Thames Water: Government Support

Tanmanjeet Singh Dhesi Excerpts

Thursday 3rd April 2025 Westminster Hall

[Luke Taylor (Sutton and Cheam) (LD)]

I beg to move,

That this House has considered Government support for Thames Water.

It is again a pleasure to serve under your chairship, Ms Lewell. I thank the Backbench Business Committee for granting me this important and extremely topical debate. I also thank hon. Members from across the House for joining me this afternoon. I hope that we are all of the same opinion on the problem, although we might well differ slightly on the solution.

Sixteen million Britons are gaslit daily by Thames Water. The company has unleashed filth in our waterways and homes, while cutting deeper and deeper into our personal finances. When I think about the performance of Thames Water, I imagine the very excrement it fails to manage. Despite all the years of historic under-investment in favour of profit, the business has been run into the ground. It now finds itself on the brink of collapse, counting down its days of cash remaining, as we all saw in the recent documentary. It makes an absolute mockery of the water utility industry that fat-cat shareholders are enjoying obscene payouts and company executives rake in sky-high salaries and bonuses, all while our rivers and our wallets suffer. River ecosystems are dying, and our children are denied the joy of swimming in nature because of the threat of swallowing human waste.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

I congratulate the hon. Member on securing this important debate. It is beyond clear that my Slough constituents are not happy with Thames Water—in fact, recent figures demonstrate that this company is one of the worst scoring for customer satisfaction for the fourth year in a row. We all know that the last Conservative Government had a rotten record on water companies: they were laden with debt and there were ridiculous executive bonuses and sky-high bills. That is not a sustainable future. Does the hon. Member agree that the Government must ensure that customers and our environment are at the heart of future reform and regulation in the sector?

[Luke Taylor]

I completely agree that customers and residents, our constituents, must be put at the heart of any solution. We must find a way to ensure that people do not have to endure this anymore. As the hon. Member correctly says, there customer satisfaction ratings have been absolutely awful, which alone gives us a credible excuse to raise their concerns in this place.

To go beautifully back on to the script, just this Tuesday Thames Water customers were slammed with a 31% hike in their bills, in the middle of a cost of living crisis, to pay for this utterly appalling service. I say “customers”, but those of us unlucky enough to call Thames Water our provider are more like prisoners. I say that because choice in this market is an illusion. In this country, taxpayers cannot choose their water utility company. They are trapped. This afternoon I shall argue that the only way this Government can support Thames Water is by saving it from itself.

--- Later in debate ---

[Luke Taylor]

My hon. Friend is absolutely right to say that the burden must lie on the vulture funds, and his comments are as wise as the residents of his Bicester and Woodstock constituency.

We Liberal Democrats have long called for action to reform this lousy company. It has been clear to us for a very long time that the current position is untenable. Recognising that it is fundamentally broken, we have no fear in stating exactly what we need: to rip it up and restructure it, so that it can finally work for our constituents.

To make my argument, I will begin by touching on the sheer mess that the company is in. Naturally, many of the points I make will come as no shock to the hon. Members across this House whose residents are flooding their inboxes as Thames Water floods our rivers with sewage. I will then outline why the Government must, with the utmost urgency, put this failing water company into special administration. Finally, I will argue that the only way that this Government can support Thames Water is by scrapping Ofwat and finally getting a regulator that uses its teeth.

Thames Water is knee-deep in a nightmare of its own making. In 2024, it set a new record by pumping 50% more untreated sewage into our waterways. In 2023, the company was named the worst performer in England and completely failed to meet its own performance metrics. In 2022, it made an extra £500 million in profit despite pipe bursts during a heatwave that caused a regional drought and a hosepipe ban. Untreated sewage now pumps through waterways in southern England like it is part of the furniture.

I fear that, were it not for the new Thames Tideway tunnel, which I was fortunate enough to visit recently, our river would be destined for the unmanageable decline that turns waterways into open sewers, like something straight out of a Dickens novel. Humans can choose not to go in the water, but flora and fauna have no such luxury. We are advised not to let our dogs swim in the river, because they may die from the pollution. Rare chalk stream habitats are being decimated by floods of untreated waste. These precious ecosystems are dying. They have no choice but to endure the toxic chemicals from Thames Water’s outflow pipes.

Thames Water’s sewage problems stem from a systemic failure to update its outdated, mostly Victorian infrastructure. High-risk infrastructure is given ad hoc fixes, with zero communication to customers. The company’s approach to fixing water facilities in Southwark, in London, is a prime example of this reckless approach. Last year, the chief executive had the audacity to blame excess storm overflows on climate change. Yes, climate change is real, and it is causing more intense rainfall and more regular storms, but let me ask Thames Water this question: how long have we known about this, and why did Thames Water not invest annually in its crumbling infrastructure to handle this well-known challenge?

