Public Office (Accountability) Bill (Carry-over extension)

Carry-over motion
Tuesday 14th July 2026 Commons Chamber

Ordered,

That the period on the expiry of which proceedings on the Public Office (Accountability) Bill shall lapse in pursuance of paragraph (13) of Standing Order No. 80A shall be extended by 136 days until 29 January 2027.—(Catherine Atkinson.)

Steel Industry (Nationalisation) Bill (Programme) (No. 2)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Steel Industry (Nationalisation) Bill for the purpose of supplementing the Order of 21 May 2026 (Steel Industry (Nationalisation) Bill: Programme):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.

Subsequent stages

(2) Any further Message from the Lords may be considered forthwith without any Question being put.

(3) Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Claire Hughes.)

Question agreed to.

Steel Industry (Nationalisation) Bill

Consideration of Lords amendments
Tuesday 14th July 2026 Commons Chamber

Consideration of Lords amendments

Clause 3

Sunset for exercise of principal transfer powers

[Madam Deputy Speaker (Caroline Nokes)]

I can inform the House that nothing in the Lords amendments engages Commons financial privilege.

18:35

[The Parliamentary Under-Secretary of State for Business and Trade (Chris McDonald)]

I beg to move, That this House agrees with Lords amendment 1.

[Madam Deputy Speaker]

With this it will be convenient to discuss Lords amendments 2 to 18.

[Chris McDonald]

It is a pleasure to be back in the House today to see through the final stages of this Bill. The Government support all the Lords amendments before us.

I wish to pay tribute to my colleague Minister Leong for so expertly guiding the Bill through its passage in the other place. I also wish to place on the record my thanks for the constructive approach taken by peers to the scrutiny of the Bill during its passage through the upper House, including the constructive and careful consideration from His Majesty’s official Opposition, Liberal Democrat peers and Cross-Bench peers. I thank them for their contribution.

We have a responsibility to act now to secure the future of the UK steel industry. This Bill will assist in that by ensuring that steel production is secured, helping to restore domestic production to sustainable levels and supporting the Government’s economic growth plans where the public interest test is met.

The Lords amendments before us strengthen the Bill in several ways. Amendment 1 ensures that the sunset power in the Bill may be extended only by increments of two years. This means that the Government would have to seek parliamentary approval at regular intervals to keep the principal transfer powers on the statute book.

Lords amendments 2 and 3 place a duty on the Secretary of State to consider the costs that are likely to be associated with the exercise of the principal transfer powers, ensuring that such costs are considered in any decision making over the use of these powers.

Lords amendments 4 and 5 upgrade the parliamentary procedure relating to continuity obligations and enforcement, ensuring that Parliament has increased scrutiny of these matters.

Lords amendments 6 to 18 all relate to the appointment and role of an independent valuer and ensure that key considerations around environmental and health and safety liabilities are taken into account during any valuation exercise.

A final decision on the use of the powers in the Bill has not been taken. Any decision to exercise the powers in the Bill will be subject to satisfaction of the public interest test, based on the relevant facts at the time of the decision.

Steel has shaped our nation’s history, and this Bill is an opportunity to ensure its long-term success. The Bill enables decisive action for a strategically vital industry, defending our national security and supporting our critical national infrastructure, our economy and our national interest. I therefore ask right hon. and hon. Members to support the Lords amendments before us today.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Secretary of State.

[Andrew Griffith (Arundel and South Downs) (Con)]

I am grateful to their lordships for their work on the Bill. We support the amendments before the House.

Let me be plain from the outset: our objection has never been to steelmaking, or to the men and women who make steel; it is to a Government who have crashed around and used blunt instruments without ever having a detailed plan. Hope is not a strategy, and a blank cheque is not a plan. Nationalisation is a bad idea, and nothing that has yet been said at that Dispatch Box has told the House where the spending stops. The Government are taking us down a fast and expensive road with no idea where the exit lies. Even members of the Government concede in private that they rushed into something that they now repent at leisure.

Let us look at what we have learnt over the passage of the Bill. The Government and their Lib Dem little helpers in the Lords voted against a Conservative amendment in the name of the noble Lord Hunt to limit support to £2.5 billion over three years. That is almost £2.3 million every single day. The cap was not plucked from thin air—that £2.5 billion was the Government’s own figure. In their refusal to accept a cap, the Government concede that the figure is likely to be more. That could have been 35,000 new police officers, eight brand-new hospitals or more than double what the Chancellor raised over the course of this Parliament by destroying the livelihoods of British farmers.

18:45

We support Lords amendment 1, which limits by two years the power for Ministers to bring further steel businesses into public ownership without coming back to this House. Powers this sweeping should never have been handed to Ministers without limit. We support Lords amendments 2 and 3, tabled by the Liberal Democrats, which would require the Secretary of State to weigh the likely costs before making share transfer or property transfer regulations. That is a modest ask, and it is hugely damning that it had to be forced on the Government.

