Future of Thames Water

Debate between Emma Hardy and Mike Martin

Tuesday 14th July 2026 Commons Chamber

[Emma Hardy]

It is true that I feel angry on behalf of all our constituents who have been so badly let down by the system that we inherited, and that is exactly why we have taken the action that we have. There is, of course, lots more to do—nobody is saying there is not—but we have to acknowledge the dire straits and the mess that we inherited. We are going to bring forward a clean water Bill to deliver on our promise to clean up our rivers, lakes and seas, and not just for today but for generations to come. The reforms will create a single powerful water regulator to act, and we will ensure that it has teeth in the way that the current regulator does not.

Turning to some of the issues raised by the hon. Member for Witney about the consortiums proposal, regarding the recapitalisation proposal being negotiated between Thames Water, London & Valley Water Consortium—a group of Thames Water’s creditors—and Ofwat, I reiterate that this Government will always act in the national interest. Before I turn to the proposal itself, it is important to be clear about the respective roles and responsibilities of the parties involved, because there is so much misinformation and misunderstanding out there. I welcome the opportunity to at least introduce a few more facts into the argument about the proposals.

Ofwat, as the independent economic regulator, is responsible for assessing that proposal and deciding whether it meets the relevant regulatory and statutory requirements, including whether it is appropriate to take the proposal forward for consultation. However, section 2 of the Water Industry Act 1991 places a duty on both Ofwat and the Secretary of State to exercise their respective relevant functions in the manner best calculated to further or achieve certain objectives. This includes protecting customers, securing the proper delivery of water and sewerage services, ensuring that companies can finance those services and that statutory obligations are properly carried out.

[Mike Martin]

Does the Minister think that the Secretary of State exercised those duties well when, under the Blair Government, Macquarie was allowed to come into Thames Water and South East Water and asset strip those companies?

[Emma Hardy]

Quite clearly, some of the behaviour that we have seen in the past from water companies shows that the regulatory system did not work, and that is exactly why we are changing it. Of course, between Blair and the current Government there were 14 years of Tory Government and five years of coalition Government during which those Governments could have taken the actions that we are taking today.

On 16 June, the Secretary of State gave her preliminary views on the consortium’s proposal to Ofwat, with reference to section 2 duties of the Water Industry Act 1991. She was clear that she does not believe that the current proposal goes far enough to protect customers and the environment. She cited three particular concerns in line with her duties: unfair costs to customers, delays to infrastructure investment and delays to environmental improvements.

However, the decision on how to assess the proposal and whether to proceed with consultation ultimately rests with Ofwat as the independent regulator. It is therefore important that the Government respect those boundaries. While the Secretary of State may express views in accordance with her statutory duties, it would not be appropriate for the Government to direct Ofwat’s decision making, prejudge the outcome of its assessment or be seen to exert undue influence on an independent regulatory process.

We are working closely with Ofwat, which will engage with the consortium on any revised proposal. It is important to be clear that it is ultimately a matter for Ofwat to decide whether to consult on the consortium’s proposal. However, I reassure the House that while the company is stable, we stand ready for all eventualities and the Secretary of State takes her duties very seriously.

I will also use this debate as an opportunity to address some of the misconceptions that have developed about special administration. Too often, SAR is presented as a simple lever that the Government can pull whenever there are concerns about a water company’s performance, but that is simply not the case. The reality is that there is a high bar for the imposition of a special administration regime. A company can enter into a SAR only if it becomes insolvent, or if there has been such a serious breach of its principal statutory duties or an enforcement order that it is no longer appropriate for the company to retain its licence.

Where performance is concerned, any application for a special administration regime would have to be supported by a robust and compelling body of evidence and would ultimately need to satisfy the courts. Bringing a case forward without sufficient evidence would not only risk the failure of that case, but waste a huge amount of taxpayers’ money. For any case brought forward, the Government and Ofwat would need to be convinced that there was a robust and compelling body of evidence. That is quite different from what is presented out there too often—that this is just a button the Government can press at will.

Water Supplies: East Grinstead

Debate between Emma Hardy and Mike Martin

Monday 12th January 2026 Commons Chamber

[Emma Hardy]

I thank the hon. Lady for her kind words.

I completely share the frustration; it would be nice not to be talking about South East Water in the House. I feel I have come to know the hon. Member for Tunbridge Wells (Mike Martin) very well for the sad reason that we seem to be meeting all too frequently about problems in that area. As I have said, the Drinking Water Inspectorate will be investigating the situation in Tunbridge Wells. One thing it will look at is bottled water and its supply to vulnerable people—has that been communicated well; has there been a sufficiency; is it in the right place?—because during a crisis it looks at whether people are getting the water they need, so that investigation will take place.

As I have mentioned, I have already met Ofwat to share some of my concerns about performance issues at the company. I will be asking it to look at whether it thinks this company has met its obligations in serving its customers, and I will be reflecting deeply and seriously on what it tells me.

[Mike Martin (Tunbridge Wells) (LD)]

I thank the Minister for all the help she has given me and my constituents over the past month. Tunbridge Wells is yet again without water. We seem to roll from outage to outage. As we stand here today, 6,500 houses are without supply. Schools are closed, and even more are closing as more areas go out of supply.

The Minister knows from personal experience that the leadership of South East Water suffers from an optimism bias, with appalling risk management. The leaders have no idea what is actually going on. During the call the Minister and I were on just an hour and a half ago, they said two things that were immediately proven to be false. That is not necessarily because they are lying, but because they do not know what they are doing. Plainly, the leadership of South East Water suffers from groupthink.

Last week, the Environment, Food and Rural Affairs Committee showed the leadership to be negligent. The Committee Chair, the right hon. Member for Orkney and Shetland (Mr Carmichael), accused the CEO of misleading Parliament and said his position was “untenable”. The Secretary of State in the Minister’s own Department has said that she is “shocked” by Hinton’s “lack of accountability”. Does the Minister have confidence in Dave Hinton, the CEO of South East Water?

[Emma Hardy]

I thank the hon. Gentleman for his question, and yes, we have been spending a long time talking to each other. I watched the EFRA Committee with great interest, particularly when Dave Hinton rated himself eight out of 10. It is really important that the Drinking Water Inspectorate has the space to do its investigation. It is also really important that Ofwat has the space to have a look at this company. My priority here and now is trying to get people’s water back on and the system up and running, and that is where I want to focus my time, but there are questions to be asked about why we are back in this situation again.