Future of Thames Water

Carolyn Harris Excerpts

Tuesday 6th January 2026 Westminster Hall

[Layla Moran]

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

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

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

Will the Government also make clear what residents can expect from this project, should it go ahead? Will there be genuine community benefit? As it stands, the company is promising lots of lovely things—sailing clubs and all sorts—but when questioned on the matter at a recent drop-in event, the promises seemed to be nothing more than an artist’s impression. Will the Minister therefore intervene to ensure that the local villages and towns that will have to suffer the disruption get something out of it, beyond higher bills?

Time and again, constituents are being let down by chronic under-investment. For decades, every Government of every colour have presided over some form of this mess. But I do not want to blame; I just want solutions. As a result, I have some questions. What are the Government doing to prepare for when Thames Water exhausts the £1.5 billion of emergency funding? Have they considered the Liberal Democrats’ plans to turn it into a public benefit company? That is not public ownership, which others call for. The taxpayer would not take on the debt, but the profits would be invested back into infrastructure and fixing the problem, not used to enrich the likes of Abu Dhabi Investment Authority and the China Investment Corporation.

Will the Government promise a full response to the Independent Water Commission report and the creation of the new regulator with teeth? When can we expect the White Paper? Will we all, together, make a new year’s resolution—that this is the year we sort out Thames Water’s mess, for the sake of people and our planet, once and for all?

[Carolyn Harris (in the Chair)]

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

[Daniel Francis (Bexleyheath and Crayford) (Lab)]

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

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

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

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

[Carolyn Harris (in the Chair)]

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

--- Later in debate ---

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

It is a pleasure to serve under your guidance this afternoon, Mrs Harris. I pay tribute to my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) for securing the debate, for leading it so brilliantly and for standing up for her community so well for so many years.

I also pay tribute to those who have contributed to the debate from all sides, but I am bound to observe the concentration of Liberal Democrat Members present, which shows how well we as a group stand up for our communities—particularly those labouring under the yoke of Thames Water, which is, as has been demonstrated, a failing company, both financially and in its primary mission to serve its customers. But in truth, this debate is about more than one failing company; it is about whether a vital public service is to be run in the interests of customers, communities and the environment, or whether the public will once again be left to pick up the bill for corporate failure while the Government fail to grasp the opportunity to make lasting changes.

Thames Water provides an essential service that none of its 16 million customers—those it is meant to serve—can opt out of. It is staggering that a company so central to public health, environmental protection and the decent stewardship of such a vital resource now stands on the brink of collapse. Thames Water is currently operating with more than £17 billion in debt, which it admits that it cannot repay. Around one third of every customer’s bill on average goes not towards fixing leaks or upgrading infrastructure, but towards servicing that debt. Much of Thames Water’s borrowing has paid for undeserved bonuses and dividends, while its infrastructure literally crumbles. That happened under the nose of the previous Conservative Government and the pitifully weak regulatory system that they created.

At the same time, customers have faced bill increases of up to 40%—indeed more, it would appear, in some circumstances. And what have customers received in return? Polluted rivers, record sewage spills and chronic under-investment. The Government’s own data confirms that sewage was pumped into the waterways of this country for more than 3.6 million hours in 2024 alone, while shareholders received £1.2 billion in dividends as a reward for that failure.

Thames Water alone was responsible for 300,000 hours of raw sewage pouring into rivers and streams. In May, the company was fined £122.7 million for breaching rules on sewage spills and on shareholder payouts. But for customers and communities who have already paid the price, that fine came far too late. The company now survives only because of emergency funding from its creditors—funding that will soon run out. The US private equity giant KKR has walked away from plans to buy Thames Water, meaning that the company is surely at the end of the road.

The question is no longer whether the current model has failed—it plainly has—but who should bear the cost of that failure, and what should happen next. For Liberal Democrats, the answer is obvious: the Government must bite the bullet and make those who are culpable pay the price. A well-planned special administration would allow much of Thames Water’s unsustainable debt to be written off and put the company on a stable financial footing while protecting essential services.

Administration must be a means to an end, not the end itself. We want Thames Water to emerge as a fundamentally different organisation, mutually owned by its 16 million customers. That should be the beginning of a wider transformation of our water industry, which could then begin to migrate to a new, public benefit model of ownership where water quality, supply and competent administration come first, instead of the amoral profiteering we have seen across the sector for the last 35 years.

This crisis also exposes a wider failure of regulation. The Independent Water Commission, which reported last summer, laid bare a system that allows companies to pollute and profit with effective impunity. Liberal Democrats have been clear for years that Ofwat should be scrapped and replaced with a tough new clean water authority that brings together financial and environmental regulation. Our current regulators are too weak, understaffed and fragmented; these huge water companies run rings around them and play them off against one another. Bring the regulators together and give them more power; let us have a regulator that the water companies actually fear.

We want strict limits on dividends and bonuses, binding targets to end sewage discharges, consistent national social tariffs, and serious investment in smart metering and infrastructure. We have led the fight, both in Parliament and in our communities, against the sewage scandal. My hon. Friend the Member for Witney (Charlie Maynard) and I tabled 44 amendments to the Water (Special Measures) Bill earlier in this Parliament, and we look forward to doing the same with a new Bill, so when can we expect that new Bill? When will we get the water White Paper that we were promised before Christmas and are still waiting for? Will the Bill be in the King’s Speech?

I am not from the Thames Water region, but our communities in Westmorland stand in solidarity, sympathy and empathy with the customers of Thames Water. Water is deeply personal to us. We are the wettest place in England, which is fine because we have to keep all our lakes topped up—the lakes and rivers that define our landscape, provide water for our region and underpin our ecology.

[Carolyn Harris (in the Chair)]

Order. I call the shadow Minister.