We support Lords amendments 4 and 5, which were laid on a cross-party basis. They shift the regulations governing continuity obligations and their enforcement from the negative procedure to the affirmative. If Ministers wish to bind steel undertakings and their suppliers, let them do so in daylight, with the consent of this House—not by regulations that slip through unseen without the scrutiny of Parliament.

We welcome the Government’s Lords amendments 6 to 18, which would require, rather than merely permit, the compensation scheme to provide for an independent valuer and would set out plainly the role that the valuer must perform. When the Government listen and act sensibly, we support them—and we have. It is a pity that the Government did not extend this House the same courtesy on the one amendment that mattered the most: the cap on an otherwise unlimited bill for the taxpayer.

For all the hours we have now spent debating the future of steelmaking in the UK, the Government still refuse to confront the real issue—they know what it is, but they refuse to confront it. It is the Secretary of State for Energy and his addiction to ruinously high energy prices. It is not me who says that but Unite the union’s general secretary, who described this as a “noose around the neck” of job creation.

There is no path to profitable steelmaking of any kind in the UK while energy prices here are four times higher than in many of our competitor nations. There is no tariff damaging enough to manufacturers and steel users to compensate for that, even though the Government’s botched attempts are clearly already causing manufacturing jobs to shift offshore.

The Government will talk about their British industrial competitiveness scheme, which is welcome, but it is just a sticking plaster on a gaping wound—and the Minister knows it. It is nonsense to claim that their strategy is one of security of supply when the same Government refused to open a coking coal mine, meaning that every furnace is reliant on imports, without which they would close in a matter of hours.

Only the Conservatives have a plan to get Britain drilling and reduce energy costs. We will remove legal obstacles blocking new oil and gas projects like Rosebank and Jackdaw and scrap the energy profits levy to make them viable. We will increase private investment in oil and gas extraction, and we will scrap the carbon taxes and industrial levies that expensively subsidise intermittent renewables that do not generate when the wind does not blow or the sun does not shine.

We will not stand in the way of these amendments. Many of them are ours, and the rest improve a flawed Bill, but let no one mistake improvement for endorsement. The amendments warrant our support, but the so-called plan and the botched decisions behind them do not.

[Sarah Olney (Richmond Park) (LD)]

We have a duty to stand by the steel sector, especially as it navigates unprecedented challenges, including President Trump’s unfair steel tariffs, China’s anti-competitive state aid practices, and the transition to environmentally sustainable production methods. If we are going to foster a thriving steel industry, we cannot allow more producers to collapse, more jobs to be lost, or the risk of our last blast furnaces going cold.

That is why the Liberal Democrats broadly welcome this legislation as a temporary emergency and targeted step aimed specifically at turning around British Steel before it can be returned to the private sector. I am particularly glad that the Government have accepted Liberal Democrat amendments that will require the Secretary of State to have regard to the costs of nationalisation before they table regulations to nationalise a company, as well as amendments that would ensure the consideration of environmental liabilities. Those Liberal Democrat amendments will strengthen the legislation, ensuring that these measures—and indeed the Government’s broader steel strategy—move us in the right direction to set the industry on a truly sustainable footing for the long term, while providing taxpayers with real value for money.

Lords amendments 2 and 3 ensure that if the Secretary of State is to exercise the principal transfer power, the Government must consider the expected cost to the taxpayer. That is important not only for business and industry to have certainty over the nationalisation process, but for taxpayers, who need to know that their money is not being wasted or paid to foreign owners who will leave our industries high and dry.

I am glad that the Government have also agreed to Liberal Democrat amendments that will strengthen the treatment of environmental liabilities in relation to the steel undertaking and ensure that they are explicitly identified and accounted for before compensation payments are made. On top of those legislative concessions, we are glad that the Government accepted other Liberal Democrat calls, including holding a debate in each House within 12 months of Royal Assent and requiring any future chair of a nationalised company to appear before the Business and Trade Committee. Those significant improvements to the legislation promote parliamentary scrutiny and accountability.

We also welcome the Government’s having listened to Liberal Democrat peers and introduction of written ministerial statements on the day of acquisition, which will be repeated every three months until we reach a year from nationalisation. Again, that change boosts transparency, enabling Parliament to scrutinise the measures’ impact on local communities and jobs. Lastly, we are glad that the Government adopted Liberal Democrat proposals to strengthen the UK Steel Council and its role in facilitating nationalisation within the context of the steel strategy.

Steel is a vital sector, bringing far-reaching benefits across the UK. It provides key materials for our national infrastructure from defence to renewable energy, and creates thousands of good jobs across the UK. The Liberal Democrats welcome the action that the Government are taking to protect British steel, backing a key plank of our critical national infrastructure. I am glad that the Government have worked constructively with the Liberal Democrats and that Ministers have adopted many of our proposals to improve transparency and accountability around the financial and environmental costs of any forthcoming measures. We will continue to constructively scrutinise the Government as they put these new measures in force to ensure that steel producers, local jobs and British taxpayers are properly supported and treated fairly.

