Water (Special Measures) Act 2025: Enforcement

Tuesday 20th January 2026 Westminster Hall

[Dr Rosena Allin-Khan in the Chair]

[Relevant documents: Second Report of the Environment, Food and Rural Affairs Committee, Priorities for water sector reform, HC 1001; Oral evidence taken before the Environment, Food and Rural Affairs Committee on 9 September and 15 July 2025, on Reforming the water sector, HC 588.]

14:30

[Tom Gordon (Harrogate and Knaresborough) (LD)]

I beg to move,

That this House has considered the enforcement of the Water (Special Measures) Act 2025.

It is a pleasure to serve with you in the chair, Dr Allin-Khan, and to open this debate on the enforcement of the Water (Special Measures) Act 2025.

Like many Members across this House, I welcomed the introduction of the Water (Special Measures) Act last year. After years of public anger over pollution, rising bills and declining services in the sector, the Act promised a tougher approach to a failing water industry. It pledged to ban bonuses for failing bosses, bring criminal charges against persistent law breakers, impose meaningful fines and introduce independent monitoring of every sewer overflow. On paper, that sounded like progress. In practice, the Act has proved to be little more than a drop in the ocean.

The Water (Special Measures) Act was meant to turn the tide, but right now the sewage is still flowing and so are the excuses from water bosses. The Act was intended to strengthen regulation and restore public trust, yet in the months since its introduction we have seen companies complying with the letter of the law while confidence continues to drain away. When regulation is drafted so narrowly it can be complied with but the purpose is undermined, it is quite clearly not fit for purpose and not strong enough. That brings me to a central question of this debate: how do we ensure that the principles of the Act are properly enforced, and that water companies are genuinely held to account?

Nowhere is the failure of the current system clearer than the performance of Yorkshire Water, which supplies water to my constituents in Harrogate and Knaresborough. The problems they face mirror those across the country, from poor customer services to rising bills and the persistent sewage pollution we see in our rivers.

Yorkshire Water was classified by Ofwat as “lagging behind” but my constituents are having to pay that price upfront. In October 2025, the Environment Agency gave Yorkshire Water a red rating for serious pollution incidents. Those incidents had almost tripled in 2024, leaving the company with one of the worst pollution records in the country. Despite this performance, customers have repeatedly been asked to pay more while receiving less. One constituent described their experience as:

“Probably the worst consumer experience I have had in my life”.

Against that backdrop, many were rightly shocked by comments from the Yorkshire Water chief executive when she suggested criticism of the company reflected

“a level of expectation from customers that’s much higher”

than it had been. With water bills expected to rise by as much as 41% over the next five years, and a hosepipe ban that was imposed from July to December, my constituents are entitled to ask how low does she think their expectations should be? If expectations are too high, then perhaps the problem is not the public but the leadership of Yorkshire Water.

[Jim Shannon (Strangford) (DUP)]

I commend the Liberal Democratic party for all they do on water issues. That cannot be taken away from them: they are to the fore. Other parties may be a wee bit annoyed at that, but they are so active it is incredible. Well done.

Does the hon. Gentleman agree that the private companies do not appear to be tied to doing the right thing for the public as a whole, but to doing more for their investors? The ability to freeze bonus payments as a penalty should be used, and the consultation with the Department for Environment, Food and Rural Affairs must allow this measure to be implemented in a quick and cost-effective manner, as a matter of urgency. Does he agree that is one thing that could be done?

[Tom Gordon]

I thank the hon. Member for his intervention. It is a pleasure to take an intervention from him, as always. I completely agree with what he has outlined and the characterisation of the way that the water sector is, frankly, morally bankrupt. There is no interest in the public good. That is why my party has long been calling to see these companies reformed, where they have to put public benefit interest first rather than corporate shareholder responsibilities.

[Bell Ribeiro-Addy (Clapham and Brixton Hill) (Lab)]

I thank the hon. Member and alongside him I wish to put on record on behalf of my constituents what an absolute disgrace Thames Water is. In a desperate attempt to secure their investments, avoid special administration and keep the company within the private sector, Thames Water’s creditors are trying to strike a deal with Ofwat that would see them polluting our waterways for up to 15 years. That is a shameless attempt that proves that they cannot be trusted to put the best interests of their customers or the environment ahead of their own purses. Does the hon. Member agree that Ofwat ought to reject that deal and use the powers it has been granted through this Act and put Thames Water into special administration?

[Tom Gordon]

The hon. Lady hits the nail on the head. Water companies are trying to get away with doing grubby deals by the back door. Across the board—it is not just Thames Water and Yorkshire Water—the sector is not operating as it should, so we need proper wholesale reform of the water companies’ models.

If the expectations are too high, it is perhaps not the public who have the wrong end of the stick, but the leadership of Yorkshire Water. Clean water is not an unreasonable demand, but the bare minimum that we should be able to expect. My constituents can see the consequences of Yorkshire Water’s failure at first hand; they need only to go out into our wonderful countryside across Harrogate and Knaresborough, where the River Nidd, Crimple beck and Oak beck have all been affected by sewage outflows and overflows.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

In my constituency, the River Avon and its tributaries are central to our natural environment and to leisure and tourism—the visitor economy. It is a disgrace that our waterways are still being polluted. Does my hon. Friend agree that water management data must be transparent, and that the Government must introduce monitoring of the volume, not just the duration, of sewage overspills?

[Tom Gordon]

I thank my hon. Friend for that very pertinent intervention. I have been to Stratford, and it is a lovely place. No community should be blighted by sewage at the hands of these water bosses. The point about volume, and not just hours of sewage dumping, is key.

The River Nidd, which once brought joy to families in Harrogate and Knaresborough, is now treated as a health hazard. Every year, kids are taken to hospital after playing and swimming in it. Dogs routinely fall sick and have to go to the vet if they dare go swim in the lido. That is not progress, but decline. Things are not getting better; they are still getting worse.

[Caroline Voaden (South Devon) (LD)]

My hon. Friend is being very generous with his time. In 2024, storm overflows at Harbertonford waste water treatment works discharged into the Harbourne river for more than 3,500 hours. In other words, raw sewage was pumped into the river, which flows into the glorious River Dart, for 40% of the year. As of this morning, the same storm overflow has been activated since 11 January. Does my hon. Friend agree that South West Water must not be allowed to get away with that?

[Tom Gordon]

That is another fantastic example of how poorly water companies across the length and breadth of our country are performing. It is entirely unacceptable. My hon. Friend and many other Liberal Democrat colleagues have done a fantastic job of holding the water bosses to account. Her constituents are very lucky to have her, and I am sure she will continue to do that.

Last summer, I took part in the Knaresborough bed race, which ends with participants crossing the River Nidd after running around town, up and down hills, with kids on beds. It is a fantastic event. If Members have not seen it, they should google it—even better, they should come and watch it. Hopefully, I will get a place to do it again this year. But in recent years the river crossing at the end has become contentious. There was talk of scrapping it altogether because of the danger of having to cross the river when sewage overflows have been pumping. Locals advise those competing in the race to drink a can of full-sugar Coke at the end in the hope that it will kill off any bacteria and nasty things that they may have swallowed during the river crossing. When that is the best piece of advice that people can give to those competing in a sporting event, something has gone very wrong. The regulation of the water sector is completely failing. No one should have to fear sickness from their local river in 21st century Britain, but that is Yorkshire Water’s legacy in my constituency.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

The hon. Gentleman is making an impassioned speech about Yorkshire Water, which also serves Dewsbury and Batley. In 2024, there were at least 346 sewage dumps in local waterways in Dewsbury and Batley, lasting over 1,000 hours. That equals 1.5 months of continuous sewage discharge. Discharges around Batley beck, the River Calder and the River Spen are blighting our waterways and our community. In addition, sewage is backing up into streets and people’s homes because of a failure to maintain pipes or design the system correctly. Does the hon. Gentleman agree that water companies have been getting away with almost murder for too long and must be held accountable? Customers must not have to pay any longer for their failings and their profiteering.

