Thames Water: Government Support

Sarah Olney Excerpts

Thursday 3rd April 2025 Westminster Hall

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Ms Lewell. I thank my hon. Friend the Member for Sutton and Cheam (Luke Taylor) for securing this debate and for his stirring opening remarks.

The Government have repeatedly referenced the £22 billion black hole that they inherited, but there has been far less reference to the debt accrued by Thames Water, which is comparable with that figure. Company executives have received hefty bonuses, and shareholders have taken billions of pounds in dividends out of the company, but Thames Water customers are seeing their bills rise by an average of 35% over the next five years. During a cost of living crisis, and on top of other mounting bills, this rise is extremely concerning for many of my constituents. What is even more alarming is that Thames Water does not believe that the bill hike is sufficient to meet the targets set by Ofwat, and it has since referred the final determination to the Competition and Markets Authority.

The Liberal Democrats have been calling for Thames Water to be placed into special administration, as it has shown that it cannot be trusted to provide a service that does not degrade our environment or line the pockets of its shareholders. In response to those calls, the Government have implied that Thames Water is not breaching its statutory duties, and therefore that intervention is not under immediate consideration.

Thames Water has repeatedly shown an inability to undertake its basic duties. In my Richmond Park constituency, Kingston Vale residents have had to endure almost constant traffic chaos in their neighbourhood, as Thames Water has repeatedly had to attend to a burst sewage pipe. A constituent reported to my office that sewage spills over the road following a leak. Thames Water recently agreed to replace the pipe, having resisted it for years. I am sure that the Government would agree that people should not have to put up with unfiltered sludge spilling on to their pavements.

Senior managers at Thames Water acknowledge that many departments are understaffed and, by their own admission, do not have the funds to invest in critical infrastructure to prevent leaks and sewage-dumping into our rivers. In a recent BBC documentary, some staff members even admitted to presenting favourable statistics when measuring the concentration of E. coli in the Thames. The cleanliness of our rivers should not be a public relations exercise. It is extremely important that Thames Water is held to account for polluting our rivers.

In 2024, Thames Water was responsible for 298,081 hours-worth of sewage spills. A freedom of information request by the Liberal Democrats discovered that Ofwat has collected not a penny of fines for that disregard of our environment. By not replacing Ofwat with a regulator with teeth, the Government are not installing a sufficient deterrent to ensure that Thames Water takes action to prevent such environmental incidents.

Given Thames Water’s current financial situation and operational capacity, as well as recent reports that KKR—which boasts a similarly poor environmental record with Northumbrian Water—plans to buy the company, does the Minister believe that Thames Water has the capabilities to prevent serious environmental hazards from repeatedly occurring?

--- Later in debate ---

[Munira Wilson (Twickenham) (LD)]

It is an absolute pleasure to serve under your chairmanship, Ms Lewell. I congratulate my hon. Friend the Member for Sutton and Cheam (Luke Taylor) on securing this important debate. It is being held only a short time after we found out that Thames Water pumped an incredible 298,081 hours-worth of sewage into our waterways in 2024, attacking our natural environment and undermining public trust. All this was at the same time as continuing to pay significant bonuses to its bosses and dividends to its shareholders, while demanding that taxpayers foot the bill. It beggars belief.

The slew of scandals, the lack of trust and concerns about water quality, not to mention the parlous state of Thames Water finances that my hon. Friend the Member for Sutton and Cheam so eloquently outlined, are exactly why I and local campaigners are fighting Thames Water’s controversial proposals to pump treated sewage into the river at Teddington in my constituency. The Government have the power to take that scheme off the table, as the shadow Minister, the hon. Member for Keighley and Ilkley (Robbie Moore), knows from when my hon. Friend the Member for Richmond Park (Sarah Olney) and I lobbied him before the last election. The new Minister, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Kingston upon Hull West and Haltemprice (Emma Hardy), also has the power to take the scheme off the table. I will outline why the scheme should not go ahead, which links to the subject of the state of Thames Water’s finances.

