Thames Water: Government Support

Calum Miller Excerpts

Thursday 3rd April 2025 Westminster Hall

[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.