[Tom Gordon]

I agree with the hon. Gentleman’s characterisation of Yorkshire Water. All too often, we hear that there will be investment and improvement, but it is frankly too little and often too late. There has been a lack of investment in infrastructure over decades, which has left the system creaking at the seams. I completely agree that we need to get a proper grip of the issues that I have outlined.

[John Milne (Horsham) (LD)]

I will add another name to the catalogue of water company disasters: Southern Water. In Rudgwick in my Horsham constituency, residents have complained for almost 20 years about effluent backing up into bathrooms, footpaths covered in soiled loo paper and having to keep children and pets indoors. Yet over the last decade, average Southern Water bills have shot up from £262 in 2016 to £702 today. Does my hon. Friend share my frustration that residents are paying vastly more with absolutely nothing to show for it?

[Tom Gordon]

That is a damning indictment of the state of water companies across the length and breadth of this country, especially at a time that is hard financially, when people have to tighten their belts more than ever before and are struggling with the cost of living crisis. That is what jars people: when they see their water bills going up more and more but they still have to deal with the grim situations that my hon. Friend outlined so eloquently. That is not an isolated story; it is a reflection of systemic failures across the industry and our country.

Since the introduction of the 2025 Act, Thames Water’s financial position has, as we have heard, continued to deteriorate, while sewage discharges persist. In the south-east just a few weeks ago, we saw repeated outages that left households without even the basic service of being able to turn on the taps. When water companies repeatedly fail and nothing visibly changes, the message to the public is clear: accountability is missing.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

I thank my hon. Friend for being so generous. As the Member of Parliament for Tiverton and Minehead, I represent two water companies, Wessex Water—who are no angels—and South West Water—who I have been chasing for several months in order to get a meeting on behalf of a constituent whose bakery was flooded to such an extent that she has now had to shut up shop and go home. I am supposed to be meeting them on Monday, but it has taken at least four days to get a time out of them. Does my hon. Friend agree that it is a disgrace that these companies are able to literally stick their fingers in their ears when people raise concerns on behalf of their communities?

[Tom Gordon]

I thank my hon. Friend for her intervention. I do not envy her having to battle just one water company, but two. She has her work cut out for her—some of us are now breathing a sigh of relief in comparison. The problem is, as she outlined, that there is no accountability. It often takes public pressure, campaigning or us in this place banging the drum to talk about these issues to get those meetings set up and problems fixed when it is a basic obligation that water companies should already provide.

Since the introduction of the 2025 Act, we have seen issues across the country. The failure of water companies is a source of frustration and distrust in politics. People feel that the legislation that was passed is simply not working, or that we got it wrong. One of the most high-profile elements of the Water (Special Measures) Act was the commitment to block bonuses for executives at failing water companies. Water companies are upping their game and thinking about the way that they structure their payments to try and circumvent these measures and the bonus ban. Ofwat investigated Yorkshire Water last year, but said that it did not breach the legislation or regulatory guidance on executive pay. The payments made to the chief executive of Yorkshire Water, Nicola Shaw, through the offshore parent company Kelda Holdings were what they called “fixed fees” for group-level responsibilities and funded by shareholders. While technically that might not constitute a breach of the ban, it is a demonstration of how open to exploitation the system and the legislation are. Rather than a bonus ban, we have ended up with a bonus rebrand.

[Josh Newbury (Cannock Chase) (Lab)]

The hon. Gentleman is making a powerful speech on behalf of his constituents. Last year, it emerged that Thames Water was planning an enormous additional compensation package under the guise of a management retention plan. After being grilled by those of us on the Environment, Food and Rural Affairs Committee, and an understandable public outcry, it announced that it would no longer go ahead with that. Does the hon. Gentleman agree that any water company setting its moral bar lower than Thames Water should take a long, hard look in the mirror?

[Tom Gordon]

I completely agree with the hon. Member. I thank him and the Chair of the EFRA Committee, my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), who is also here today. The work that they have been doing in highlighting the issues endemic to water companies across this country could not have come sooner. The fixes that they have highlighted in their reports are important for driving this conversation as we look towards the future.

Turning back to Yorkshire Water, in the past two years, those payments—which were apparently not bonuses but rather “fixed fees”, or whatever Yorkshire Water called them—totalled more than £1 million, on top of the near £700,000 annual basic salary, at a time when pollution incidents were rising and trust was collapsing. Yorkshire Water’s chief executive has since said that it was a “mistake” not to disclose those payments and not to have been more transparent. Well, that is too little too late when Yorkshire Water has been caught with its hand in the cookie jar. My message to Yorkshire Water is simple: it can rename a bonus to a “fixed fee” and apologise for getting caught out, but the stench of sewage still clings to it, and to the bosses at Yorkshire Water.

I remain concerned about the overreliance on fines as a primary enforcement tool. In recent years, we have seen Yorkshire Water and many other companies facing record-breaking fines, but the problem remains: the lack of accountability that they face, even when such astronomical penalties are imposed on them. Simply put, we cannot fine our way out of failure when customers end up footing the bill.

[Dr Roz Savage (South Cotswolds) (LD)]

I thank my hon. Friend for his impassioned speech on this very important subject. My constituents in the South Cotswolds will be deeply disappointed by this White Paper. Does my hon. Friend agree that the Government need to get literally upstream of this question, and address the question of water company ownership? When we look to Europe, we see models such as mutual or public-benefit ownership working much more effectively. Does he also agree that the profit motive does not sit well with an essential public utility?

[Tom Gordon]

I thank my hon. Friend for putting across that argument, and I completely agree with her. She has outlined the case and the reasoning very well.

Moving on to today’s water White Paper, it is right that we recognise that the current regulatory system has failed, that Ofwat has not provided the hands-on oversight required, and that prevention must replace crisis management. Proposals for a new regulator, stronger inspections and greater transparency are a step in the right direction—if long overdue—but a White Paper and those new proposals will only be as strong as their enforcement.

I want to press the Minister on three specific points. First, will the Minister confirm that the new regulator will have an explicit duty to close remuneration loopholes, so that executives cannot simply comply with the letter of the law while undermining its purpose? Secondly, will the Minister commit to ensuring that criminal liability for water bosses is not merely theoretical but actively pursued where there is evidence of serious or repeated environmental harm? Thirdly, will the Minister set out how enforcement action will target decision makers, not just balance sheets, so that customers are no longer left paying for failure through higher bills? Those are the tests that will determine whether today’s White Paper represents a genuine reset or simply another missed opportunity.

Ultimately, this debate is about accountability. Pollution on this scale is not an accident; it is a result of decisions, incentives and failures of leadership. When executives are rewarded while rivers are polluted, that is not mismanagement; it is environmental vandalism. Nicola Shaw remains in post despite rising bills, collapsing trust and one of the worst pollution records in this country. In any other industry, that level of failure would end in resignation. So today I say clearly: Nicola Shaw, do us a favour and go.

A new regulator must come into post and go further than we have seen with Ofwat. Water bosses who preside over illegal pollution should not just have their bonuses blocked; they should face criminal consequences for their environmental damage and harm. No more hiding behind corporate structures, no more excuses and no more polluting with impunity: if they poison our waterways, they should answer not just to shareholders but to the full force of the law.

[Dr Rosena Allin-Khan (in the Chair)]

I remind Members that they should bob if they wish to be called in the debate. Timings-wise, we will stick to approximately five minutes per person at the moment, which should make possible one or two interventions as well.

14:49

[Joe Morris (Hexham) (Lab)]

It is a pleasure to serve under your chairship, as always, Dr Allin-Khan. I join colleagues in congratulating the hon. Member for Harrogate and Knaresborough (Tom Gordon) on securing such an important debate on a crucial topic, which concerns people across the country.

I am grateful to take the opportunity to speak today about the River Tyne, which holds great sentimental value to me, as I know it does to so many people who call both Northumberland and the wider north-east home, and have been raised in the area surrounding it. I, along with many of my constituents, have deeply fond memories of exploring and enjoying the astonishing diversity of nature that the River Tyne has to offer. It is a natural landmark, central to community life, to local economies and to the identity of the region, along with some of Northumberland’s other great rivers.