[Martin Vickers (Brigg and Immingham) (Con)]

I welcome the Government’s acceptance of the Lords amendments. As hon. Members will know, part of my constituency takes in the Scunthorpe steelworks, and hundreds of my constituents work there. My aim throughout the rather tortuous and long saga about the future of the steelworks has been to ensure that their jobs are retained.

As the shadow Secretary of State outlined, the Bill could have been further improved, but I am delighted that we have at least reached a conclusion. There will be a sigh of relief among my many constituents who rely on the steelworks for their employment.

I look forward to engaging with the Minister as we move forward on the future of the steelworks—because, as I think he is well aware, if energy costs in particular stay as they are, there are future disasters ahead. We must do something on energy costs if we are to maintain any sort of a steel industry and heavy industry in the UK.

I thank the Minister for getting us to this point and look forward to working with him in the future.

[Chris McDonald]

I have listened carefully to the shadow Secretary of State’s remarks and those from the shadow Minister, and I will address them in a moment. I am grateful for the support of the Vice-Chamberlain of His Majesty’s Household, my hon. Friend the Member for Scunthorpe (Sir Nicholas Dakin), and of the Minister without Portfolio, my right hon. Friend the Member for Redcar (Anna Turley), both of whom are unable to speak in the debate as a result of their positions elsewhere in the House.

I opened by remarking on the constructive and careful consideration that the Bill has had in the other place; it is disappointing to see that the shadow Secretary of State is not taking the same approach. I will pick up a couple of the issues he raised. I am acutely aware of the position in which the previous Government left us, with uncompetitive energy prices for industry. If he had been attentive in some of the debates we have been involved in, he would be aware of some of the measures that I have taken to address that. Those include our energy-intensive scheme, increased relief on our supercharger scheme and our British industrial competitiveness scheme. I am determined to do more.

On tariffs, I am not saying that making the decision on tariffs was easy, but the shadow Secretary of State would clearly throw British industry to the mercy of dumped steel on the global market. We will not make that decision. He mentions coal for coking ovens. He may be unaware that there are no coking ovens in Scunthorpe. They were closed on his watch.

This Government are acting decisively and with purpose in the national interest, but the shadow Secretary of State is blinded by his ideological position on nationalisation. We believe that a steel industry, where necessary run by the Government and owned by the people, at least gives the opportunity to attract private sector investment. If the public interest test is met, that is the right thing to do. But if that does not convince the shadow Secretary of State, perhaps I can appeal to his sense of patriotism. I said on Second Reading that the England men’s football team had only ever won the world cup in a year when we had nationalised the steel industry. If he has any sense of duty towards our team and wishes them well, he should support nationalisation this time as well.

Lords amendment 1 agreed to.

Lords amendments 2 to 18 agreed to.

Petitions

Tuesday 14th July 2026 Commons Chamber

18:56

[James Naish (Rushcliffe) (Lab)]

I wish to present a petition on behalf of residents of West Bridgford in my constituency, calling for the creation of a new town council. West Bridgford is home to around 40,000 people, making it by far the largest settlement in Rushcliffe, yet unlike almost every other part of the borough it has no town or parish council to represent its local interests. As local government reorganisation concludes this week, many residents are concerned that decisions affecting their community will be taken solely by a large unitary authority, leaving local voices further removed or altogether absent from decision making.

For almost 80 years, West Bridgford had its own urban district council, and there is a strong feeling among residents that a new town council would be beneficial. Indeed, an independent survey carried out earlier this year found exceptionally high engagement. The petition I present today therefore reflects that local desire for greater democratic representation and asks the Government to work with Rushcliffe borough council as the process moves forward.

I am pleased to present the petition, which states:

The petition of residents of West Bridgford in the constituency of Rushcliffe,

Declares that there is a need for a new town council for West Bridgford; further declares that a new town council would have a positive impact on community cohesion throughout the area, which would enhance a sense of place, and support the local environment, its communities, and local distinctiveness.

The petitioners therefore request that the House of Commons urge the Government to work with Rushcliffe Borough Council to create a new West Bridgford town council to support local residents.

And the petitioners remain, etc.

[P003223]

[Chris Hinchliff (North East Hertfordshire) (Lab)]

I rise to present a petition alongside a corresponding online petition signed by hundreds of my constituents in North East Hertfordshire calling to ban housing developers from donating to political parties. Developers are some of the largest donors in politics, pouring in massive sums to tilt the planning system ever further in their favour. Cash for access leaves the impression that the same developers are wrecking nature and failing to deliver affordable homes. Those profiting from low-quality, overpriced housing are also writing the rules. This cements inequality at the heart of democracy because the people living with the consequences of a profit-driven housing crisis never get a seat at the table.

The petition states:

The petition of residents of the United Kingdom,

Declares that housing developers are among the largest donors to political parties and donate massive sums of money in an attempt to tilt the planning system further in their favour; further declares that cash-for-access leaves the impression that the same developers profiting from low-quality, overpriced housing are also helping to write the rules; and further declares that the corrupting influence of big money should be removed from the planning system and politics should be refocused on genuine solutions to the housing crisis that bring down housing costs for ordinary people and give local communities more of a say over their future.

