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.
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?
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.
I am very grateful to my hon. Friend for securing this debate. My constituents in Bicester and Woodstock are fed up of Thames Water providing a poor service yet continually hiking the charges for it. I am thinking of constituents like Martin, who lives in Bladon, whose toilet floods regularly because of a collapsed sewer and who now has a tanker parked outside his house 24/7 because Thames Water has so delayed making the repairs. Does my hon. Friend agree that we need a reset at Thames Water after years of financial and operational failure? Does he further agree that the Government are quite wrong to be resisting special administration, which would be the best way to ensure that the financial mismanagement of the past sits rightly with the vulture funds and bondholders and not with future bill payers?
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.
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?
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.
I am sure the hon. Member is wondering why a Scottish MP is speaking in a debate about Thames Water. I absolutely agree with his concerns about Thames Water, but the model he seems to be proposing is very close to what we have with Scottish Water, which I am sure he has done a lot of research on. He will know that sewage was dumped into Scotland’s rivers and lochs for over 600 hours a day in 2023, and we do not monitor our water discharges anywhere near as closely as England. I therefore urge caution. The model he is proposing does not work in Scotland. The Scottish Environment Protection Agency, despite having the powers, does not use them in the way he might want.
I genuinely thank the hon. Member for his intervention. It highlights that there is no silver bullet. The solutions that we propose are complex and difficult; they require monitoring and oversight of infrastructure plans, and properly phased, long-term planning and investment to prevent the discharges that we see under the current system. Only through the proper process—upgrading holding tanks, for example, or upgrading the technologies used to filter and clean the water before the effluence is put back into the river—can we see improvement. His challenge is fair and welcome; the solution not a silver bullet.
To conclude, a utility company, working in collaboration with Government, can be a force for good governance and good management of our environment, and give good value to bill payers. Imagine looking at a water bill and thinking, “This is good value!” I promise that there is a future like that, but that is what is at stake. The Government must act now to sort out the mess and establish that in this country, utility companies can thrive only when they take seriously their responsibilities to the environment and to us, rather than solely the pursuit of profit.
It is a pleasure to see you in the Chair, Ms Lewell. I thank the hon. Member for Sutton and Cheam (Luke Taylor) for securing the debate and for not supporting Thames Water; I am very pleased to hear that.
I do not think anyone has been deluded into thinking that Thames Water is doing a good job—certainly not me or my constituents. Since I was elected to this House, hardly a year has passed without another major water infrastructure issue that leaves hundreds of my constituents without water for days on end. That is not to mention the years that I have lived in my constituency and been a victim of Thames Water’s extremely shoddy service. Apart from three years in Yorkshire, I have had to endure Thames Water for the entirety of my life, and it has shown very little concern for the impact that it has.
In 2023, a burst water pipe on Brixton Hill left residents without water for three days. Last July, on one of the hottest days of the year, residents of Clarence Avenue had their water shut off without any prior notice. As recently as December, faulty valve pumps in Brixton left homes without water for more than four days. Those are just the most recent incidents—as I said, there have been a number of them since I was elected.
The residents of Clapham and Brixton Hill are not the only ones who will have experienced those disruptions in service, so Members can imagine my constituents’ outrage when, in the wake of poor service and increased bills, they see Thames Water’s shareholders and directors receive millions of pounds in dividends. In October 2023, Thames Water made interim dividend payments totalling £37.5 million to its holding company, Thames Water Utilities Holdings Ltd, while the pipes were literally rotting under our feet. In March 2024, the company made further dividend payments amounting to £158.3 million, from which shareholders received non-cash benefits, all while the quality of water has continued to decline every single year.
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.
I thank the hon. Member for Sutton and Cheam (Luke Taylor) for bringing forward this debate. I am a little surprised that there are only 10 things he hates about Thames Water; my list is significantly longer. It is a really important debate. I wanted to come into it with a balanced view, and not just slate Thames Water, but it is incredibly hard. I feel that Thames Water is systematically failing the public on pretty much every level. We have seen a lack of investment in infrastructure, which has resulted in mass pollution, the needless deaths of thousands of animals and fish and destruction to our natural habitat, which is completely unacceptable. At the same time as not investing, Thames Water has been paying out astronomical fees to its chief executive, and to its shareholders in dividends—that is completely ridiculous, and it is being passed on to my residents. We need to look at changing that.
