Future of Thames Water

I beg to move,

That this House has considered the future of Thames Water.

It is a pleasure to serve under your chairpersonship, Mrs Harris, and I thank the Minister for attending this debate to listen to my constituents’ concerns. What better way to start the year than to debate the future of Thames Water? But—let me be frank—I do not believe this company has a future. If Thames Water had been genuinely subject to market forces over the years, it would have collapsed many, many decades ago, but instead, a broken regulatory system and chronic mismanagement have repeatedly let businesses and customers down.

Consider this: last year, Robert, aged 81, from Abingdon, received a water bill for—wait for it—£39,000. Thames Water later revised it to £37,688.64. He and his partner Patricia said, quite understandably, that they had become ill from stress because of the bill. It took two months, an intervention and a BBC story to cancel the absurd charge. That case epitomises the incompetence and disregard for customers that has eroded public trust in this company.

Another example is 70-year-old Morna from Botley, who suffered repeated floods in her house due to a blocked Thames Water drain. I visited and saw for myself the strain it took for her to fight for over a year with Thames Water for it finally to unblock it. The delays and inaction are just unacceptable.

I have one last example: Len and Jenny are in their 80s and in frail health, and they lost basic sanitation to their home in 2023. A blocked pipe caused sewage to enter through air bricks and they were left with no toilet, no washing facilities and no power. All they had was a portaloo in their garden and a tanker to pump out sewage. Foul waste continued to bubble up through the basin in their bathroom. We are now in 2026, and Jenny and Len still do not have the recommended non-return valve, a firm date for the maintenance or compensation. If Thames Water cannot even do those basics, what can it do?

I thank the hon. Lady for bringing this debate to Westminster Hall. Thames Water is £20 billion in debt, and it needs £20 billion to service the investment that is necessary. The chief executive has had substantial payouts and dividends. Is it not time for the Government to intervene, take over and get the job right?

Thames Water’s repeated mismanagement is why the Liberal Democrats have long called for all of the water company bosses not to receive that level of payout. We will continue to campaign in that vein.

Locally, we have been campaigning on the issue for many years. Along with Safer Waters, Thames21 and local activists, we secured bathing water status for Port Meadow in Oxford, only the second inland site in the country. That has forced Thames Water to monitor and report on water quality there, but for the last three years, that rating has been “poor”. Residents in Oxford, like others across the country, continue to risk their health every time they swim.

One would think that poor quality would logically lead to action, but it seems not to have done. In a debate just two years ago, I called for legally binding targets on sewage pollution, so I was pleased when the Government promised last July to halve sewage pollution by 2030. Today, I urge the Minister and the Government to move faster and to take all legal and financial steps necessary to make that change happen, because, as we have heard, Thames Water customers experience poor service, flooding, sewage in their homes and sewage in their rivers, and for this, they are being asked to pay more—indeed, 31% more in 2025-26 than the year before.

My hon. Friend is giving an excellent speech on a topic that is very close to every Liberal Democrat heart. Thames Water is in £17 billion of debt, yet the company continues to progress with the Teddington direct river abstraction in my constituency, with a plant that would be operational for just six weeks a year at a cost of £1 billion. The project is strongly opposed locally on environmental, social and economic grounds. Does my hon. Friend agree that Thames Water should scrap the project and use that money to cut bills?

I do not trust Thames Water to do anything, and I will come on to an example of an even bigger and even worse project. We want investment and change, but the problem we have is that there is no longer any trust that this company can do that on time and on budget, and in a way that is actually going to deliver real change. That is why 2,507 local residents across Oxfordshire backed a Lib Dem petition calling for these price hikes to be scrapped. If this were a proper private company, it would not be asking customers to pay more for this level of service, yet that is exactly what it has done, and it has frankly given them no say in the process.

While I am lambasting this company today, I am not having a go at its hard-working staff. We need to be clear that they are not to blame for the current woes and dismal performance. In July, I visited Abingdon sewage treatment works, and friendly and knowledgeable people who had worked there for decades told me how the system is supposed to work: tanks remove the sludge, microbes digest bacteria and clean water is discharged. It was so clean that I could have drunk from it there and then—in fact, a heron strutted around the wetland ponds showing exactly what would have been possible. Sadly, that summer idyll is all too frequently shattered when the rain falls, the floodgates open and raw sewage pours out.

At this point, I should acknowledge the role that we and the public can play in helping to reduce pressure on the system. We have seen with our own eyes those mountains of wet wipes being removed from the pipes, and that skip full of rubbish that should never have been flushed down the toilet in the first place. Do the Government have plans for a public information campaign on this matter—paid for, of course, by water company profits? If we saw as many adverts on this issue as we do on things such as fast food, it would help everyone in protecting our rivers.