The petitioners therefore request that the House of Commons urges the Government to ban housing developers from donating to political parties.

And the petitioners remain, etc.

[P003225]

[Neil Duncan-Jordan (Poole) (Lab)]

I rise to present a petition, alongside a corresponding online petition, which has been signed by more than 4,000 UK residents, calling for a ban on political donors getting contracts from Governments they helped to fund. Big money donors do not give out of kindness; they pay for access and influence. The evidence shows that it is a smart investment, because the firms have landed billions in Government contracts. If we want to build a better country, we need a better kind of politics, and tackling the corrosive influence of big money is the first step to rebuilding public trust. The petitioners

“therefore request that the House of Commons urges the Government to ban political donors from receiving public contracts with Governments of political parties”

to which they have donated,

“And the petitioners remain, etc.”

Following is the full text of the petition:

[The petition of residents of the United Kingdom,

Declares that companies which donate to political parties have gone on to receive billions of pounds in public contracts; and further declares that this creates a perception that political decisions are shaped by cosy relationships with super-rich donors, instead of a sole focus on delivering better living standards and services for millions of people.

The petitioners therefore request that the House of Commons urges the Government to ban political donors from receiving public contracts with Governments of political parties they have donated to.

And the petitioners remain, etc.]

[P003226]

[Liam Conlon (Beckenham and Penge) (Lab)]

With 28 world records, the Crystal Palace national sports centre is the spiritual home of UK athletics. It is also an incredible community asset. Residents across Beckenham and Penge speak fondly about using its facilities growing up, or remember their children and grandchildren learning to swim in the Olympic-sized pool. However, in recent years, the centre has become a boarded-up relic of the past—in 2014, the then Mayor of London, Boris Johnson, even tried to demolish the athletic stadium and turn it into an unwanted free school—but thanks to the work of Fran Bernstein, Ben Woods, the Crystal Palace Sports Partnership and many others, the centre now has a lifeline. The £130 million transformation of the centre, backed by funding from our Mayor of London, Sir Sadiq Khan, will see the reopening of the Olympic-sized pool and diving boards, a revamped athletics stadium, and new facilities for other sports, too. I will be campaigning to bring world-class athletics back to Crystal Palace park once again. The petitioners

“therefore request that the House of Commons urges the Government to work with the Mayor of London and other relevant partners to support the delivery of the transformation of the Crystal Palace National Sports Centre.”

Following is the full text of the petition:

[The petition of residents of the constituency of Beckenham and Penge,

Declares that the Crystal Palace National Sports Centre is a nationally significant sporting and community facility; further declares that plans have been submitted to transform the site, including refurbishment of the Grade II listed building, a revamped Olympic-sized pool and athletics stadium and new multi-sport and parasport facilities; and further declares that this transformation would benefit residents of Beckenham and Penge for generations to come.

The petitioners therefore request that the House of Commons urges the Government to work with the Mayor of London and other relevant partners to support the delivery of the transformation of the Crystal Palace National Sports Centre.

And the petitioners remain, etc.]

[P003227]

Future of Thames Water

Tuesday 14th July 2026 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Claire Hughes.)

19:01

[Charlie Maynard (Witney) (LD)]

I will discuss the future of Thames Water, starting with Thames Water’s record of pollution and environmental failure, and how it impacts everyone in my Witney constituency. Thames Water serves the constituency and embodies the systemic failure of the national water sector. Last year, Thames Water pumped sewage into rivers and lakes for 107,822 hours.

West Oxfordshire is very much ground zero for sewage. We have the Thames, the Evenlode, the Windrush, Shill brook and the Cole. We also have WASP, or Windrush Against Sewage Pollution, which has been so active in going after Thames Water’s bad behaviour. It has mapped the illegal sewage spills at Thames Water sewage treatment works and found that, between 2021 and 2025, there were 1,231 illegal spills just in the Witney constituency, and 271 illegal spills in just one sewage treatment works, Faringdon.

West Oxfordshire district council has done great work in trying to hold Thames Water to account, as has WASP, which inspired the Channel 4 programme “Dirty Business”, which many hon. Members will have seen, so well done to Peter, Ash, Geoff and Vaughan. Despite Thames Water’s appalling record, residents have seen their bills skyrocket. I have constituents whose bills have gone up by 50% and 70%; I even have one whose bill has gone up by 93%. That is outrageous, but those bill hikes are not making the situation any better. That is because Thames Water’s financial situation is disastrous. Thames has nearly £20 billion of debt.

[Chris Vince (Harlow) (Lab/Co-op)]

I thank the hon. Gentleman for making his speech, because this is hugely important. Residents in Harlow are also fed up with their bills going up because of what appears to be Thames Water’s incompetence. Does he agree that that should not be the case, and that if Thames Water is so incompetent that it cannot sort out this problem, the Government need to step in and do something about it?

