Future of Thames Water

Tim Farron Excerpts

Tuesday 6th January 2026 Westminster Hall

[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.