Future of Thames Water

Debate between James Naish and Angela Eagle

Tuesday 6th January 2026 Westminster Hall

[The Minister for Food Security and Rural Affairs (Dame Angela Eagle)]

It is a great pleasure to serve under your chairmanship, Mrs Harris. I do not know whether it is down to you, but it is now much warmer in this room than it was in the last Parliament when I was chairing such debates. I regularly left thinking that I had developed frostbite, so whoever has managed to make that change has done a good job. I thank the hon. Member for Oxford West and Abingdon (Layla Moran) for securing this debate, and thank all hon. Members on both sides of the Chamber for the manner in which they have, very eloquently, made their important points in this debate. It is a pleasure to respond to it on behalf of the water Minister, my hon. Friend the Member for Kingston upon Hull West and Haltemprice (Emma Hardy), who sadly is unable to be here today.

This Government are committed to the transformation of the water sector. As the hon. Member for Epping Forest (Dr Hudson) has just said, the industry is spending £104 billion of private investment on upgrading our crumbling sewage pipes and cutting sewage pollution. Is it not a pity that some of that investment did not happen many years ago? That was promised as one of the advantages of a privatisation that, as many people have said in their various eloquent ways during today’s debate, has essentially not worked. Through the Water (Special Measures) Act, we have driven meaningful improvements in the performance and culture of the water industry, as a first step—only a first step—in enabling wider transformative change across the sector.

Following Sir Jon Cunliffe’s report, we have announced our intention to do three things: establish a new single regulator, create a water ombudsman, and stop water companies from marking their own homework when it comes to pollution. The water reform White Paper, which—I have to tantalise hon. Members—is due very shortly, will set out our vision for the sector. Members will not have to wait very long; that is all I am going to say. That White Paper will form the basis of new water legislation, which we will introduce as soon as we get a place in the parliamentary programme to do so. The reforms will secure better outcomes for customers, investors and the environment, and will make the water sector one of growth and opportunity.

Turning to Thames Water, this Government will always act in the national interest, and we will work to ensure that Thames Water acts in the best interests of customers and the environment. We are working closely with Ofwat, which is in conversation with the London & Valley Water consortium, a group of Thames Water’s creditors. Ofwat will only agree to a plan that will ensure the best possible outcomes for customers and the environment.

[James Naish]

I think it was more a turn of phrase than anything else, but it was suggested earlier that customers were being treated as cash cows for servicing the debt of Thames Water. Will the Minister confirm that that is not the case, either for Thames Water or for other companies, because investment is ringfenced under the new legislation, and therefore customer money is being put into the infrastructure that matters?

[Dame Angela Eagle]

I can confirm that, and it was one of the first things that this Labour Government, when we were incoming, put on to the statute book as a priority, in order to prevent that particular abuse. Thames Water is now under a cash lock-up arrangement; only Ofwat can approve any further dividend payments. That restriction will remain in place until credit ratings improve. Nothing that is happening at the moment will allow the kind of behaviour that we have seen in the past, from this company and others, to continue.