Water Companies: Fines

Baroness Jones of Moulsecoomb Excerpts

Thursday 6th February 2025 Lords Chamber

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I congratulate the noble Baroness, Lady Grender, on this very topical Question. It is such a pleasure to see a Labour colleague, a Lib Dem colleague, a Conservative colleague and, I have no doubt, a Bishop colleague standing up and saying things that I completely agree with—it is so rare.

I am going to take a slightly different tack from my colleagues. It is very hard to convey the anger felt by not just hundreds of thousands but millions of people at the mess the water companies have made over the past 30 years. I say “mess”, because that is what the public have had had to deal with. This is about sewage-filled seawater, dirty beaches, polluted rivers, chalk stream ecosystems destroyed and sometimes even E. coli in our water supply. Of course, water companies have been amazingly efficient at siphoning off money for shareholders and employees. But this week, the public are fighting back.

I will focus on Thames Water, not least because last week I had a letter from it demanding £19 extra per month on my bill to pay for the work it should have been doing over the past decades and has not done. But my anger with it pre-dates that by quite a long way. Thames Water has £17 billion of debt and is at the centre of a public backlash against Britain’s privatised water industry, which created monopolies, so customers have no choice. It has increasingly polluted our environment with sewage amid justified accusations that profit has been prioritised over the environment.

Windrush Against Sewage Pollution is one of 34 clean river groups involved in a legal challenge in the High Court this week, in an attempt to push for temporary nationalisation of Thames Water. Obviously, I strongly support this. In court, the campaign groups will argue that Thames Water should be put into a government-handled special administration. The court hearing will decide whether to approve the £3 billion in emergency funding that Thames Water has been allowed so far. The judge will hear campaigners argue that the emergency loan will be far too costly for customers. I would add: why should we pay twice for goods and services that we have not had? Again, let us remember that Thames Water already has a debt of £17 billion.

The High Court judge will also hear from Britain’s biggest water supplier and groups of rival creditors on Monday before deciding whether to approve the rescue of this close-to-bankrupt company. Without the debt lifeline, Thames Water has said it could run out of cash by March. Last month, Thames Water was granted Government approval to seek the £3 billion cash loan, which the troubled company said was crucial to ensure that it had enough money to stave off temporary nationalisation.

Clean river campaigners led by Charlie Maynard, the Liberal Democrat MP for Witney, have made a written submission to the court. The case is closing today, with the decision in mid-March. Charlie Maynard, whose constituency has been at the centre of mounting anger over raw sewage pollution being pumped into the River Windrush, is backed by other MPs in the water company region, and 28 parish councils. Maynard said in the submission that he was opposed to the restructuring plan in the interests of the company’s 16 million customers and argued that servicing the emergency fund would not be financially sustainable in the mid or long term for the company, and that it did not make appropriate provision for the company to fulfil its legal obligations to provide water and sewerage services and not to pollute rivers. Ultimately customers will be forced to pay for the emergency loan, which comes with a 9.75% interest rate—absolutely staggering.

Thames Water said it was confident that its plan would succeed as it had the backing of creditors holding more than 90% of its secured debt, despite opposition from a group of much lower-ranked creditors. The judge must decide whether the dissenting creditors would be no worse off in the most likely alternative to the plan, which Thames Water has said is that the company is placed in special administration. Under government proposals, Thames Water would get access to additional funding, cash reserves and debt extensions, giving it breathing space to secure its survival in the long term. A lot of people would say that it did not deserve that, and that it actually deserves to go bankrupt.

Evidence provided to the court by Dieter Helm, professor of economic policy at Oxford University, said that Thames Water had failed on the capital maintenance of its assets and had

“profit maximised by gearing up its balance sheet at the outer limits of what was sustainable”.

He added:

“Thames used the balance sheet to mortgage the assets and pay out the proceeds in special dividends and other benefits to shareholders”.


Then, only today, another Thames Water fail: bottled water is being delivered to homes in parts of Surrey, after residents have been left without water. Supply problems in the area are said to have been caused by “multiple bursts” on the same pipe. People in that area may have low pressure or no water, Thames Water has said. In its latest update, it said:

“We remain on site, working to fix the pipe that has been damaged during the bursts”.


That is a considerate statement to its customers, who are quite used to it failing them completely. But it has promised that

“additional supplies of bottled water are available”.

There is absolutely no doubt that Thames Water did this damage, so presumably it has to pay to clean it up—in which case, the money that it pays in fines really has to go to the clean-up. It is not possible to repair all the damage to nature and people, because ecosystems have been destroyed. I really hope the Minister can explain to the Treasury just how annoyed millions of people are that this has not yet happened.

I very much support the whole idea of the restoration fund, and I hope that this Government go for it.