My hon. Friend speaks of the under-investment in sewage treatment works and other assets. Nowhere is that truer than in Oxford sewage treatment works, which serves residents in my constituency outside of Oxford city. The site already cannot cope with the amount of sewage that it has to deal with. Does my hon. Friend also find it strange that the Environment Agency suddenly dropped its objections to developments, days after receiving a letter from lobbying interests around Oxford? Does she share my scepticism that Thames Water can deliver on the upgrades before the homes are built?

My scepticism about Thames Water is basically the theme of my entire speech, and I completely agree. We absolutely need more houses in and around Oxford—on that I am clear. However, if that work is one of the things stopping those homes from being built, we must of course ensure that it is done to the highest possible standard. It sounds like something has happened there, and I would love to understand better why the EA withdrew that objection with no further change.

More than half of sewage treatment facilities are operating below their required capacity, while raw sewage discharge doubled between 2023-24 and 2024-25. That is a symptom of chronic underinvestment, and we need serious capital to fix the problem. Instead, Thames Water chose to funnel profits into dividends. As recently as March 2024, the company paid £158.3 million out to shareholders. This is a company that is hanging on to a lifeline of creditor goodwill, having already raced through £1.5 billion of the emergency cash that was injected 11 months ago. The scale of the mismanagement is staggering.

No one doubts the need to take steps to secure our water supply for the future in the context of the climate change, but I now come to the local example that I promised my hon. Friend the Member for Richmond Park (Sarah Olney). Thames Water presides over leaks to the tune of over 592 million litres a day, which is nearly a quarter of all the water it manages—it is unbelievable. My residents have justified questions about the validity of the arguments underpinning the south-east strategic reservoir option, also known as SESRO, which lies just outside Abingdon. It is estimated to cost £7.5 billion and counting, and we should remember that it started at £2.2 billion, and barely nothing has changed since then. If such a major project must go ahead—the Government say it should, fine—then can the Minister tell me something that I just do not get? Do they really trust Thames Water to get this done right? It is like running a bath when a hole has been punched through the plughole. I would not trust Thames Water to run a bath, let alone deliver a project of this size.

I remind Members to bob if they wish to speak, so that we can ascertain whether we need a time limit. I will call the Front Benchers at 5.08 pm, with the Minister rising at 5.18 pm.

It is a pleasure to serve under your chairship, Mrs Harris. I thank the hon. Member for Oxford West and Abingdon (Layla Moran) for securing the debate and for her comments. As she said, the issues have been caused by many years of under-investment. In my corner of south-east London, constituents in Bexleyheath and Crayford continue to experience many problems.

Of course, I support the measures in the Water (Special Measures) Act 2025, which this Government introduced following our election last year. However, as I have said on numerous occasions since my election 18 months ago, we continue to see the real impacts of a lack of investment in infrastructure over many years, particularly in Crayford town centre. We have now had four consecutive summers of major leaks in Crayford town centre. They have caused the closure of the road in the town centre for a week or two, impacting residents and businesses, and there is no real understanding of Thames Water’s long-term solution for these issues or how we will see investment in local infrastructure in the longer term.

As has been said, we have seen an enormous increase in bills this year. For many of my constituents, they have risen by 30% or 40%—my bill in fact went up by a higher percentage—but we continue to struggle to obtain information from Thames Water. I have told the company many times that, if we must have that level of increase, and we know the condition of the local infrastructure, it would be hugely helpful for me to be able to explain to my constituents why they are seeing that increase and to understand the programme of works for local infrastructure and where the money is being invested to put things right. It continues to prove very difficult to obtain that list.

I have supported the Government’s position, which is that they will continue to work to turn the company around in private ownership, but what will we do if the Government’s investment runs out? At what stage will we say to Thames Water that constituents cannot continue to see that level of increase and receive that lack of explanation on the local investment? At what stage will we say that enough is enough and we need to take a different direction?

I am imposing a three-minute time limit. Any interventions need to be short to allow all Members who are on the call list to speak.

It is a pleasure to serve under your chairship, Mrs Harris. I commend my hon. Friend and constituency neighbour the Member for Oxford West and Abingdon (Layla Moran) for introducing the debate so eloquently. As she said, there is no question but that climate change and population growth are placing increasing strain on our water resources, and that we need the right infrastructure to accommodate a growing population. That is why, despite some aspects being controversial, I support new housing and road projects in my constituency.

Concern about some of Thames Water’s plans is widespread and impossible to ignore, because of Thames Water’s performance and track record. It is impossible to ignore the fact that Thames Water currently loses more than 600 million litres of water—nearly a quarter of the water in its network—to leaks every day. The ongoing failure to deal with those losses is one of the principal reasons why my constituents do not have faith in Thames Water’s enthusiasm for what it is now calling the White Horse reservoir.