With that in mind, I will take a moment to highlight the incredible work of the Tyne Rivers Trust and the Wylam Clean Tyne organisation, both of which are dedicated to improving the wellbeing of the region’s rivers and communities—from Alston up to Kielder and beyond—through education, practical conservation and environmental activism. The protection and development of the Tyne’s waters establish it as one of the best salmon rivers in England. It houses a diverse range of animals and plant life, and it is worth millions to our local economy. Importantly, it also acts as a third space for local communities looking to access the positive effects on wellbeing associated with spending time in and around nature.

It is a devastating fact that the previous Government allowed our river to be flooded with an unregulated torrent of sewage. They were a Government who saw environmental protection as an inconvenience, not a responsibility. They underfunded regulators, scaled back monitoring and weakened the enforcement of environmental standards. They allowed water companies’ profits to soar, bosses to accept hundreds of thousands of pounds in bonuses, and household bills to increase. They left my constituents with a River Tyne that is unsafe and in decline, not because of natural change but because of political failure and political choices.

I strongly welcome the measures in the Water (Special Measures) Act, which reflects our mission to clean up our rivers and bring accountability to water companies. I agree that, in order to bring about the necessary long-standing reform, it is fundamental that the plans are effectively enforced, and that funding and resources back regulators so that they can apply the new legislation consistently and effectively. I would like to hear from the Minister how rural communities, including those in my constituency, can be supported by the Act specifically. Northumbrian Water must be held accountable, having made over 3,000 sewage dumps into the Tyne in 2024 alone. It must be held responsible for what must be significant investment in the infrastructure of overflows and the rebuilding of public trust.

I also want to emphasise, as often as I can, the importance of working in partnership with communities across my constituency, particularly rural communities. The expertise of the organisations that I mentioned will be crucial to the conversation that Northumbrian Water and local government could have if they are serious about understanding and tackling the problem. They, alongside farmers and land managers, are vital stewards of our environment. Supporting sustainable land use, reducing run-off and improving soil and water management must be done collaboratively, with practical support, funding, clear guidance and long-term certainty. This Government understand that environmental recovery and economic growth go hand in hand. Clean rivers do not just enrich our environment; they support tourism, angling and farming, and they build a sense of local pride. Protecting the Tyne is not a barrier to prosperity; it is part of building a greener, fairer and more resilient future.

I will touch on the impact of the clean river on young people. Tyne Green in the town of Hexham or the banks along Wylam and Prudhoe are all venues for young people to get to know the river and enjoy it. There have been some fantastic initiatives on river safety pioneered by my friend and comrade, Angie Scott, who is a Northumberland county councillor for Prudhoe. As we try to clean up our waterways, it is important to ensure that young people maintain not just access to them but an understanding of them. I should be grateful if the Minister would speak about that.

14:53

[Mims Davies (East Grinstead and Uckfield) (Con)]

It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I congratulate the hon. Member for Harrogate and Knaresborough (Tom Gordon) on securing this welcome and—particularly in my constituency—timely debate on regulation, public trust and customers’ experience.

I am participating on behalf of my constituents in East Grinstead, Uckfield and the villages. Many people will know that Sussex and Kent were at the epicentre of the recent outages, despite the guidance we had on the Friday before the taps were turned off that it would be elsewhere. Today is another opportunity to welcome the new powers in the White Paper and talk about how we hold the regulator, Ofwat, to account. I put on the record my huge thanks to the Minister and her team in DEFRA for listening to me on behalf of my constituents and holding these companies to account.

What has happened over the weekend is clear. I will go through my list of experiences. Before the boundary changes, in August 2020, hundreds of homes were affected in my patch and in East Sussex. In November 2022, 30,000 people were affected, including in my part of the world, and in Kent. In December 2022, in Uckfield and in Crowborough in the constituency of my hon. Friend the Member for Sussex Weald (Ms Ghani), 16,000 households were affected. In June 2023, thousands of homes were affected again across the Mid Sussex district. In January 2024, Sussex and Kent homes were affected by the impact of Storm Henk. Then Sussex and Kent were again affected in November 2024, and again in January 2025.

Dr Allin-Khan, you will be interested in this. I met today with Karen McDowell, the head of Sussex integrated care board, to consider the impact on the Queen Victoria hospital in East Grinstead. I thank its leader Abigail and her team for their stoicism during the outage. In the midst of the sanitation issue, with a norovirus crisis and a flu crisis in our local NHS, when we did not have water across my area, people from Surrey, where they declared an emergency, were being sent to my local hospital for treatment. It is absolutely outrageous.

People are now turning to the point of compensation. If this is caused by a storm and an act of God, that is one thing. The Minister knows that this is about a bulk supply issue linked to South East Water. Ultimately, if there is any break in service and if licence conditions are broken, it is ultimately my constituents who cannot function.

Today’s written statement mentions the need for a

“joined-up regional water planning function and framework to improve local decision making and delivery.”

I recognise the need for a broader debate on the Water (Special Measures) Act 2025, building on the Environment Act 2021, to make sure that there is a proper answer.

My constituents are turning at the moment to what this means in terms of compensation. The break in service is absolutely front of mind. As I have spelled out, this is not the first time. Unless there is leadership and structural change, I truly believe it will not be the last.

Let me give the example of the Ashdown Park hotel. There are 50 staff members living on the site. It was closed for days, with no response from the Saturday of the outage through to the reopening. Birthdays, spa days, treats and celebrations were all destroyed, with frontline staff left trying to explain.

I urge my constituents and those watching today to sign up to the priority list. Many vulnerable people, particularly in our villages, were left waiting for water. I know that is an issue that both the shadow Minister and the Minister are particularly worried about.

There are also the needs of livestock. Horses need to drink 5 to 8 gallons of water every day. This situation has been tearing out people’s hearts and souls. They have been so worried. For me, these outages are a moment of crisis in the water sector. I have people cancelling their direct debits at the same time as larger bills are falling on their mats.

I am conscious that many people want to speak, so I will come to a conclusion. I am grateful for the opportunity to speak on something that matters to me deeply. I ask the Minister to work with me on behalf of my constituents to hold the leadership—the chair, the chief executive and the team—to account. I hope that this new vision, with this White Paper, turns into action, change and accountability.

Colleagues have spoken about the opportunity for shareholders to do what they can. NatWest Group holds a large stake in South East Water. In today’s Telegraph, it notes that it wants the company to be held to account for supply issues, and for those issues to be “fully resolved with urgency”. Other shareholders also say they want this addressed and they want resilience in the services. So do we, so do our constituents, and so should everyone.

14:59

[Catherine Fookes (Monmouthshire) (Lab)]

It is a pleasure to serve under your chairship, Dr Allin-Khan.

Cleaning up our rivers is one of my top priorities, and I am delighted that the Government agree and have introduced more legislation and action on enforcement in 18 months than the previous Government did in 14 years. I was incredibly pleased to serve on the Bill Committee for the Water (Special Measures) Act—the subject of this debate—with some of the other Members present. The Act sets out, for the first time, a ban on water company bosses’ bonuses, and will ensure that the CEOs of water companies can even face criminal charges and imprisonment.

In Wales, Dŵr Cymru is our not-for-profit water company. However, I am afraid that being not for profit has not stopped it dumping sewage into our much-loved rivers. In 2023, we had a massive 2,383 sewage-dumping incidents in Monmouthshire. In 2022, the then chief executive took home £332,000, and a further £232,000 in bonuses. More recently, Ofwat stepped in and stopped the company paying out £163,000 in bonuses from customers’ money, so that was a step forward.

[Caroline Voaden]

In May 2024, an outbreak of cryptosporidiosis in my constituency left 17,000 properties under a boil water notice for as long as two months. Although the incident is the subject of legal investigation, I would like to highlight my constituents’ frustration that the then CEO, Susan Davy, later picked up a share bonus of £191,000, bringing her total package for that year up to £803,000. Ofwat banned six water companies from paying executive bonuses, but I was shocked to see that South West Water was not one of them. Does the hon. Member agree that that is a clear illustration of why Ofwat must be replaced without delay, as it clearly fails to adequately protect the public interest?

