Future of Thames Water

Neil Hudson Excerpts

Tuesday 6th January 2026 Westminster Hall

[Dr Neil Hudson (Epping Forest) (Con)]

It is a great pleasure to serve under your chairmanship, Mrs Harris. I congratulate the hon. Member for Oxford West and Abingdon (Layla Moran) on securing this important debate. We have heard many contributions from across the House.

Thames Water is a distressing example that brings to light several serious issues that require ongoing attention from the Government and regulators. During the passage of the Water (Special Measures) Act 2025, His Majesty’s official Opposition tabled many sensible amendments that would have ensured that companies did not leverage too much debt. Puzzlingly, and disappointingly, the Government failed to support those amendments.

Companies should be held to the highest standards, and the last Conservative Government took a range of measures to try to do exactly that. Only 7% of storm overflows were monitored when the previous Labour Government departed office in 2010; the Conservatives took that to 100%. Our landmark Environment Act 2021 delivered our plan for cutting plastic pollution and holding water companies to account. We had our ambitious plan for water and took strong action on water companies that were illegally dumping sewage into our waters. We also banned water company bosses from receiving bonuses if the company had committed serious criminal breaches that damaged the environment.

Quite rightly, there is huge frustration that Thames Water has been wrung dry of capital over the years. It has failed to invest to expand its supply and to clean up its sewage spills. His Majesty’s official Opposition have been clear that we do not want to see Thames Water fold, because, although water supply would continue, it would carry the serious risk of higher bills for customers and would not solve any of the issues facing the company. Bizarrely, the third party led legal action that could have sunk the company, and, with it, Reform appears to be happy for the company to go under, exposing the taxpayer to billions and pushing consumer water bills sky high. If the company were taken into a temporary special administration regime or permanent public ownership, the taxpayer would ultimately end up paying the price. That cannot happen, it should not happen, and the parties calling for it seem to be in denial about what it would mean for the British taxpayer.

Ofwat, as the independent regulator for the sector—for now—has responsibility for the sector’s financial resilience and must continue to work closely with Thames Water. In the 2025 to 2030 price review, Ofwat challenged the efficiency of Thames Water’s proposed spending. That led to Thames Water being expected to deliver all schemes that it had proposed, but for £491 million less than it put forward and without any reductions in scale or standard. While Thames Water had initially proposed to appeal Ofwat’s final determinations for 2025 to 2030, it has deferred the appeal while it seeks to secure a rescue proposal.

Talking of spending, the Government have repeatedly made it a talking point that they have secured £104 billion of investment in the water system. They are not telling us, however, that £93 billion of that investment had been submitted by water companies in October 2023, while the Conservatives were in office.

[Charlie Maynard]

Will the hon. Gentleman give way?

[Dr Hudson]

I have to finish—I only have a certain amount of time. Can the Minister outline what action the Government are taking to help find a market-based solution for a Thames Water rescue deal, specifically in the light of reports that current lenders are preventing or shutting out competitors? What are the Government doing to encourage fair competition that puts the long-term interests of the company and customers first, rather than the interests of those seeking to minimise losses?

We are all agreed that Thames Water is in urgent need of a rescue plan. It must be a market-based solution that protects the taxpayer and customers. With the alarming example of Thames Water, which we are discussing today, and with the Cunliffe review’s clear call for improved financial responsibility, His Majesty’s official Opposition continue to urge the Government to rethink their approach and adopt sensible measures to put water companies on a more stable and secure financial footing, in order to protect water, the environment and the British taxpayer.