Thames Water

Lindsay Hoyle Excerpts

Tuesday 16th June 2026 Commons Chamber

[The Secretary of State for Environment, Food and Rural Affairs (Emma Reynolds)]

Before I begin, let me say that this is a solemn day, as we remember our dear friend and colleague Jo Cox—I got to know her when we were living in Brussels in our 20s. I pay tribute to her formidable sister and their family for all their vital work to honour her memory.

I will make a statement regarding the position of Thames Water and the proposed recapitalisation package under consideration. This Government were elected with a clear mandate to clean up our rivers, lakes and seas, having inherited record levels of pollution incidents from water companies. Thames Water has underperformed for 15 years. It has regularly missed performance targets, it has unacceptable levels of serious pollution incidents, and the company is heavily indebted. This situation, which delivers poor outcomes for consumers and the environment, cannot continue.

To fix this, over the course of the past two years, the company has been undertaking a recapitalisation process to seek vital long-term funding. The Government have been clear throughout that any investor will need to have a credible and robust turnaround plan, the implementation of which must be monitored by regulators and must restore the company’s financial resilience and operational performance. Ofwat, with the support of Government, have been in discussions with the London and Valley Water consortium—a group of Thames Water’s creditors—regarding the terms of a proposal. On 6 March, the consortium presented its proposal for Thames Water to both Ofwat and the Government. Ofwat has been continuing its discussions with the consortium since then, and I wanted to update the House on the next stage of the process.

Ofwat is currently evaluating the consortium’s proposal and, as the independent regulator, is responsible for deciding whether to accept it. If Ofwat decides to accept the proposal, this would be subject to a public consultation and a court-sanctioned restructuring process. A recapitalisation process of this size is complex and will take time. As the Environment Secretary, I have several duties, set out in section 2 of the Water Industry Act 1991. These include protecting consumers, securing the proper delivery of water and sewerage services, and ensuring that companies can finance those services and that statutory obligations are properly carried out. Today, I can confirm that I have sent a letter to Iain Coucher, Ofwat’s chair, outlining my early views on the proposal linked to my section 2 duties. These should not be taken as, nor do they constitute, a direction from Government to Ofwat.

I do not believe that the current proposal goes far enough to protect customers and the environment. I have three particular concerns about the proposal: the unfair cost to customers, delays to vital infrastructure investments, and delays to environmental improvements. The 16 million Thames Water customers are front and centre of my consideration, and I am primarily worried about the impact on them. There is an expectation in the proposal that customers will fund—and therefore bear an undue cost for—investment in the company.

In addition, I am not convinced about the proposal’s request to reduce performance standards, nor about the significant delay to vital infrastructure investments. This would mean delays to environmental improvements, particularly those related to waste-water treatments linked to statutory requirements, as well as to projects that are important for drinking water safety and supply. I am therefore concerned that the long-term resilience of the water and waste-water systems may not be adequately protected. The Government will always act in the national interest, and my priority as Environment Secretary is protecting customers and the environment. We will stand ready for all eventualities.

I conclude by emphasising this Government’s commitment to turning around the water sector. In under two years, we have taken swift, decisive action. We have introduced the Water (Special Measures) Act 2025 to raise standards, enforce accountability, and make pollution cover-ups a criminal offence. We have banned more than £4 million in bonuses for polluting water bosses; we have unlocked £104 billion of private investment to rebuild vital infrastructure; and we have commissioned Sir Jon Cunliffe to lead the most comprehensive independent review of the water sector since privatisation. Together, those steps have paved the way for the landmark clean water Bill announced in the King’s Speech. The Bill fulfils the commitments we set out in the water White Paper earlier this year and will deliver the fundamental reforms that are so desperately needed. This once-in-a-generation Bill will create a single powerful water regulator, moving away from a system where water companies mark their own homework by putting in place stronger, active supervision. This will strengthen water companies’ financial resilience and the long-term stability of the sector, with modernised economic regulation and new powers to drive turnaround where companies perform poorly.

Additionally, the reforms will strengthen the consumer advocate, providing a more independent, authoritative voice that can challenge the system, drive improvements in outcomes and ensure that customers’ interests are put first. We will also improve water quality by cutting pollution at its source. Finally, we will avoid the situation we are discussing today happening again: our reforms will give the new regulator the powers to ensure water companies do not accumulate unmanageable levels of debt. More broadly, they will secure the long-term stability of the sector and ensure that companies are financially resilient. Put simply, our reforms will deliver better outcomes for customers and the environment.

I commend this statement to the House.

[Mr Speaker]

I thank the Secretary of State for coming to the House at the earliest opportunity to update Members before making announcements elsewhere. She is a shining example to her Cabinet colleagues of how this House should be treated.

I call the shadow Secretary of State.

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[Emma Reynolds]

I am always happy to receive brownie points, Mr Speaker, so thank you for what you said.

The shadow Secretary of State rightly says that untreated sewage has poured into our waterways, and it did, in the long years that her party was in government. They cut the Environment Agency’s enforcement budget and moved to an approach where water companies marked their own homework—the so-called self-monitoring approach. She has some brass neck in lecturing us when we saw a series of failures under her Government.

We are here today, and we as a Government inherited record levels of pollution in our waterways, because of the failure by the Government of the right hon. Lady to see what was happening before their eyes. It was a failure of regulation, a failure of the regulators and a failure of the previous Government.

I am proud of what we have achieved in the two short years that we have been in power. I am proud of the Water (Special Measures) Act 2025. When did the Conservatives ever cap polluting water bosses’ bonuses? Never. The right hon. Lady lectures me about amendments to our Act. Our Act did more in less than a year than her party did in 14 years to ensure a fairer deal for customers and a better deal for the environment.

