreed to.
Resolved,
That this House has considered Government support for Thames Water.