[Charlie Maynard]

I completely agree, and Thames Water’s full-year accounts are out at 7 am tomorrow morning. We will see just what they tell us. It is going to be ugly, not least because the company’s equity is worthless. The largest equity shareholders wrote down their shareholding to zero value and withdrew their board members more than two years ago. When Thames Water’s creditors sought to take on another £3 billion of debt last year, I was given permission to intervene in the High Court and speak for the interests of Thames Water’s 16 million customers, who are paying all these outrageous costs and interest expenses, but would otherwise have had no voice in court.

This Labour Government have slow-peddled for the last two years, and have refused to draw a line under decades of Tory bad behaviour by putting Thames Water into special administration. This approach is costing customers an absolute fortune. Thames Water paid £338 million just in interest expenses in the six months to September 2025. That is £133 million more, just in interest expenses, than it paid in the same period the previous year.

Labour is taking this hands-off approach despite the company’s multiple breaches of its operating licence. Let me illustrate some of those breaches. As I have stated, the company has carried out more than 1,000 illegal spills over four years. It must hold two investment-grade credit ratings as a condition of its operating licence, but it last held any investment-grade credit rating two years ago, in July 2024, and it has undergone a change of ultimate controller; yet the Minister, the Secretary of State and Ofwat have repeatedly refused to answer on that point.

[Mike Martin (Tunbridge Wells) (LD)]

We have a similar problem with South East Water, which is probably the second-worst water company in the United Kingdom after Thames Water. With South East Water, too, this Labour Government have been too timid. Does my hon. Friend agree that the Government, by acting, or not acting, in the way that they are, they are privileging shareholders over consumers?

[Charlie Maynard]

Absolutely. The consumers are getting the raw deal, and there is no end in sight.

To qualify as an ultimate controller—it is a defined term—a party need only have material influence over Thames Water. The creditor consortium right now is negotiating bilaterally with the company, and has put in £3 billion, but somehow that does not make it meet the criterion. It is ridiculous, and frankly, seeing this failure play out was probably the single moment when I most despaired of government and the rule of law. I repeatedly ask the same question, and repeatedly do not get an answer. I find it really, really bad.

[Clive Jones (Wokingham) (LD)]

Residents in Wokingham are absolutely sick of the failures of Thames Water’s management. In 2025 alone, Thames Water committed 74 sewage spills, for a duration of 684 hours. That means that Thames Water dumped sewage for the equivalent of 456 football matches, and there were certainly no clean sheets. No waterway in Wokingham is safe—

[Madam Deputy Speaker (Caroline Nokes)]

Order. The hon. Gentleman should be aware that interventions should be short, spontaneous and perhaps not pre-typed and three pages long.

[Charlie Maynard]

I thank my hon. Friend.

Rather than having customers pay hundreds of millions of pounds of debt at ludicrous interest rates of nearly 10%, Thames Water should be taken into a special administration regime, which is commonly known as bankruptcy on insolvency grounds. I urge the Government to pursue a SAR on the basis of insolvency, as this is a more straightforward way to secure special administration than on a performance basis, and it will give the special administrator additional powers and a stronger position in relation to the creditors.

The Water Industry Act 1991 sets out triggers linked to financial insolvency. Among them is the company being unable, or likely to be unable, to pay its debts. The Secretary of State and Ofwat both have discretion to apply to the High Court for a special administration order if that condition is triggered. I understand that the Government currently do not have, and have refused to publish, a SAR assessment policy. That is despite the Cunliffe review concluding that there is a need for

“broad, judgement-based tests within a clear policy, that has been set out in advance, of how the regulator will assess failing companies against these tests, the factors it will take into account and the indicators it will consider.”

That is from paragraph 793, recommendation 59, of the final report. Clarity around those tests and when a SAR will be used would benefit the water sector and its investors. Importantly, it also increases the Government’s negotiating leverage with the class A creditor consortium by further increasing the credibility of the threat of a SAR. I am interested to hear from the Minister why the Department for Environment, Food and Rural Affairs is so reluctant to publish those tests.

A SAR process would allow Thames Water’s debt to be written down substantially, very likely into single-digit billions. This write-down is crucial, and it is not punitive. The write-down should be sufficient for the company to leave the SAR with a balance sheet that is strong enough to manage the huge spend that will be required over the next decade or so on treatment works and pipe networks.

[Mr Will Forster (Woking) (LD)]

Does my hon. Friend agree that we need Thames Water to go into special measures, so that it can invest in infrastructure? In my constituency, Thames Water has closed a road for three weeks in Horsell because it has not invested, and it dumped over 1,115 hours-worth of sewage last year into our River Wey. That lack of investment is why we need what he is calling for today.

[Charlie Maynard]

I completely agree with my hon. Friend. That is what is going on up and down the catchment writ small, with treatment works deferred despite being crucially needed. In Aston, we have sewage running down the street year after year, and it is the same in Standlake. It is just disgusting, and there is no end in sight.