Instead of prioritising the environment and local communities, Thames Water chose to line the pockets of its executives, its shareholders and the vulture funds that owned it. In 2023, the company paid £196 million in dividends, and over the past four years £62 million has been paid out to company executives in bonuses. This has been done at a time when the company is drowning in debt, which currently stands at a whopping £19 billion. Startlingly, more than 25% of customer water bill payments are spent on paying interest on the company’s debt. That is our money paying for the company’s mistakes.

Now, we are told not to worry; everything is in hand because US private equity group KKR—Kohlberg Kravis Roberts & Co.—has been selected as the preferred bidder to take control of Thames Water. This is not a British company, and it has no stake in British communities. We have no reason to believe that a private equity group based in the United States will act as though it has any obligation other than to itself. Northumbrian Water, in which KKR has a significant stake, was responsible for more than 40,000 sewage spills in 2024. What will change if it takes over Thames Water? Enough is enough. The Government must step up.

[Mr Dhesi]

The hon. Member is making a hard-hitting speech. The scale of the water bill increases has left many of my more vulnerable Slough constituents very anxious about how they will pay their bills. As he rightly points out, in recent years, while customers struggle, water companies including Thames Water have pumped record amounts of sewage into our rivers, paid their bosses millions in bonuses and failed to invest adequately in vital infrastructure. Does the hon. Member agree that the Government must take firm steps to stop this exploitation of the environment and of our people, and that water companies must now step up to the plate to protect their most vulnerable customers?

[Luke Taylor]

I absolutely agree, but I fear Thames Water’s lack of ability to do that, simply due to the debt pile and the situation in which the company finds itself. The hon. Member’s words on behalf of his vulnerable residents clearly come from a deep wish to serve them.

The Government must step up. They must not support Thames Water—the motion is somewhat misleading—but they must support customers throughout the south by finally doing what has long been necessary. Indeed, the first draft of the debate title I submitted to the Backbench Business Committee was, “10 things I hate about Thames Water”—my researcher will appreciate me getting that in—but alas, we were not able to bring it forward.

The Government must place Thames Water under special administration. I do not lay all the blame at the feet of the current Government. We all know that for far too long the Conservative Government stood idly by while Thames Water poisoned our waterways. But with each passing day this Government must surely recognise the growing urgency of action; if they do not, it will become their fault.

Under special administration the state can temporarily take control of this collapsing company. The day-to-day operations would carry on as normal, but the board that has bled the business dry would be gone—restructured and replaced. The greedy executives who have pocketed millions in bonuses while running the company into the ground would be stripped of their bonuses. There can be no more fat pay cheques while they fail customers. Taxpayers would no longer be forced to watch helplessly as their bills rise like the water level, slowly drowning them just to cover the company’s massive and foolish debt.

With new leadership there is a chance for a new direction. Under special administration the company could finally implement a meaningful plan to tackle the sewage crisis that has plagued our waterways for far too long. No longer would our streams, rivers and lakes be seen as expendable. The £3 billion debt lifeline that Thames Water has just secured will not last forever. All it serves to do is to preserve a broken status quo. The company has proven time and again that it is not fit for purpose. If this Government do not act now, how much more of our constituents’ money will be flushed down the drain? I am begging the Government—literally begging —to listen to our anger, save us from Thames Water’s incompetence, and take steps to ensure that the next iteration of Thames Water, and other water companies across the UK, cannot get away with this kind of behaviour.

It all starts with setting up a proper water company regulator that actually does its job. Ofwat is an utter disgrace. It is asleep at the wheel and complicit in the chaos caused by the company. The regulator has sleepwalked through the mess that is Thames Water, now greenlighting a 35% hike in bills over the next five years. It has turned a blind eye to the outrageous profits and bonuses pocketed by Thames Water shareholders. It has sat leisurely by as the water companies refused to properly update their crumbling infrastructure. It has repeatedly refused to set meaningful environmental targets for water companies to improve the quality of our water. The regulator is, through its inaction, helping Thames Water to fleece the taxpayer and carry out its dirty work.

It is time to scrap Ofwat and replace it with a new regulator, one with real teeth that, in the great tradition of anti-trust and community-first capitalism, is not afraid of a fight and will square up firmly to those who benefit most from a broken system. We need a regulator that is not afraid to be bold and ambitious in fighting for the best for the British people. We expect nothing less from the Government, so why should we shrink from demanding it from the regulatory arms of the state? Indeed, if the Government hold themselves to that standard, why should they hold their agencies to anything less?

The fact is that our constituents are being utterly let down. We cannot go on like this. Across the board, the water industry needs wholesale reform, but right at the heart of the scandal, wallowing in a stinking mess of its own making, is Thames Water—a company that was set up to serve the public but has instead become a paragon of failure, debt and daylight robbery. The Government do not have long. They must act swiftly to rescue the idea at the heart of the company—the idea, which I hope has not been fully eroded or caked in sludge, that a utility company, working in collaboration with Government, can be a force for good governance.