Thames Water: Government Support

Bell Ribeiro-Addy Excerpts

Thursday 3rd April 2025 Westminster Hall

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.