A SAR process would allow the Government to use the period while Thames Water is in a SAR to put much of the good work from the Cunliffe review into new legislation, and to do the legwork to enable the company to exit as a mutual. Crucially, a SAR would not ultimately cost the Government anything—this really matters—because they will recoup all the funding spent on a SAR, as this new funding injected by the Government would be super senior to all other funding. I am very grateful to the former DEFRA Secretary, Steve Reed, for setting out in a letter to the—

[Madam Deputy Speaker (Caroline Nokes)]

Order. The hon. Gentleman means to say, “the former Secretary of State for DEFRA, the right hon. Member for Streatham and Croydon North (Steve Reed).”

[Charlie Maynard]

My apologies, Madam Deputy Speaker.

I am grateful to the former Secretary of State for setting out in a letter to the Environment, Food and Rural Affairs Committee in June last year that

“we expect that any Government funding required during a SAR would be recouped after the conclusion of the administration”.

The current Secretary of State set out the same point in a parliamentary debate on 16 June. It is also worth noting that the Tories—there are not any in the Chamber—continue to refuse to acknowledge this, and that Teneo, Thames Water’s own expert adviser, stated the same in its report to the High Court in December 2024.

[Calum Miller (Bicester and Woodstock) (LD)]

My hon. Friend is making a powerful argument. Does he agree that the Government’s reluctance to take a company that is clearly now technically insolvent into a SAR is loading costs on to consumers who use other water companies, by creating a moral hazard that means that companies are incentivised to take on ever more debt, with the debt providers being protected by the Government? Instead, the Government should allow companies to fail, if they are going to fail, and to be taken into a SAR, so that there can be investment in the infrastructure that my hon. Friends referred to.

[Charlie Maynard]

I agree 100%, and that is what is so depressing; by continuing to demonstrate that the regulators have no teeth, we create a bigger and bigger problem for ourselves.

The alternative to a SAR—a deal with the creditors, which, extraordinarily, seems to be the Government’s preferred option at this point—should not be countenanced. Giving these businesses, now operating as London & Valley Water consortium, yet more control of the company at ludicrously high interest rates would allow this downward spiral to continue. The Government must and can change course by using their power to ask for a SAR under existing legislation.

There is now the opportunity for Thames Water to exit special administration as a mutual, owned and run in the interests of its customers, and to break the cycle of financial mismanagement and egregious environmental failings once and for all. Legislation sets out that a water company insolvency SAR can conclude in two ways: rescue, whereby the company is restructured, debts are written down or converted, and the existing legal entity continues in a modified form; or transfer, whereby the regulated undertaking is sold or transferred to a new owner. That does not require a competitive auction, as the legislation provides for a transfer approved by the Secretary of State and Ofwat.Nothing in the legislation states that either route requires a competitive sale, as the overriding objective in a SAR is continuity of public service, not maximising creditor returns.

The Government could therefore set out at the point of SAR entry, or shortly after, that a mutual is the preferred exit route for Thames, and make that clear in the special administrator’s mandate. Work would need to be done in parallel with the SAR process to incorporate and put in place the governance framework for a new mutual, as well as more broadly updating water regulations to take into account the Cunliffe report’s recommendations. Ofwat could then work towards a licence transfer to the mutual, rather than running a market sale.

In conclusion, I have some questions for the Minister. If she is unable to answer them now, I would appreciate an answer in writing if possible. Have the Government sought legal advice on the SAR process from a specialist law firm? I appreciate that FTI Consulting has been instructed for many months, but that is not a substitute for legal advice. A proper, specialist understanding of the SAR as a legal process, and of the litigation risk—perceived or actual—of applying for a SAR, is critical.

Will the Government commit to publishing a SAR assessment policy, and does the Minister agree that the creditors consortium has material influence over Thames Water, and therefore meets the ultimate controller test? Will the Minister act with Ofwat to enforce the appropriate penalties on Thames Water for having undergone that change without having given notice, and will she provide an update on the negotiations between Ofwat and Thames Water? Will the Minister now take the London & Valley Water deal off the table, and work with the Secretary of State to apply to the court for Thames Water to be put into special administration? Finally, in response to a question about whether she would consider the Liberal Democrat call for water companies to be mutually owned public benefit companies, the Minister said:

“I would be happy to see more mutual ownership of water companies, but the question is how we get there.”——[Official Report, 16 June 2026; Vol. 787, c. 728.]

Given that, will she confirm her Department’s position on mutual ownership models for water companies? What are the Department’s plans for exploring how we get there?

19:16

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)]

I thank the hon. Member for Witney (Charlie Maynard) for inviting me to respond to his concerns about the future of Thames Water. I have listened with his interest to his comments, and I hope I will be able to add some facts to the debate. I also accept his sympathy and anger on behalf of his constituents. Indeed, they must feel very angry about the fact that water was left in such a state, and that the Environment Agency’s budget was cut by half by the coalition Government, who also introduced self-monitoring. The Environment Agency was unable to fulfil its duties during the time of the coalition Government, and the regulators did not put forward forceful accountability for the water companies. It was left to this Labour Government to clear up the mess left by the coalition Government and 14 years of the Conservatives. I am sure the hon. Gentleman shares my anger about that—I certainly felt angry about it when I came into government and saw the mess that we had been left to clear up.

