Future of Thames Water

Charlie Maynard Excerpts

Tuesday 14th July 2026 Commons Chamber

[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?

--- Later in debate ---

[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.

--- Later in debate ---

[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.