[Catherine Fookes]

Our White Paper, published today, deals with the reform of Ofwat, so hopefully we will see an end to that kind of behaviour. In fact, I was just about to say that a total of £9.7 million was paid out in executive bonuses and benefits to water and sewage company executives between 2022 and 2023. The Act will stop bonuses for poor performances.

Let me move on to my favourite topic: our wonderful rivers, which we seek to protect with the Act. I would argue that in Monmouthshire we have some of the finest rivers in the UK. I apologise to my hon. Friend the Member for Hexham (Joe Morris), but they are much nicer than the River Tyne. The majestic Wye—the birthplace of tourism in the UK—the babbling Usk and the meandering Monnow are all wonderful rivers. They give us our sense of place, they provide recreation in the form of walks, kayaks or swims, and they are a magnet for tourism. They are the backbone of our local economy.

I will never forget the awe I felt when I first saw a flash of blue go past me as I was kayaking down the River Wye, as I saw my first ever kingfisher. It was an incredibly exciting moment. Rivers know no borders, and the Wye runs through four counties and two countries, so we must co-operate to manage it across borders. Fortunately, that is now possible given that we have two Labour Governments working together.

When I was growing up, my parents had no problem with letting me go and cool off by dunking myself in the chalk streams near my house. The only issue was the mess that I made when I came back inside. Now, though, parents have to be fearful of letting their children go in the river. The only thing on which I really agree with the hon. Member for Harrogate and Knaresborough (Tom Gordon) is the fact that dogs are now getting seriously ill in our rivers. A wonderful, usually bouncy, sprollie named Tess recently fell seriously ill with E. coli after swimming in the river, only recovering after many weeks of antibiotics.

We all want waterways that we can swim in, and water that is safe to drink and available to us, and we want it at an affordable price, so I am delighted that our two Governments in Cardiff and here in Westminster are working together. I am so grateful to the Minister for all her work and for supporting me in a meeting with the Wye Catchment Partnership and the Welsh Government, which resulted in £1 million for the River Wye action plan, which is just the start of the Wye’s recovery. I also thank all the non-governmental organisations and citizen scientists—the Welsh Rivers Union, Friends of the River Wye, Save the River Usk and the Wye and Usk Foundation, to name but a few—for all their work to help to clean up our rivers.

I am pleased that as well as the Water (Special Measures) Act, the White Paper has been published today, and it aims to overhaul the water system and strengthen regulation. It is the next piece of the jigsaw puzzle. The Deputy First Minister has confirmed that, following the Cunliffe review, the Welsh Government will publish their vision for water reform in Wales later this year, setting out the next steps and inviting views from others. I welcome the fact that there will be a shared transition plan, co-designed with the UK Government, that sets out the route to a new water system in Wales, and that interim arrangements, including a strategic policy statement for Ofwat and other regulators, will provide clarity during the period of transition.

I thank the Minister and the Secretary of State for all their work so far on this vital issue. I hope the Minister can assure me that the UK and Welsh Governments will continue to work closely on our water courses as, of course, rivers do not heed boundaries.

15:05

[Liz Jarvis (Eastleigh) (LD)]

It is a pleasure to serve under your chairship, Dr Allin-Khan. I am grateful to my hon. Friend the Member for Harrogate and Knaresborough (Tom Gordon) for securing this important debate and giving me the opportunity to speak on behalf of my constituents, who are utterly fed up with Southern Water and a system that is failing them at every level.

My constituents are being hit with a 53% increase in their water bills—the largest rise of any water company in England or Wales—at a time when household finances are already under enormous pressure. What are they getting in return? Outages, sewage dumping, hosepipe bans, leaks and a provider that can act with impunity but cannot get a grip of its failed services.

Against that backdrop, my constituents were rightly furious to learn that the CEO of Southern Water received a £1.4 million annual pay package last year—nearly double what it was the year before—despite the company being banned from issuing bonuses, and after zero improvements in service delivery or environmental performance. It beggars belief and is frankly indefensible. My constituents should not have to pay for Southern Water’s failures, yet that is exactly what is happening. Bills go up and services do not get better.

There are repeated sewage leaks into the River Itchen, the precious chalk stream that runs through my constituency. In the latest Environment Agency assessment, Southern Water was handed a two-star rating after causing a shocking 269 pollution incidents in 2024, including 15 that were classified as serious.

Meanwhile, water outages in my constituency have become commonplace. Just before Christmas 2024, residents in Chandler’s Ford and Eastleigh were left without water after a massive outage, with almost 60,000 homes across Hampshire affected. I raised the issue of outages at Prime Minister’s questions last April and was assured that action would be taken. What exactly has changed? That is why I am so disappointed that the Government’s water White Paper, published today, does not go further and fails to deliver the fundamental change needed to protect rivers such as the Itchen.

People in Eastleigh are fed up with tough words from the Government while bills rise, sewage continues to flow and water company executives continue to cash in. We need a new ownership model in which water companies are mutually owned by customers and professionally managed, with full transparency, including the publication of the volume of sewage dumped into our rivers, not just the duration of spills, and a new regulator that can finally get to grips with this crisis.

15:08

[Mike Martin (Tunbridge Wells) (LD)]

It is a pleasure to serve under your chairship, Dr Allin-Khan.

I would like to start by thanking the Minister for all her support. I do not think we realised that we would spend so much time on the same Zoom calls with a vast collection of characters from across Kent and the water sector. I also thank the Secretary of State, who came to Tunbridge Wells last Wednesday to announce an unprecedented review into South East Water’s licence.

It has been interesting to hear Members talk of their local water companies and how surreal it is that they are able to continue with such appalling performance while patting themselves on the back and rewarding themselves with eye-watering sums of money. I have news for everyone here—hold my beer—because South East Water is the worst in the entire country.

At the end of November, the water went out in Tunbridge Wells, and South East Water got off to a good start by setting up a bottled-water station in another town. When we pointed out that Tonbridge and Tunbridge Wells are different towns, bottled water stations were then set up in the right town, although we had to point out where they should be. That outage lasted about two weeks, with a week of no water and then a week of a boil notice.

South East Water handled the communications so poorly that, naturally, my constituents were quite fearful of the quality of water and whether they would be able to drink it. That space was then filled by bad actors and we had to ask the Cabinet Office to intervene to help us with the disinformation. South East Water’s crisis management and communications during that outage were absolutely appalling. The Minister will agree with me that through all of the Zoom meetings we had daily, the qualities on display among the representatives from South East Water were extremely poor. Yet when they were called to the Select Committee in January, they gave themselves an eight out of 10. [Laughter.] I did mention to Members that these are literally the worst people. They are gangster capitalists, as I will go on to explain.

While the CEO was at the EFRA Committee giving himself an eight of 10, the water was going off again in Tunbridge Wells. At the exact moment he was saying there was a plan and everything was going to be okay, I got a text from my mother-in-law, who lives at one of the highest points in Tunbridge Wells. We are all water experts in Tunbridge Wells now, and the water goes off first on the high ground, because South East Water cannot pump it uphill. I immediately rang South East Water and was asked where I had got that information, so I was informing the water company that there was a major outage in Tunbridge Wells.

I then picked up the phone to the borough council, which picked up the phone to Kent county council, which runs the resilience forum. That was the chain of the passage of information to get the local resilience forum stood up, rather than South East Water understanding, knowing what was going on, getting a grip of the situation and communicating effectively to local partners.

[Mims Davies]

The hon. Gentleman is making a speech that I feel I could make. I feel deep sorrow for him and for his constituents. Given the amount of outages, it is very surprising that the crisis communication does not get any better. Water companies should be experts in it, but are clearly not. My concern is that even when we give them information that we believe is true, when they offer information back it very often is not true. I have asked, “Has the water station that you’ve said has been set up in my patch actually opened?”, and got the answer, “Yes.” I then told people in good faith but it turned out it had not. That is a fundamental problem, is it not?

[Mike Martin]

I offer two examples—surreal is the only word for them. I was standing at a water station in Tunbridge Wells, speaking to South East Water, and I was told, “The water station is open.” I looked around, and it definitely was not open. The problem is that South East Water has a contractor that sets up the water stations that either is incompetent, is mendacious or lies—or all three—so the company does not have a grip of what is going on.

