Water (Special Measures) Act 2025: Enforcement

Neil Hudson Excerpts

Tuesday 20th January 2026 Westminster Hall

[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.