Let me flip the page to other Thames Water failures and look at its customer service: it was attempting to charge a resident in Swindon North over £11,000, saying he was using an Olympic-sized swimming pool of water weekly. He battled for over a year, getting nowhere. It took one email from me to get Thames Water to come out and look at it—shock horror, he was not using an Olympic-sized swimming pool. Thames Water actually owed him money. It should not take a Member of Parliament emailing to intervene—that is completely wrong and unacceptable. Thames Water needs to be more accountable to the public.
In Swindon we also have flooding, like in every constituency. We have it from Priory Vale to Stratton St Margaret. Thames Water has agreed that it is at fault and that this is its problem, yet has done nothing about it. That is unacceptable. Residents cannot remortgage their house or move on, and are trapped in a situation where they have to accept that every year their house will flood while, once again, Thames Water makes more profit. That is completely shoddy and unacceptable.
20 of 65 shown
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.
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.
Thames Water chairman Sir Adrian Montague was accused of a conflict of interest over the £37 million in dividend payments that were made to shareholders in February 2025. Under his tenure, Thames Water paid £195.8 million in dividends, breaching Ofwat rules. Ofwat fined it just £18 million, but Thames Water paid zero pounds of that £18 million fine. I agree with the hon. Member for Sutton and Cheam that Ofwat is also unfit for purpose.
Others may have a better understanding of how such things work, but I do not understand how a company that is in debt and failing, and that has damaged infrastructure, has the money to pay dividends to its shareholders. While my constituents’ taps run dry, the fat cats of Thames Water are literally turning theirs on—but not to drink the water of course, because they know better.
The cherry on the sewage-filled cake? On Tuesday, my constituents and millions of Thames Water customers woke up to what would have been the world’s worst April fool’s day joke—the grim reality of a 31% bill increase. One constituent wrote to me because they are experiencing a 45.8% increase in their monthly bill, from £36.55 to £53.30 a month. The service will remain shoddy, but the price that customers are made to pay will rise. Thames Water is rinsing my constituents, pouring sewage into our waterways and siphoning off money to shareholders, and hiking up bills to pay for it.
It is fair to say that Thames Water’s management are comparable with what the company is dumping in the Thames—crap. They are just crap. They are running the company’s finances into the ground and relying on the Government to bail them out, all the while leaving my constituents in the vulnerable position of having no running water at times. If they are relying on the Government to bail them out, we taxpayers are literally paying them twice. Clearly, they cannot be trusted to operate such a vital service legitimately, and they certainly should not be allowed to pocket thousands of pounds in the process.
I do believe that the Government should be supporting Thames Water—supporting it back into public ownership. That is the only support that they should give it. Rather than a US private equity firm being allowed to take it over, it should be taken over by the Government and made accountable to its service users, the British public. Those who are against nationalisation on an ideological basis will say that competition is needed to ensure innovation and the best service, but there is no competition for Thames Water. Which other water company can my constituents switch to when the service is poor?
It makes no sense to me that a new private company should be allowed to take over and reap the profits with little incentive to provide a better service. My constituents deserve a better service, and the continued private ownership of Thames Water will not bring that. Public ownership will not solve every single issue with Thames Water, but it will certainly solve more than allowing an American company to take it over and profit off the backs of my constituents.
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?
We have also heard today about the increase in prices. I urge Ofwat to reject Thames Water’s new claim to increase prices. As we have said, Thames Water is not delivering and not accountable. What metric is it actually succeeding on? This is unacceptable. I am sure that everybody in this room would say that Thames Water should not increase its prices. I am pleased that the Government are planning to introduce more regulation, to monitor the sewage systems more and to give Ofwat more power. I just want to see it use that power.
I again thank the hon. Member for Sutton and Cheam. I thought that the debate would be a bit busier so I did not plan a long speech, but this issue is vitally important, and I look forward to hearing what the Minister has to say.