The river is at the very heart of the community in my constituency, with paddle boarders, rowers and wild water swimmers from not only our local community but from further afield coming to use the river, and residents are extremely worried about the environmental impact of the proposals, including on human health, biodiversity, wildlife, and of course water quality.

[Sarah Olney]

My constituents in Ham and north Kingston on the opposite bank of the river from my hon. Friend’s constituency in Twickenham are particularly concerned about how the construction impacts will affect the Ham Lands nature reserve. We have not heard enough from Thames Water about exactly what its plans are for that. Does she agree that Thames Water needs to be much more up front about what exactly it plans to do?

[Munira Wilson]

Absolutely. A lot of those environmental and social impacts have yet to be set out in detail. My hon. Friend and I are both eagerly awaiting, as are thousands of our constituents, the environmental impact assessments and the statutory consultation, which I believe will start later this year.

Thames Water keeps telling us that water quality will not be compromised, yet it has failed to assure us that dangerous compounds and chemicals, including PFAS— perfluoroalkyl and polyfluoroalkyl substances, or so-called “forever chemicals”—which I have talked at length to the Minister about, will be filtered out. Its environmental track record tells a different story and residents are understandably sceptical. Thames Water insists that the proposals represent the best value option, yet it has failed to show to the community and elected representatives its workings on how it has got to that best value definition.

The company has a proven history of failing to invest in infrastructure and in the essentials, while pouring millions of pounds of bill payers’ money into short-term fixes that do nothing but produce new assets for the company to borrow against. Indeed, that is what many residents are suspicious the scheme is about: trying to load up its balance sheet to be able to leverage yet more debt.

Just as Thames Water declared itself to be on the verge of collapse, the Government approved a £300 million infrastructure project that, by the company’s own admission, will be used only once every two years and save only one tenth of the hundreds of millions of litres of water that Thames Water loses every day through leaks. This is after Thames Water spent some £250 million on the Beckton desalination plant back in 2012, which was meant to improve water resilience in London, but has barely been used. When I questioned Thames Water’s chief executive officer about it, he told me that it did not work as well as it was meant to—I kid you not. This leaves Thames Water customers in my constituency rightly asking why they should pay the price for its mismanagement. If the Teddington direct river abstraction does get the green light from Government, will it deliver the benefits that Thames Water claims it will to warrant the environmental impact, both on our river and indeed on its shores?

It is the issue of trust that is so important to public confidence in our water companies and our water infrastructure. The public ought to have confidence that the companies responsible for our most basic human need, clean water, are acting in their best interests, not in the interests of shareholders and executives. Time and again Thames Water has eroded that trust and proven itself unworthy of the public’s confidence, and throughout it has been our constituents who have been asked to pay up for the failures and the mismanagement of the company. Over a quarter of bill payers’ money is spent simply on servicing water company debt. Worse still, while Thames Water pleads poverty, its executives slip out the back door with eye-watering bonuses.

Where is the accountability? Where is the justice for those who suffer the consequences of their negligence? As my hon. Friend the Member for Sutton and Cheam has set out, the Liberal Democrats have a strong record on this issue. I pay tribute to my hon. Friend the Member for Witney (Charlie Maynard) and his attempts to hold Thames Water to account in the courts and challenge it for its horrendous behaviour. He has been absolutely outstanding. I thank him for everything he has done with his tremendous campaign.

We must put an end to the cycle of environmental negligence and financial mismanagement. Thames Water is on the brink, and placing it into special administration is the only way to prevent a full-scale collapse. Meanwhile, Ofwat lacks the authority to hold failing water companies to account, and unless the Government take decisive action, they risk the same weakness. It is time, as my hon. Friend the Member for Sutton and Cheam has already said, to replace Ofwat with a regulator that has real enforcement powers and the full backing of the Government behind it.

The bottom line is that we need to crack down on failing water companies, not prop them up. With customers paying ever higher bills and our precious environment at risk, the Government must go much further, much faster, in reining in these companies.