Future of Thames Water

Charlie Maynard Excerpts

Tuesday 6th January 2026 Westminster Hall

[Charlie Maynard (Witney) (LD)]

It is a pleasure to serve under your chairship, Mrs Harris. West Oxfordshire is very much ground zero for Thames Water. We have the Thames itself, the Evenlode and the Windrush. West Oxfordshire district council has done great work in going after Thames Water. We have WASP—Windrush Against Sewage Pollution—and we, as a team, have also gone after Thames Water through the High Court and the Court of Appeal, all the way up to the Supreme Court. I thank the legal team that fought pro bono with us last year on behalf of the 16 million Thames Water customers who are being royally stiffed.

As my hon. Friend the Member for Oxford West and Abingdon (Layla Moran) mentioned, the bills people are paying are completely outrageous. I have had constituents whose bills have gone up by 50% and 70%. Somebody got a 93% increase through the post. It is outrageous.

[Helen Maguire (Epsom and Ewell) (LD)]

One of my local residents has had their bills doubled, and a mains water pipe in West Hill has burst, causing major chaos for my constituents. Yet £2.5 million was given out in executive bonuses last April. It is disgraceful that the Labour Government have left our constituents to foot the bill for Thames Water’s shoddy performance. Does my hon. Friend agree that we should put the company into special administration?

[Charlie Maynard]

I completely agree—well said. What is so depressing is that the Labour Government have embraced the Conservative’s mistakes over Thames Water, and our water sector more broadly, and then doubled down on them. The Government have been and continue to be hoodwinked by a bunch of hedge-funds whispering about financial Armageddon into ears of the Department for Environment Food and Rural Affairs and Ofwat. They need to follow through on their regulatory obligations, because we need regulators that have teeth and backbone and will actually deliver. Instead, we have hedge-funds making vast fees with outrageous interest expenses, at the cost of us as consumers. It is not fair. It is a great shame, and it is also unnecessary, because the company’s financial and environmental positions are completely unsustainable. With every day that passes, this becomes more Labour’s problem.

We now need to cut the rope and put the company into special administration, on account of its many breaches of its licence obligations, so that its debt can be written down to around three times cash flow and it can come out of the special administration regime mutually owned by 16 million customers, and run on behalf of them and the environment, and with Government-guaranteed funding mechanisms in place to fund the investment required over the next three, five and 15 years.

Will the Government please answer my letter to the Minister responsible for sewage and flooding, sent at the start of October? I asked whether the Minister believes that Thames Water’s ad hoc group of class A creditors now exerts material influence over it, thereby meeting the “ultimate controller” criteria. I would really like an answer on that. Last February, a High Court judge found that they have material influence over the company, and it would be great to have a straight answer from the Secretary of State or the Minister on that point.

I would not like the Government to give Thames Water, or any other water company, a free pass on paying environmental fines in full. When there are breaches, we need regulators that enforce the fines that are in place. Similarly, given the extreme precarity of the company’s finances, as my hon. Friends have mentioned, the Government should not entrust it with delivering a huge and costly infrastructure project in Oxfordshire in the form of the south-east strategic reservoir option, about which my hon. Friends the Members for Didcot and Wantage (Olly Glover) and for Oxford West and Abingdon spoke in detail. Given all our constituents’ low level of faith in Thames Water, the future of which is precarious, to put it extremely mildly, it is no wonder that this is causing such alarm to residents in my constituency and those of my hon. Friends.

Please do not be bamboozled by the hedge funds; instead, show some backbone—and do not own the Tories’ mistakes. That is the key thing, because this Government still have a chance to leave it with them. Please do so and put the company into a special administration regime.

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

It is a great pleasure to serve under your chairmanship, Mrs Harris. I congratulate the hon. Member for Oxford West and Abingdon (Layla Moran) on securing this important debate. We have heard many contributions from across the House.

Thames Water is a distressing example that brings to light several serious issues that require ongoing attention from the Government and regulators. During the passage of the Water (Special Measures) Act 2025, His Majesty’s official Opposition tabled many sensible amendments that would have ensured that companies did not leverage too much debt. Puzzlingly, and disappointingly, the Government failed to support those amendments.

Companies should be held to the highest standards, and the last Conservative Government took a range of measures to try to do exactly that. Only 7% of storm overflows were monitored when the previous Labour Government departed office in 2010; the Conservatives took that to 100%. 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 took strong action on water companies that were illegally dumping sewage into our waters. We also banned water company bosses from receiving bonuses if the company had committed serious criminal breaches that damaged the environment.

Quite rightly, there is huge frustration that Thames Water has been wrung dry of capital over the years. It has failed to invest to expand its supply and to clean up its sewage spills. His Majesty’s official Opposition have been clear that we do not want to see Thames Water fold, because, although water supply would continue, it would carry the serious risk of higher bills for customers and would not solve any of the issues facing the company. Bizarrely, the third party led legal action that could have sunk the company, and, with it, Reform appears to be happy for the company to go under, exposing the taxpayer to billions and pushing consumer water bills sky high. If the company were taken into a temporary special administration regime or permanent public ownership, the taxpayer would ultimately end up paying the price. That cannot happen, it should not happen, and the parties calling for it seem to be in denial about what it would mean for the British taxpayer.