Thames Water’s record of financial mismanagement and poor operational delivery is well documented and has badly eroded public trust. Against that background, it is extraordinary, but really ought not to surprise us, that the estimated cost of the proposed reservoir near Abingdon has risen from £2.2 billion to as much as £7.5 billion. That is no marginal increase: it is a threefold rise. At the same time, the size of the proposed reservoir has increased by 50% compared with what was once consulted on.

Despite the scale of the financial risk, it is bill payers—my constituents—not investors who are expected to foot the bill. This is not a fair allocation of risk, particularly when the company’s past decisions have contributed to its current financial fragility. We therefore urgently need an independent review and proper consideration of alternatives, such as the Severn-to-Thames transfer scheme, before irreversible commitments are made. Bill payers in Oxfordshire, and indeed across the region, deserve a proper solution that is effective, proportionate and fair. That means an urgent independent review of the south-east strategic reservoir option proposal, full transparency over costs, and serious consideration of alternatives, including leakage control, before any irreversible commitments are made.

It is a pleasure to serve under your chairmanship, Mrs Harris. We have heard about Thames Water’s incompetent management of the physical pipes and networks. I want to touch on the mismanagement of its finances: the profit and loss and the balance sheet.

In 2007, Macquarie, a big private equity group, bought the company and loaded it up with so much debt that it could not cope. That is why we have ended up with the debt soaring from £6 billion to some £18 billion over the last 15 years or so, while the regulator was completely asleep at the wheel and allowed that to happen. The previous Conservative Government allowed it to happen.

We now have a situation in which the debt is trading on the markets at somewhere between 5p and 50p in the pound—in other words, the debt is not worth what the original holders provided. In Thames Water’s recent accounts there are four pages on whether or not the company is a going concern. That basically means it is not. It is effectively bust. As a genuine private company, it is not able to meet its financial or regulatory obligations. It is time to say that enough is enough.

In business there is an expression: caveat emptor. The private equity groups, the debt holders and the bond holders knew what they were doing. They were trying to make large private equity returns. That is fine—I believe in free markets—but when they mess it up, they have to pay the price. Now is the time to say to those investors that enough is enough.

The last thing we need is for the group to be bought by a substantial Chinese infrastructure group that is already the single biggest owner of all our utilities in the United Kingdom, and that takes over £1 billion in dividends and interest on shareholder loans every single year. No—now is the time for the Government to show some genuine courage and to say that enough is enough. It is time to buy it back for a pound, make the investment that is required, with competent people to stop the outrageous leaks and mismanagement of the physical assets. We will then have a worthwhile water company we can all be proud of.

It is a pleasure to serve under your chairship, Mrs Harris. My constituency is a river community and has been badly affected by the failures of Thames Water, including sewage discharges into the River Thames and the River Mole. That goes to the heart of public trust in Thames Water, or the lack thereof, and exemplifies its failure, as well as the lack of regulation and accountability under the previous Government.

While my constituents bear a 31% increase in their bills, all that goes towards is servicing £17 billion of debt. Yet Walton Rowing Club and the 1st Molesey Sea Scouts found 5,000 colony-forming units of E. coli per 100 ml in Walton, and 12,000 per 100 ml in Thames Ditton. Anything above 900 is classified as unsafe. We need investment in infrastructure, but until the Government take Thames Water into special administration, that cannot happen.

I want to speak briefly about the lived experience of my constituents near Thames Water’s Lower Green sewage plant in Esher, which exemplifies its casual disregard for the public. For decades, residents have endured persistent and unpleasant odours from the site. One resident from Farm Road in Esher described being forced to keep windows shut and avoid outdoor spaces, and worrying about the long-term impacts on wellbeing, air quality and property values. Nobody was interested—not the previous MP, nor Thames Water.

Residents told me that for decades their only interaction was Thames Water vans being driven at speed through the housing estate that borders the treatment plant. Residents’ complaints over decades were met with delay, deflection or silence. That experience is symptomatic of a wider failure: a water company that too often acts only when sustained pressure is applied, and a political class that does not hold the operators to account.

Last year, I met Thames Water representatives directly at the site. Following that visit, the company identified the cause: septicity driven by faulty equipment, which allowed bacteria to build up and produce a foul smell. Repairs were eventually made and preventive measures were introduced. Spare parts have now been stockpiled so that if the fault recurs, it can be fixed immediately rather than after weeks of delay. That should have happened 30 years ago. Residents should not have to wait decades, or rely on “novel” political pressure, for basic maintenance to be carried out.