The right hon. Lady asks about nationalisation. I gently say that a special administration regime is not the same as nationalisation. [Interruption.] I am just clarifying for the House; I do not wish to have an exchange with her across the ballot box—sorry, the Dispatch Box—if I can possibly help it. The ballot box might be at some other point. There is a difference between nationalisation and a special administration regime. With nationalisation, the Government would be taking ownership of the company. With a special administration regime, the Government would finance a special administrator appointed by the courts to run the company.

The right hon. Lady talks about public trust in our water sector being at record lows. All I can say is that we are clearing up her party’s mess. [Interruption.] It was under her Government that Thames Water was plunged into unmanageable levels of debt.

[Mr Speaker]

Order. Can I just say to the shadow Secretary of State that I want to hear the Secretary of State? We do not need a running commentary all the way through. I made sure that those on the Government Front Bench listened to her.

[Emma Reynolds]

I am not surprised that there are not many Opposition Back Benchers here, given the Conservatives’ terrible record on the water industry. In our clean water Bill, which we will introduce later in the Session, we will take forward a desperately needed, once-in-a-generation reform of the water sector to introduce a powerful single regulator that holds water companies to account.

[Mr Speaker]

I call the Chair of the Environmental Audit Committee.

[Mr Toby Perkins (Chesterfield) (Lab)]

Thames Water customers are paying the price for the incompetent regulation that allowed Macquarie to saddle the company with eye-watering debts at the same time as its environmental performance was so disgraceful. That debt ultimately led to shareholders writing the equity value down to zero. Those who bought the debt are now making this proposal. I entirely understand why the Secretary of State would not want customers to receive a service that was failing in its environmental responsibilities while they paid higher bills, but what assessment has she made as to whether Thames Water is a viable business? We have been told that this is the final offer from the company. Is there a viable business there that will deliver long-term investment within a reasonable cost window for billpayers? If there is not, at what point does public administration become inevitable?

[Emma Reynolds]

As I set out in my letter to the regulator, Ofwat, I am concerned that the proposal will mean delays to environmental improvements and to improvements to water infrastructure, with, as my hon. Friend rightly says, unfair cost being laid at the door of Thames Water customers. He asks whether it is a viable business and about next steps. This is a stage in the process where I have given my early views on this proposal. It is now for Ofwat to decide what to do next, and we wait to see what happens.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I start by associating myself closely with the Secretary of State’s remarks about Jo Cox. It was a privilege to serve alongside her in this place, and we still miss her deeply.

I am grateful to the Secretary of State for advance sight of the statement and for the helpful briefing that I received earlier. Since Conservative privatisation more than 35 years ago, some £85 billion of billpayers’ money has flowed out like a torrent into the pockets of mostly overseas shareholders and executives paying themselves unearned bonuses. That money could and should have gone into cleaning up our waterways and modernising infrastructure. Instead, sewage was released into our lakes, rivers and seas for 1.8 million hours last year, and more than 100,000 of those were in the Thames region alone. Some 20% of our water leaks out of its pipes before it even reaches our homes. For Thames Water, the figure is even worse, with 25% of that water wasted.

Now Thames Water’s investors are asking for more time for more opportunity to take money before they inevitably run. The Secretary of State is right, then, that the creditors’ offer is a disgrace. They get to keep making money, and Thames Water billpayers get to pay even more to keep them going, while getting the privilege of seeing long-overdue infrastructure improvements delayed for yet another decade. Thames Water is taking the mickey. The Liberal Democrats say, “No more, and no thanks.”

It is clear that Thames Water has failed in its basic performance as a water company, and that gives the Secretary of State all the reason she needs to place it into special administration, so why is she not doing that instead? Her letter to Ofwat is, I am afraid, a sign of dreadful weakness. She has to beg an equally weak Ofwat to show a resolve that it institutionally lacks. Thames has failed in its performance, so just put it into special administration and migrate the company to a mutually owned model, where the billpayers own the company and call the shots. That way, investment will be made, sewage spills will stop and water leaks will cease. By doing that, she could begin the process whereby all our water companies are owned not by private equity, overseas investors or the sluggish state, but by the people. If she did that, she would win the favour of people from Witney to Windermere. Why does she not stop faffing about and do that instead?

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[Several hon. Members rose—]

[Mr Speaker]

Order. I am only going to call Members whose constituencies have Thames Water. Clive Jones, I think you are one of those Members.

[Clive Jones (Wokingham) (LD)]

Thank you very much, Mr Speaker. Residents in Wokingham have endured years of sewage dumping by Thames Water and ever-rising bills, while stakeholders have lined their pockets. The current ownership model is unsustainable, so will the Minister consider the Liberal Democrats’ call for water companies to be mutually-owned public benefit corporations, putting customers and the environment first, rather than prioritising the interests of creditors and financial institutions?

[Chris Hinchliff (North East Hertfordshire) (Lab)]

The Secretary of State has made the right decision in seeking to protect billpayers and opposing giving Thames Water a free pass to continue polluting our rivers. The thousands of hours of sewage spills into chalk streams and their tributaries across North East Hertfordshire that Thames Water has continued to oversee are unforgiveable, if not technically illegal. Thames Water is failing in practically every possible way. The level of incompetence is staggering, given that it has 16 million captive customers. My constituents are not interested in Thames Water being given any more chances—[Interruption.]

[Mr Speaker]

Order. What is the hon. Member for Caerphilly (Chris Evans) doing, on his feet while another Member is speaking? Come on, Chris, you should know better than anybody!

[Chris Hinchliff]

Will the Secretary of State put an end to this unholy mess and rid us of this frankly parasitic company once and for all?