Future of Thames Water

Debate between Charlie Maynard and Angela Eagle

Tuesday 6th January 2026 Westminster Hall

[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.

--- Later in debate ---

[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.