I have another utterly surreal example. I think the hon. Member for East Grinstead and Uckfield (Mims Davies) was in the meeting with the Minister when the Minister said, “There seems to be a problem in Cranbrook, according to my briefing. Dave Hinton, could you speak to that?” For Members who do not know, Cranbrook is in the borough of Tunbridge Wells but not in the constituency. Alongside me was the chief executive from the borough council, who said, “What’s the problem in Cranbrook?” He immediately thought he had a problem to deal with. Dave Hinton, the CEO of South East Water, said, “Oh no, there’s no problem in Cranbrook. I think it’s absolutely fine. Where did you get that information?” The Minister asked her official where the information was from, and in a moment worthy of the best episode of “Yes Minister” the official said dryly, “Minister, we got that information from South East Water.”

These people are utter gangsters. They gave evidence to the Select Committee, which is chaired by my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), and immediately afterwards the chief water inspector for England and Wales—God, he warms your heart if you are in the middle of a water crisis, I can tell you—came and rubbished their evidence. South Easter Water said the crisis was unforeseeable; the chief water inspector said, “No, not only was it foreseeable but we told you what you needed to do in the weeks and months preceding the outage. Had you done that, the crisis wouldn’t have happened.” To my mind, that is negligence. In the first crisis in December, people had to receive lifesaving treatment because a dialysis centre got knocked out. South East Water is a hair’s breadth away from a corporate manslaughter charge. These people are gangsters.

[Sarah Gibson (Chippenham) (LD)]

The disasters involving South East Water in my hon. Friend’s constituency are frightening. In my constituency, Thames Water managed to put water in the wrong town, and the residents of the small town that was affected could not go and find it because they had no transport. Thames Water did not tell anyone that the water was there. In fact, had it not been for the local supermarket telling people that there was water in the car park, no one would have known. What I find really scary about my hon. Friend’s comments—I am sure he will agree—is that gangsters seem to be acting in my area as well, because Thames Water seems no different from the company he highlights. We need to look at this more seriously.

[Mike Martin]

My gangsters are worse than my hon. Friend’s. She makes a powerful point.

[Mr Carmichael]

All this talk of gangsters makes me think my hon. Friend must be styling himself as the Eliot Ness of the water industry. His point about the Drinking Water Inspectorate is particularly important today, as we hear about the changes proposed in the White Paper. The DWI does exceptionally high quality work. Does he agree that we must not lose that output when we fold it into the new super regulator?

[Mike Martin]

I am well over my time, and I need to get to the point of my speech, but I get incredibly passionate when defending my constituents’ interests and their right to clean water. The White Paper is out today. My challenge to the Minister, whom I count as an ally in this fight, is this. What measures contained in the White Paper would have prevented the outages in Tunbridge Wells? She will, of course, give me an answer from the Dispatch Box, but I ask her to reflect honestly on that.

I also ask her to think about debt, which the Government do not speak to in the White Paper. About £70 billion of debt is held across the water industry, much of it by shareholders in water companies that pay out 10% interest. Financial engineering got us into this mess, and we need a bit of financial engineering to get us out of it and to lower interest rates on that debt. I ask the Minister to speak to that.

[Dr Rosena Allin-Khan (in the Chair)]

The passion is very welcome, but in the spirit of trying to be fair and make sure everybody gets at least five minutes, we are now on a strict time limit, with no more than five minutes for the final two speakers. I call Josh Newbury.

15:17

[Josh Newbury (Cannock Chase) (Lab)]

It is a pleasure to speak with you in the Chair, Dr Allin-Khan. I pay tribute to the hon. Member for Harrogate and Knaresborough (Tom Gordon) for securing this debate and giving those in positions of power in our water industry a chance to hear hard truths and take accountability. Although the state of the industry and the morally questionable behaviour of many companies is a talking point for some, I know that he has been a dogged campaigner on this for many years. In fact, I am sure I saw a photo somewhere of him wading in the River Nidd, such is his commitment to getting up close and personal with the issues.

Speaking of getting up close and personal, those of us who are members of the Environment, Food and Rural Affairs Committee have had—I hesitate to say the pleasure—the task of grilling the bosses of nine water companies as part of our inquiry into reforming the water sector. We have dived into many of the issues that we are hearing about, such as sewage overflows, compliance with environmental laws, support for vulnerable customers, the impact of flooding and outages, and, of course, the atrocious corporate culture and disconnection from the principles of delivering an essential public service that has taken hold in much of the water industry. That work has reinforced for me just how bad things have got, how far public confidence in the water industry has been damaged and how necessary robust reform has become.

What I have heard from my constituents is echoed across the country: a sense that accountability is an afterthought, that communities are left to pick up the pieces when things go wrong, and that bosses can get additional compensation regardless of how their company performs. That is precisely why the Water (Special Measures) Act is so important. It rightly strengthens the powers available to regulators and makes it clear that persistent failure—environmental, operational or corporate—must carry real consequences. It reflects a clear Labour principle that essential public services must work in the public interest and not simply for shareholder return.

Crucially, the Act marks a decisive shift away from the regulatory complacency of the past. In the year from July 2024, criminal prosecutions of water companies rose by 145%—a clear sign of meaningful progress. However, enforcement needs to be felt not just at operational level, but at the top. It is impossible to justify the need for customers to tolerate sewage in our waterways, botched responses during outages and poor communication, while senior executives still receive substantial payouts with impunity. That disconnect is corrosive. It undermines confidence not only in individual companies, but in the whole system, regulators included. That is why I believe that the true test of the Act and the newly released water White Paper will be whether they drive a genuine shift in the industry—one in which transparency and consumer trust are central to how success is measured.

Some companies, as we have heard, have sought to repackage rewards under labels such as “retention payments”. The public do not distinguish between a bonus and a retention payment. They see only failing senior execs continuing to be rewarded. The boss of South East Water is set to receive a £400k bonus just for staying in his job, despite, as we have heard, the company leaving thousands of households in Kent and Sussex without water for days and issuing some of the worst crisis communications I have ever seen. Last month, the BBC picked up on the comment I made on social media that David Hinton should do his job or go. Having heard him in front of the EFRA Committee, I absolutely stand by that.

Ofwat is currently responsible for enforcing the Act. Enforcement has often been too slow and remote from customers’ lives, and that cannot be separated from how the regulator has operated. The Committee took a long, hard look at Ofwat and found a regulator that was too cosy in dealing with water companies and too bureaucratic in dealing with customers. A regulator that is slow to act, overly procedural and reluctant to challenge company behaviour will never deliver the cultural change that the Government are determined to secure.

It is important to recognise that not all regulators have failed. During a recent Committee session with South East Water and the drinking water inspectorate, the response from the DWI was, as the Chair of the Committee has said, incredibly useful. It was clear that it is doing very effective work, despite having fewer than 60 staff. As we move towards a new single regulator, we have to preserve the DWI’s culture, expertise and robustness. I hope that, in responding to the debate, the Minister can set out what the Department will do to make sure that the few examples of where the current regulatory system is working well are preserved rather than thrown out with the bathwater.

I welcome the measures set out in the new water White Paper, such as an end to companies marking their own homework. An MOT-style regime for water assets will finally move us from crisis response to prevention. The new water ombudsman, with its legally binding powers, will be customers’ advocate when things go wrong. Our communities want action. They want to know that when rules are broken, consequences will follow. The only way to change behaviour in a broken system is to change the law, and I am confident that we will continue to see tough action from this Government where the last failed so miserably.

15:22

[Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve under you in the Chair, Dr Allin-Khan. I congratulate my hon. Friend the Member for Harrogate and Knaresborough (Tom Gordon) on bringing to the Chamber an issue that has sparked vivid examples of the complete and abject failure of our privatised water companies. I welcome this debate, although the news that it brings is very disappointing, is it not? Our rivers are, of course, precious. The Tone runs through and unites almost all parts of Taunton and Wellington. It is a lifeline for biodiversity, for families and countryside lovers and for the whole natural world. When rivers are healthy, our communities and our nature flourish, but when they are polluted, we all suffer.