Let me remind the hon. Gentleman exactly what we have done. We introduced the Water (Special Measures) Act 2025 within six weeks of entering government, to raise standards, enforce accountability, and make pollution cover-ups a criminal offence. We banned more than £4 million in bonuses, and unlocked money in private investment to rebuild vital infrastructure. Just last week we introduced automatic penalties. There is more I could mention, including 10,000 water inspections, which is many more than happened after the slash and burn of funding for the Environment Agency by the coalition Government. We have restored to the system the accountability that has been missing for so long.

[Fleur Anderson (Putney) (Lab)]

My constituents are cheering on the work that the Government have done by getting a grip of this situation after the Environment Agency was left to mark its own homework, and the self-monitoring and regulation framework failed. Will the Minister say more about the dedicated supervisory teams in the White Paper, which will be working to stop this happening again and ensure that Thames Water changes in future?

[Emma Hardy]

My hon. Friend is quite right to point out how self-monitoring, which was introduced by the coalition Government, was such an utter mistake that has done so much damage to the water industry. It is why we are in the current situation. The purpose of the supervisory regime is to be able to intervene earlier, and it works alongside the performance improvement regime so that we can hold companies to account. That is why we are abolishing Ofwat—

[Charlie Maynard]

On that point, will the Minister give way?

[Emma Hardy]

I have heard quite a lot from the hon. Gentleman, so I would be most grateful if he would not mind giving someone else a chance. We are looking at introducing the performance regime for the same reason, because we want to ensure that we can intervene early to stop the abject failure that we saw under the coalition Government.

[Sean Woodcock (Banbury) (Lab)]

Every week in my surgeries I hear about the consequences of Thames Water’s failures. An elderly widowed constituent was left without running water after it failed and botched the installation of a water meter, and she was forced to shell out hundreds of pounds on an emergency plumber to remedy the situation. Will the Minister confirm that she understands the anger of constituents like mine with regard to Thames Water and its continued failing? Will she confirm that she will keep all measures under review?

[Emma Hardy]

It is true that I feel angry on behalf of all our constituents who have been so badly let down by the system that we inherited, and that is exactly why we have taken the action that we have. There is, of course, lots more to do—nobody is saying there is not—but we have to acknowledge the dire straits and the mess that we inherited. We are going to bring forward a clean water Bill to deliver on our promise to clean up our rivers, lakes and seas, and not just for today but for generations to come. The reforms will create a single powerful water regulator to act, and we will ensure that it has teeth in the way that the current regulator does not.

Turning to some of the issues raised by the hon. Member for Witney about the consortiums proposal, regarding the recapitalisation proposal being negotiated between Thames Water, London & Valley Water Consortium—a group of Thames Water’s creditors—and Ofwat, I reiterate that this Government will always act in the national interest. Before I turn to the proposal itself, it is important to be clear about the respective roles and responsibilities of the parties involved, because there is so much misinformation and misunderstanding out there. I welcome the opportunity to at least introduce a few more facts into the argument about the proposals.

Ofwat, as the independent economic regulator, is responsible for assessing that proposal and deciding whether it meets the relevant regulatory and statutory requirements, including whether it is appropriate to take the proposal forward for consultation. However, section 2 of the Water Industry Act 1991 places a duty on both Ofwat and the Secretary of State to exercise their respective relevant functions in the manner best calculated to further or achieve certain objectives. This includes protecting customers, securing the proper delivery of water and sewerage services, ensuring that companies can finance those services and that statutory obligations are properly carried out.

[Mike Martin]

Does the Minister think that the Secretary of State exercised those duties well when, under the Blair Government, Macquarie was allowed to come into Thames Water and South East Water and asset strip those companies?

[Emma Hardy]

Quite clearly, some of the behaviour that we have seen in the past from water companies shows that the regulatory system did not work, and that is exactly why we are changing it. Of course, between Blair and the current Government there were 14 years of Tory Government and five years of coalition Government during which those Governments could have taken the actions that we are taking today.

On 16 June, the Secretary of State gave her preliminary views on the consortium’s proposal to Ofwat, with reference to section 2 duties of the Water Industry Act 1991. She was clear that she does not believe that the current proposal goes far enough to protect customers and the environment. She cited three particular concerns in line with her duties: unfair costs to customers, delays to infrastructure investment and delays to environmental improvements.

However, the decision on how to assess the proposal and whether to proceed with consultation ultimately rests with Ofwat as the independent regulator. It is therefore important that the Government respect those boundaries. While the Secretary of State may express views in accordance with her statutory duties, it would not be appropriate for the Government to direct Ofwat’s decision making, prejudge the outcome of its assessment or be seen to exert undue influence on an independent regulatory process.

