Thames Water: Government Support

Debate between Emma Hardy and John Lamont

Thursday 3rd April 2025 Westminster Hall

[Emma Hardy]

With respect, I think that we have different interpretations of the truth. We are saying that the company can enter SA if it is insolvent. Thames Water is not at the point of insolvency. My message to the public and to people working in the company is that the company remains stable at the moment; however, as a responsible Government, we are preparing for every eventuality.

I want to talk about broader commitments to financial stability and the independent commission. For me, this debate highlights how important it is to address the financial resilience of the water sector. We are talking specifically about Thames Water, but that does not mean that everything else is a bed of roses. Some historical decisions made by companies on debt levels have left them badly financially exposed. Those decisions often coincided with moves towards more complex ownership structures and the involvement of firms with shorter-term horizons.

We recognise that the Government have an important role to play in setting a regulatory framework that encourages a stable water sector. In hindsight, many might question the 2014 changes to make Ofwat a lighter-touch regulator. The Independent Water Commission is exploring how the Government could provide the regulatory structure that most people in the Chamber recognise that we need. The call for evidence is currently live, seeking views from stakeholders on improvements that could be made to economic regulation across a number of areas. As always, we welcome contributions from everybody across the House. The call for evidence closes on 23 April, and I encourage all interested parties to respond to the commission’s questions on these topics via DEFRA’s online consultation tool, Citizen Space.

I conclude by reiterating that both the Government and Ofwat are carefully monitoring the situation with Thames Water.

[John Lamont]

I want to pick up on my point about Scotland. Some Members have been advocating for nationalisation. Does the Minister have any thoughts on that, and have the current Government looked at what is happening in Scotland? Scottish Water, by many standards, is performing even less well than Thames Water. But Scottish Water is state-owned. Its chief executive is paid £290,000. The model in Scotland is not something that I would encourage the Minister to look at—I am not saying that she is—but I would be keen to have her reflections.

[Emma Hardy]

Water is devolved, and I completely respect the autonomy of the Scottish Parliament to make those decisions. The Government have been clear that we are not looking at nationalisation, simply because of the cost, the time it would take and the legal complications. My focus is quite simply on what I can do to improve the situation that we currently face. There is a lot of consensus around looking at regulation and how effective, or not, it is at the moment, and what can be changed. That is where I have put all my focus. Nationalisation was ruled out of the Independent Water Commission; however, all other forms of ownership are allowed within the terms of reference.

It is for the companies to resolve their financial resilience issues within the context of their licence and broader statutory obligations. However, I must be clear: the Government are prepared for all scenarios across our regulated industries, as any responsible Government would be. This new Government are committed to turning around the water sector—I refer back to my 10 reasons for hope before Easter—which will be achieved through practical measures to clean up illegal sewage dumping and attracting major private sector investment to upgrade infrastructure while prioritising the interests, as we have mentioned, of customers and our beautiful environment.