That is why the recent revelations about Wessex Water are infuriating. Just a few weeks ago, we learned that the company’s former chief executive officer, Colin Skellett, received a £170,000 bonus from the Malaysian parent company, YTL Utilities. Despite a Government ban on bonuses, the current CEO and chief financial officer received £50,000 in additional payments through the same route. Those payments came after Wessex Water’s criminal conviction in November 2024 for pollution that killed more than 2,000 fish, and after the company was fined £11 million for additional sewage failures. That is all in the context of the £4.25 billion paid out by Wessex Water to private shareholders since privatisation. I cannot think of a more graphic failure of the Conservatives’ privatisation programme. Imagine if that £4 billion had been invested in our rivers and infrastructure over that time. That is exactly the kind of behaviour that the Water (Special Measures) Act 2025 was meant to prevent, but companies are getting around it by using parent company fee payments, fee payments generally and complex corporate structures to circumvent the rules.

In Committee, my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) warned that that would happen and pushed for a stronger regulator. We called for Ofwat to be scrapped and replaced with a regulator with real teeth. We also called for a new ownership model for water companies, for the public to be brought in through public interest companies, and for mutual ownership so that customers have a stake in the ownership and profits are reinvested in the company rather than going to private shareholders on the other side of the world. Many bill payers in the Wessex Water area would be surprised to find that that is where the money they pay ultimately ends up.

The fundamental problem is that while executives are exploiting loopholes to line their pockets, rivers are getting worse and dying. Customers are paying through higher bills, and communities are watching their local rivers fill with sewage. I checked just before coming to the debate, and north of Bradford-on-Tone and in Heron Gate and Lower Henlade in my constituency, sewage works are pumping sewage into the River Tone right now. Water company bosses should not be rewarded for that kind of behaviour through whatever corporate sleight of hand they are attempting to use. That is as real in my constituency as it is anywhere else.

As so often happens, volunteers have come to the fore. They banded together, and the Friends of French Weir Park and I applied for and got bathing water status to try to improve the water quality of the river, but we need investment.

[Tom Gordon]

My hon. Friend highlights the involvement of the fantastic community groups that have had to pick up the pieces of this broken system. Does he agree that, in an ideal world, we would not need organisations such as the Nidd Action Group in my constituency, even though the work they do is fantastic?

[Gideon Amos]

That is absolutely right. Water companies should be run in the interest of the public, not of the private shareholders’ pockets. That would be a welcome reform for communities in Taunton and Wellington and, no doubt, across the country.

In Taunton and Wellington, Wessex Water needs to reform and put this right. I welcome the action it is beginning to take, but we need real investment in the River Tone to improve bathing water quality, and water quality generally. Our sewage works must get the investment that they need. The Government must close the loopholes whereby bonuses are paid in all but name, and we need to ban the parent company payments that circumvent those rules. We need to strengthen enforcement powers, give regulators teeth and hold companies accountable so that communities such as mine can have confidence that the water they pay for comes from a company that is set up and run in the interest of the public, not private profit.

[Dr Rosena Allin-Khan (in the Chair)]

I call the Liberal Democrat spokesperson, Tim Farron. I thank everyone for keeping to time.

15:28

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is as privilege to serve under your guidance, Dr Allin-Khan. I say a big thank you to my hon. Friend the Member for Harrogate and Knaresborough (Tom Gordon) for securing this debate and leading it so ably. I also make a little apology to my hon. Friend the Member for Taunton and Wellington (Gideon Amos) for clearing my throat while he was speaking. I was not doing so to make him shut up and sit down—I am not the Speaker. I genuinely had a frog in my throat.

I remember the Water (Special Measures) Act 2025 well. I genuinely enjoyed being on the Bill Committee with Members here and others. There are lots of good things in it, but overall the Liberal Democrat view was that it felt like incremental change when more radical reform was needed. All the same, it included some real positives, including provision to ban bonuses for the senior executives of failing water companies. Yet, as we have heard from multiple sources, water companies are now making a mockery of that legislation.

We have heard about some of those already, but let me run through some examples. Southern Water’s chief exec’s pay has doubled to £1.4 million via a “two-year long-term incentive plan”. Wessex Water’s chief exec and chief financial officer both got an extra £50,000 undisclosed from its parent company. As we have heard, Thames Water tried it on—21 senior managers were set to be paid a total of £2.46 million in retention payments. In perhaps the most explicit example, as set out by my hon. Friend the Member for Harrogate and Knaresborough, the chief executive of Yorkshire Water received £1.3 million from the holding company, Kelda Holdings.

Those are clear and obvious examples of water companies trying to perhaps abide by the letter of the law, if they can get away with it, while completely and utterly flouting the spirit of it. It is totally predictable. Outrageously, Ofwat have either signed off many of these cases or just shimmied and said, “None of our business. We’ve got no powers to do it”—a reminder that it is high time it was abolished and replaced with a more powerful regulator.

[Mr Carmichael]

Thames Water first paid out bonuses it said it would not recoup, and has subsequently said only that the payment of bonuses is paused. My hon. Friend knows that I am a nasty, suspicious and cynical person, but I am pretty sure the senior management, the chief executive and the chair of that company are heading for the door one way or another at some stage. I suspect that one of their last acts before they leave the office will be to press “pay” on those bonuses. Does my hon. Friend agree that if that happens, we can agree that whatever the good intentions behind the Water (Special Measures) Act, they simply have not worked, and we need to build a consensus on how to regulate these things more effectively?

[Tim Farron]

My right hon. Friend is neither nasty nor cynical; he knows Thames Water only too well. Well intentioned though the Act may be, it is clearly full of holes, and the water company chief executives and others are finding ways through them.

We contrast all of that with the fact that in 2024—the last time we had comprehensive figures—the water companies between them dumped sewage in our waterways for a duration of 3.6 million hours. My patch of Westmorland is now the third hardest-hit constituency in England for duration of sewage spills. In 2024 alone, there were over 5,000 sewage discharge incidents, amounting to more than 55,000 hours of raw sewage released into our rivers and lakes, from the Eden to the Eea and from the Kent to the Crake. In just the first 20—no, 19 and a half—days of 2026, there have already been 424 hours of sewage discharge into Westmorland’s precious waterways.

At the same time, water companies across the country are shamelessly slithering around the bonus ban. Their bonuses and dividends are being paid, for the most part, by bill payers. Indeed, water companies are wading in colossal debt, often incurred to pay those bonuses and dividends. In just 2024, £1.2 billion was paid out in dividends, mostly out of debt. In my communities in Westmorland, 11p out of every pound we pay on our water bills goes just to finance debt. Thames Water is even worse: customers are paying over 30p in the pound simply to service the company’s debts.

My message to industry leaders is this: bonuses are meant to be paid to folks who do a good job. If you are leading a company that actively pollutes our lakes, rivers and seas, I hate to be the one to break it to you, but you are not doing a good job.

[Alison Bennett (Mid Sussex) (LD)]

My hon. Friend is right to discuss the problems of sewage in our waterways, but as my hon. Friend the Member for Tunbridge Wells (Mike Martin) and I, and the hon. Member for East Grinstead and Uckfield (Mims Davies), have all experienced in recent weeks, it is not just about sewage in waterways; it is about freshwater supply. Does my hon. Friend agree that the chief executive of South East Water should also go for failing to deliver tap water to our taps?

[Tim Farron]

I imagine that that is item 1—indeed, probably items 1 to 6—on the job description. If they cannot fulfil that obligation, then go they should.

The Government brought in the Act to stop bonuses like this being paid, but they are clearly not effectively enforcing that ban in practice. Although I am critical of the Government, my main criticism is reserved for the water company bosses themselves, who have the nerve to go looking for ways to get around the bonus ban to enrich themselves, often out of bill payers’ money. I tell water industry bosses this: your customers see you, our constituents see you and your hard-working frontline employees see you. Your authority is diminished because your integrity is diminished. That proves the Liberal Democrats right: we need far more radical change in our water industry.

So we come to the White Paper released by the Government this week. Having rejected our 44 amendments to what is now the Water (Special Measures) Act 2025, the Government soon conceded that they needed to do more and launched the independent commission into the water sector, chaired by Sir Jon Cunliffe. The commission reported last July, and this week’s White Paper draws from its report. It is meant to be a step towards a more far-reaching water Bill, perhaps in the coming parliamentary Session, and there are welcome elements in the Government’s trailing of it. For example, it is good that they want to borrow the Liberal Democrats’ plan for a single unified regulator to bring financial and environmental oversight together.