Ofwat, as the independent regulator for the sector—for now—has responsibility for the sector’s financial resilience and must continue to work closely with Thames Water. In the 2025 to 2030 price review, Ofwat challenged the efficiency of Thames Water’s proposed spending. That led to Thames Water being expected to deliver all schemes that it had proposed, but for £491 million less than it put forward and without any reductions in scale or standard. While Thames Water had initially proposed to appeal Ofwat’s final determinations for 2025 to 2030, it has deferred the appeal while it seeks to secure a rescue proposal.

Talking of spending, the Government have repeatedly made it a talking point that they have secured £104 billion of investment in the water system. They are not telling us, however, that £93 billion of that investment had been submitted by water companies in October 2023, while the Conservatives were in office.

[Charlie Maynard]

Will the hon. Gentleman give way?

[Dr Hudson]

I have to finish—I only have a certain amount of time. Can the Minister outline what action the Government are taking to help find a market-based solution for a Thames Water rescue deal, specifically in the light of reports that current lenders are preventing or shutting out competitors? What are the Government doing to encourage fair competition that puts the long-term interests of the company and customers first, rather than the interests of those seeking to minimise losses?

We are all agreed that Thames Water is in urgent need of a rescue plan. It must be a market-based solution that protects the taxpayer and customers. With the alarming example of Thames Water, which we are discussing today, and with the Cunliffe review’s clear call for improved financial responsibility, His Majesty’s official Opposition continue to urge the Government to rethink their approach and adopt sensible measures to put water companies on a more stable and secure financial footing, in order to protect water, the environment and the British taxpayer.

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[Dame Angela Eagle]

I can confirm that, and it was one of the first things that this Labour Government, when we were incoming, put on to the statute book as a priority, in order to prevent that particular abuse. Thames Water is now under a cash lock-up arrangement; only Ofwat can approve any further dividend payments. That restriction will remain in place until credit ratings improve. Nothing that is happening at the moment will allow the kind of behaviour that we have seen in the past, from this company and others, to continue.

[Charlie Maynard]

We have interest costs of 9.75% being paid. We have massive advisory fees coming out of the company. All the class A creditors’ legal fees—£15 million a month, give or take—were being paid for by Thames Water. To say that this is not all hitting the customers is not true. Who else is paying for this, if it is not ultimately the customers?

[Dame Angela Eagle]

I was talking about the specific point that my hon. Friend the Member for Rushcliffe (James Naish) made about ringfencing for investment, not about some of the costs of the current impasse at Thames Water. To go back to that, the Government will always act in the interests of customers and the environment, and ensure that Thames Water acts in those best interests too.

We are working closely with Ofwat, which is currently in conversation with the London & Valley Water consortium, which is the group of creditors that was referred to. Ofwat will only agree to a plan that will ensure the best possible outcomes for customers and the environment. We will continue to support engagement between Ofwat and the consortium, with a view to supporting a market-led solution for Thames Water’s difficulties, while ensuring that customers and the environment are protected.

Many hon. Members in this debate have talked about the potential for a special administration regime. Should Thames Water become insolvent, we would not hesitate to apply to the court to place the company into a special administration regime, but as the hon. Member for Epping Forest pointed out, that is not a cost-free option. This would ensure that there is no increased disruption to customers’ water or waste-water services. In line with our preparations for a range of scenarios across regulated industries, including water, officials from the Department for Environment, Food and Rural Affairs have selected a firm, FTI Consulting, as an adviser to help with special administration regime contingency planning. That planning is going ahead.

[Charlie Maynard]

Will the Minister give way?

[Dame Angela Eagle]

No, I must make this point, which is quite important in the context of the debate. There is a high bar for the use of special administration regimes. The law states that special administration can be initiated only if the company becomes insolvent—while Thames Water is living fairly hand to mouth, it is not currently insolvent—or is in such a serious breach of its principle statutory duties or an enforcement order that it is inappropriate for the company to retain its licence. Those are the only two things than can lead to the application of a special administration regime.

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[Charlie Maynard]

I concur with those views from the hon. Member for Boston and Skegness (Richard Tice), but can the Minister confirm that those discussions with class A creditors will not involve forgiving the company for its fines?

[Dame Angela Eagle]

There is an ongoing process that I cannot and will not comment on from the sidelines. What I have said is that the Government will ensure that any resolution comes in the interests of the environment and customers, and that is the criteria that the Government will apply, but I will not commentate on rumours from outside of the process in this place. It is important that we allow the process to continue to its conclusion, whatever that may be. I hope that Members are reassured that the Government will be ready to act and use special administration if we have to, should we get to that circumstance—but we are not in that circumstance yet.

I conclude by reiterating that this Government will always act in the national interest. We are clear that Thames Water must always act in the best interests of customers and the environment. We expect it to do that, and we stand ready to act if it becomes clear that it cannot.