Thames Water

Lord Cromwell Excerpts

Wednesday 17th June 2026 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

On the basis that I do not know how many pipes, what size reservoir and where it would be, it is difficult to assess a capital investment. The Government have a reservoir policy. We have committed to building new reservoirs. No Government have done that for many years now, which is partly why we have issues with supporting housing development and important infrastructure development in the south-east. We are working closely with the Ministry of Housing, Communities and Local Government because we must get this right to ensure that our economy is fit for the future.

[Lord Cromwell (CB)]

I agree with the Minister that debt overburdening of the company was a major cause of its problems. She has heard me call many a time for the new regulator to have the proper understanding of financial engineering, which the current Ofwat team simply did not have. That enabled the companies to get away with this. I underline this again because it was a simple inadequacy of understanding of financial engineering that enabled this situation to occur.

[Baroness Hayman of Ullock (Lab)]

The noble Lord is correct that how debt was leveraged was unsustainable. It has led us to a situation where companies—not just Thames Water—are saddled with a ridiculous amount of debt that the regulator should have had more of a grip on. I am happy to discuss further the noble Lord’s thoughts on this. We have had discussions before. When we come to the next water Bill, making sure that we get the regulator correct will be crucial.