I want quickly to add to the point made by my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) and others that the Drinking Water Inspectorate is doing a good job. We should not level it down to the level of the rest of the regulatory sector, but level the sector up to the inspectorate’s level.

It is good that the Government want to make regulation more proactive through the work of a chief engineer. However, the disaster in Kent and Sussex over the water supply, the financial failure of Thames Water, the failure of all water companies to prevent sewage dumping and the decision of water industry leaders to stick two fingers up to bill payers and Parliament by dodging the bonus ban all tell us that we will never solve this crisis while we maintain the current ownership model. The Liberal Democrats demand that our water companies be transitioned to being mutually owned public benefit companies, so that money raised in the water industry is reinvested in our infrastructure, and the main motivation is not the profiteering of people who are often probably not even resident in this country, but the quality of our water supply and sewage removal systems and the benefit to the customer. We are therefore bitterly disappointed that the Government have no plans to change the ownership model at all. As a result, the White Paper looks like yet another missed opportunity.

Water UK has welcomed the White Paper, which ought to really worry the Government because it is the water companies’ trade body. Of course it is delighted that the Government continue to protect the water companies from the fullest scrutiny. As my hon. Friend the Member for Eastleigh (Liz Jarvis) pointed out, we are measuring the duration, not the volume, of sewage. I said that sewage was dumped for 3.6 million hours in 2024, and that is all I can say, because the duration of spills is all we are allowed to know, but the volume of sewage going into our waterways is surely even more significant. There can be long trickle or a swift deluge, yet the Government refuse to enforce the measurement of volume, despite Liberal Democrat amendments to the Bill that would have allowed them to do that.

It feels like the Government, in failing to enforce the 2025 Act and stand up to the water companies in their new water White Paper, are content merely to make tentative steps to be better than the dismal record of their Tory predecessors—which is not a high bar. The British people need this Government to be a lot more than just a bit better than the Conservatives. They need radical reform of this failed ownership model and of inadequate regulations and enforcement. The Liberal Democrats will offer that reform.

15:37

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

It is a great pleasure to serve under your chairmanship, Dr Allin-Khan, and to speak in this important debate on the enforcement of the Water (Special Measures) Act. I thank the hon. Member for Harrogate and Knaresborough (Tom Gordon) for securing this debate and for his opening remarks. We have heard many powerful contributions from across the Chamber.

Today’s debate once again reinforces what everyone here and the public know: the water industry needs fundamental reform—work that the Conservatives started. Because of the Conservatives, 100% of storm overflows are now monitored, compared with just 7% in 2010, when the last Labour Government left office. We now know the scale of the problem and can start holding water companies to account more transparently and, importantly, with an evidence base for incidents such as illegal sewage spills.

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 strong action on water companies that were illegally dumping sewage into our waters. The last Government brought in measures to ban executives from receiving bonuses where water companies are found to have committed serious pollution incidents. That is why it was so disappointing to see the current Government simply recycling and repackaging some of those measures, while leaving out major improvements, such as the water restoration fund, when they introduced the Water (Special Measures) Act.

Existing measures to allow Ofwat to change the conditions of water company licences in the Environment Act 2021 were already sufficient to ban bonuses for executives where that was deemed necessary. Although the Opposition supported and constructively scrutinised the Water (Special Measures) Act, that primary legislation, despite the measures it included, was not necessary to enforce a ban on bonuses in the first place. During its passage, we tabled many sensible amendments, including ones to ringfence funding from enforcement fines to a dedicated water restoration fund, to guarantee that companies fixed locally the environmental damage they caused; to require Ofwat to create rules on financial reporting in its remuneration and governance rules, on which MPs would have been given a vote; to reduce consumers’ bills if their companies were hit with enforcement fines; and to ensure that companies did not leverage too much debt. Sadly, the Government failed to support those amendments, and very much missed an opportunity to increase accountability through them.

I am sure the Minister, for whom I have great affection and respect, will reassure us that the Government have set out all their plans to improve accountability in the water industry in the water reform White Paper published today—although I have to say that that is nearly six months after the water commission published its final report, which the Minister said the Government would respond to promptly.

We need only look at the example of Thames Water, which we have heard about a bit today, and which is still in a precarious financial situation, to see that we really cannot afford to delay wholesale reform much longer. It has been wrung dry of capital, and it has failed to invest to expand its supply and clean up sewage spills. Alarmingly, the interim financial report showed that between the end of March and the end of September 2025 its debt, as a percentage of company equity, increased by £833 million—a 5% increase. All of that is only heightened by the fact that Thames Water has had £123 million pounds of enforcement fines because of Ofwat’s findings last May.

His Majesty’s official Opposition have been clear: we do not want to see Thames Water fold, because although water supply would continue, there would be a serious risk of higher bills for consumers and the issues facing the company would not be solved. Strangely, the third party led legal action that could have sunk the company, and both they and Reform seem happy for the company to go under, exposing taxpayers to billions and pushing consumer water bills sky high. Can the Minister reassure the House that the Government are taking action to help find a market-based solution for the Thames Water rescue deal?

When it comes to water supply, we need only look at recent events in the south-east, which we have heard about today, to see directly how urgently customers need changes to regulation. In recent days and weeks, we have heard powerful testimony from my hon. Friend the Member for East Grinstead and Uckfield (Mims Davies) and other colleagues. Communities across Sussex and Kent have faced terrible impacts, with tens of thousands of homes left without water supply, medical procedures cancelled, some hospital appointments moved online, schools and libraries shut, hospitality businesses having to close their doors, and farmers and horse owners fearing they will not have enough water for their livestock.

On the subject of animals, water companies have been saying that they have no duty to provide water for them. As a medic, Dr Allin-Khan, you will be very familiar with the fluid requirements of a person, but to put it in perspective, the average 500 kg horse needs 25 litres of water a day, and a lactating dairy cow needs upwards of 100 litres a day. That is a hell of a lot of water that the companies are not providing when we have outages, creating animal welfare issues and pressing local communities. Farmers, animal owners and local communities have had to step in, roll their sleeves up and help each other out—it should not be like that.

Given the clear need for wholesale reform and accountability for water delivery and quality, can the Minister provide any clarity today as to when we will actually see tangible, beneficial changes to the quality, but also quantity, of fresh water supplied to households, medical establishments, schools and businesses? One aspect the Government have articulated is that the regulatory system will see reform, with some of the current bodies abolished and merged into one. The Opposition accept that that is necessary to improve the current state of the water industry, but can the Minister confirm that the Government are working at pace to provide a new regulatory structure that genuinely improves regulation and delivery; to provide clarity as to how that regulator will be organised to efficiently deliver its responsibilities; and, as we have heard from colleagues, to ensure that standards that are currently working better—such as in the Drinking Water Inspectorate—are not worsened by regulatory reform?

His Majesty’s most loyal Opposition have always maintained that we will support serious efforts to continue the last Government’s work in holding water companies accountable and improving our water sector. Ministers have said that they will not tolerate any attempts to work around the ban on bonuses and will instruct Ofwat to enforce fines and other penalties if it finds the rules have been broken. Ofwat has said it is considering updating its company reporting requirements for next year’s performance-related executive pay assessment to ensure that there is greater transparency around exactly what renumeration companies receive and, as we have heard today, why they are receiving that payment.

The Opposition fully support the Government in seeking to enforce the law and ensuring that executives do not receive unfair bonuses where water companies have been found to commit criminal breaches and are not delivering a good service. We would also support genuine efforts by the Government to hold water companies to account and build on the work of the last Conservative Government to improve water quality. I urge the Minister to use this opportunity to outline exactly how the Government will ensure existing laws are properly enforced. I am sorry to say that, so far, the meaningful reform that they have promised, and that is rightly expected, has under-delivered when it comes to the change that we need. Their response to the Cunliffe review, although slow in coming, is now their biggest opportunity to make sure they get this right. We need not just words, but action, and sensible measures that the whole House can get behind.