We are working closely with Ofwat, which will engage with the consortium on any revised proposal. It is important to be clear that it is ultimately a matter for Ofwat to decide whether to consult on the consortium’s proposal. However, I reassure the House that while the company is stable, we stand ready for all eventualities and the Secretary of State takes her duties very seriously.

I will also use this debate as an opportunity to address some of the misconceptions that have developed about special administration. Too often, SAR is presented as a simple lever that the Government can pull whenever there are concerns about a water company’s performance, but that is simply not the case. The reality is that there is a high bar for the imposition of a special administration regime. A company can enter into a SAR only if it becomes insolvent, or if there has been such a serious breach of its principal statutory duties or an enforcement order that it is no longer appropriate for the company to retain its licence.

Where performance is concerned, any application for a special administration regime would have to be supported by a robust and compelling body of evidence and would ultimately need to satisfy the courts. Bringing a case forward without sufficient evidence would not only risk the failure of that case, but waste a huge amount of taxpayers’ money. For any case brought forward, the Government and Ofwat would need to be convinced that there was a robust and compelling body of evidence. That is quite different from what is presented out there too often—that this is just a button the Government can press at will.

[Calum Miller]

I am glad the Minister has moved on to the substance of DEFRA’s case. Will she clarify for my residents whether she considers a company that is spending 33% of the income it gets from customers on servicing its debt and paying a 10% premium on that debt is actually viable as a company? Will she set out for the House what she considers to be the measure of insolvency for a privately held monopoly?

[Emma Hardy]

As I have just said, on the issue of performance, cases have to be brought forward to court, and the court must be convinced that the company is not performing—I will move on to insolvency.

This issue is why regulators start by using the full range of supervisory and enforcement powers available to them where appropriate. Companies must be held to account, put forward credible plans to improve and deliver for customers on the environment. Indeed, that is one of the reasons why we are introducing a new performance improvement regime through the clean water Bill.

The performance improvement regime will help to prevent poorly performing companies from falling into a cycle of decline, allowing regulators to step in before a company approaches the point of failure. It will strengthen accountability, support improvements in performance and provide a clearer pathway for intervention long before special administration may be required.

Let me address another misconception about special administration. Some suggest that placing a company into special administration would simply allow the Government to take over and run the company directly. That is not how the regime works. A special administrator is appointed by a court and has specific legal duties and objectives. It must manage the company’s affairs, businesses and property for the statutory purposes set out in the Water Industry Act.

The special administrator’s primary responsibility is to ensure the continued delivery of essential water and waste water services while securing a long-term solution for the business. Depending on the circumstances, that could mean rescuing the company, such as through a restructuring, or transferring it as a going concern to new owners. That is why the special administration regime exists to protect customers and maintain vital public services while providing a framework for recovery or transfer. Customers continue to receive their services throughout the process, and the special administrator operates under the supervision of the court and within a clear legal framework.

I know the hon. Member for Witney is particularly concerned about whether the consortium meets the criteria of acting as the ultimate controller of Thames Water. Let me use this opportunity to address his concerns. The classification of ultimate controller is a matter for Ofwat, as the independent economic regulator, by reference to the terms of the company’s licence. Ofwat has given a detailed explanation of why it does not consider the creditors to be the ultimate controllers of the company in its letter to the Chair of the Business and Trade Committee, my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), dated 8 September 2025.

Ofwat has stated that one of the reasons why it does not believe creditors are in a position to materially influence the company’s policies or affairs is that it does not have the right to appoint directors to the board, and it does not hold any governance or veto rights over the Thames Water business plan or other strategic decisions that the company’s board is making. I am reassured that it has reviewed the matter and that the ultimate controller of the company has not changed—

[Charlie Maynard]

How is that possible?

[Emma Hardy]

This is the thing with the hon. Gentleman: he makes many assertions in this House when he stands up to comment, but then he refuses to allow me to address and answer them. I am still answering his point about the ultimate controller. If he wants to ask me a question, he should have the decency and respect to listen to the answer.

I am also reassured that Ofwat will continue to keep the position of Thames Water’s ultimate controllers under review, and that it has made clear to the company its expectation that the company will continue to monitor whether there is, or may be, a change to the ultimate controller position.

I hope that what I have said has introduced a few facts to what can otherwise be quite an inflamed conversation. This Government are serious about tackling water company failure, acting on behalf of customers and protecting the environment. We have demonstrated this with the action we took on our very first day in office, and the action we have taken every day since. I am always happy to discuss issues related to special administration. I have held a private briefing with the hon. Member for Witney before. I would do so again, but what I do not like is when things are presented to the House in a way that is—I am not allowed to say dishonest, so how can I put this?—incorrect. This Government will always act in the national interest, and while the company is stable, we stand ready for all eventualities, including being ready to apply for a special administration regime if necessary.

Question put and agreed to.

19:30

House adjourned.