15:46

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Emma Hardy)]

It is a pleasure to serve under your chairmanship, Dr Allin-Khan. I thank the hon. Member for Harrogate and Knaresborough (Tom Gordon) for securing this debate. I am particularly delighted he has done so today—great timing—since today we have published our new vision for water.

These are once-in-a-generation reforms to our water system, delivering tough oversight and real accountability, and putting an end to water company excuses. This Labour Government are doing away with water companies marking their own homework and are holding them firmly to account. From an MOT-style approach for water companies’ pipes and pumps to no-notice inspection powers, we are creating a system where customers get the service they deserve and bosses have nowhere to hide. We have already taken tough action on the worst performing water companies, while protecting customers by doubling compensation for those impacted by supply interruptions.

There are a few more treats included in today’s White Paper, among them a new chief engineer to bring technical expertise to the new regulator for the first time in 20 years; new performance improvement regimes, so that any water companies falling behind in finances, environmental standards, drinking water quality or operations will face tough consequences; and dedicated supervisory teams to replace the current one-size-fits-all approach and give the new single regulator a thorough understanding of how each company operates; no-notice inspections; mandatory water efficiency labelling; accelerated roll-out of smart meters; regional planning to bring together councils, water companies, farmers and developers to deliver joined-up plans to tackle river pollution, water resources and housing growth; and senior accountability to ensure water bosses are directly accountable for the service that customers receive.

[Mims Davies]

My constituents, particularly businesses, want clear understanding around compensation, but the area that interests me is the chief engineer role. The guidance that was given to her fellow Minister, the hon. Member for Coventry East (Mary Creagh) before the recent 16,500-property outage in East Grinstead and the villages was that it would affect Sussex Weald and Crowborough. How can this new chief engineer help us to get South East Water to be clear about what is already going on?

[Emma Hardy]

I have huge sympathy and support for the hon. Lady and her constituents in the situation that they have faced in the last few weeks and I understand the urgent need for compensation, not just for her residents, but many of the neighbouring constituencies. She mentioned that it is the first time that Ofwat has ever done an investigation into whether a company is still complying with its licence to operate. It is looking at the customer part of the operation licence to see whether or not the company is complying; that is the first time that has ever been done. The Consumer Council for Water is visiting the Tunbridge Wells area to hear direct testimony from people about how they have been treated and how the situation has impacted them. I share the love expressed in the Chamber for the Drinking Water Inspectorate, particularly for Marcus Rink and all the work he does, and the inspectorate is looking carefully into that matter as well.

One of the things that we promised in the Water (Special Measures) Act were powerful new customer panels to ensure that customers are at the heart of company governance. Some first accountability sessions will be held in spring 2026, requiring customers’ views to be taken into account in company decision making and allowing those customers to hold companies to account—one of the many things that was in that Act.

While we are on the situation that the hon. Member for East Grinstead and Uckfield (Mims Davies) faced, I will mention the hon. Member for Tunbridge Wells (Mike Martin), whom we spent rather a long time with over the last few weeks. It is outrageous; my heart sank when I saw Tunbridge Wells and its residents being impacted again after the awful situation that businesses faced in the run-up to Christmas. I am keen for them to receive compensation as quickly as possible. He is right to point out the concerns that we all had about the disinformation that was put out. The need for clear communication to everybody about what is happening is incredibly important.

There are many things from the water White Paper that I would like to highlight. I hope we get a chance in Parliament over the coming weeks to look at some of that in more detail. There is a section on debt at the bottom of page 26 of the White Paper that states:

“We will therefore consider how the regulator can work with companies and investors to ensure companies do not accumulate unmanageable levels of debt”.

There is a direct reference to debt in the White Paper. It is also worth pointing out what it says in the section called “Putting Customers First”. Page 31 mentions

“increasing public access to water for recreation and wellbeing”',

something that I know my hon. Friend the Member for Cannock Chase (Josh Newbury) is really interested in. That is because of the love that there is for the Tyne and how beautiful it is—we want to see people having access to it.

The White Paper mentions the powerful new customer panels as well, and also looks at regulators strengthening the “customer measure of experience”. That is one of the metrics used to judge water companies and we want to strengthen that metric of experience.

Another thing that comes up in debates on agricultural pollution is the effect that it has on the beautiful and stunning River Wye, and which I know is a huge source of concern for my hon. Friend the Member for Monmouthshire (Catherine Fookes). On page 35, we talk about how we will

“consult on reforms on how sewage sludge use in agriculture is regulated and whether this should be included in the Environmental Permitting Regime..”

One of the big focuses and challenges is what the difference would be, if these measures were all in place. One of the many key things is about prevention rather than cure—I know you will understand that analogy very well, Dr Allin-Khan. It is about getting companies to fix things before they break. Around the country, we have too many examples of things breaking before companies recognise that they should be fixed. The MOT work, the engineer and the resilience standards are all about understanding where the problems are and getting in there and fixing them first. Fundamentally, that is cheaper and better for customers, because it costs less to fix something before it breaks and creates a disaster somewhere.

[Mr Carmichael]

I am interested to get the Minister’s view on this subject of the relationship between the Department and companies. She may be aware that the Department is currently appealing to the first-tier tribunal a decision of the Information Commissioner requiring them to disclose information to Democracy for Sale, an organisation run by investigative journalists. DEFRA’s defence is that they have to have a safe space when talking to water companies about these things. I am not expecting her to comment on live legal proceedings, but will she reflect on that, and interrogate her officials when she returns to the Department about whether it is appropriate for the Department to defend such cases where, in this case, the party receiving the obvious benefit is Thames Water?

[Emma Hardy]

As the right hon. Gentleman has noted, I cannot speak about live investigations, but I will reflect on what he outlines.

The hon. Member for Epping Forest (Dr Hudson) mentioned livestock and its importance, something that came up a lot during our many calls. Yes, we need adequate water for people, but there have also been many animals in distress.

We will carry out pilots across the country to look at the new regional regulatory structure and how we are going to make it work. That is a massive opportunity for Members across the House to get involved.

My hon. Friend the Member for Hexham (Joe Morris) was talking about rural communities being supported and ensuring that we have emergency provisions for livestock. In relation to the River Tyne in particular, I encourage him to speak to his water company and find out exactly when it will upgrade those storm overflows, so that he can see tangible progress in his area.

We have also doubled the funding for catchment partnerships, which is great news where we have those, particularly in rural areas. I thank my hon. Friend the Member for Monmouthshire for her work on the Bill Committee and for the work that she continues to do in championing the River Wye. She is quite right that rivers do not obey geographical boundaries, so we have to work together. I put on record my thanks to the Welsh Government for all the work they have done. We have worked together on many different measures and will continue to do so.

I also thank my hon. Friend the Member for Cannock Chase for his work on the EFRA Committee. He is right that there should be clear consequences for failure, and he will be pleased to know that following the Water (Special Measures) Act, the Environment Agency is on track to deliver 10,000 inspections in the year ’25-26. That is a massive increase on the previous year’s 4,600 inspections; we are more than doubling inspections of water companies. We are also doubling compensation because, sadly, we have seen that the doubling of compensation for customers who face supply outages or receive boil notices is desperately needed.

I would like to be in a situation—as we will be when we implement all these measures—where we do not need to compensate customers because we are not continually seeing failure. But until that moment, I will continue to work hard, push on and deliver the changes that the industry so desperately needs.

15:57

[Tom Gordon]

Thank you, Dr Allin-Khan. It has been a privilege to hear from Members from across the House and the country. They have shared examples about their water companies, and the failures and systemic issues that are pervasive across the sector.

In particular, I thank my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) for his determined campaigning on this issue over the years and in the run-up to the general election; it came up time and again when we were candidates, and those Liberal Democrats who were elected to this place owe him a great debt of gratitude for banging the drum. I also thank everyone who intervened—I cannot rattle through everyone in the time I have, but I look forward to seeing the water White Paper and to chewing it over in depth and with more time, hopefully in the main Chamber.

Question put and agreed to.

Resolved,

That this House has considered the enforcement of the Water (Special Measures) Act 2025.