Water (Special Measures) Act 2025: Enforcement

Tom Gordon Excerpts

Tuesday 20th January 2026 Westminster Hall

[Tom Gordon (Harrogate and Knaresborough) (LD)]

I beg to move,

That this House has considered the enforcement of the Water (Special Measures) Act 2025.

It is a pleasure to serve with you in the chair, Dr Allin-Khan, and to open this debate on the enforcement of the Water (Special Measures) Act 2025.

Like many Members across this House, I welcomed the introduction of the Water (Special Measures) Act last year. After years of public anger over pollution, rising bills and declining services in the sector, the Act promised a tougher approach to a failing water industry. It pledged to ban bonuses for failing bosses, bring criminal charges against persistent law breakers, impose meaningful fines and introduce independent monitoring of every sewer overflow. On paper, that sounded like progress. In practice, the Act has proved to be little more than a drop in the ocean.

The Water (Special Measures) Act was meant to turn the tide, but right now the sewage is still flowing and so are the excuses from water bosses. The Act was intended to strengthen regulation and restore public trust, yet in the months since its introduction we have seen companies complying with the letter of the law while confidence continues to drain away. When regulation is drafted so narrowly it can be complied with but the purpose is undermined, it is quite clearly not fit for purpose and not strong enough. That brings me to a central question of this debate: how do we ensure that the principles of the Act are properly enforced, and that water companies are genuinely held to account?

Nowhere is the failure of the current system clearer than the performance of Yorkshire Water, which supplies water to my constituents in Harrogate and Knaresborough. The problems they face mirror those across the country, from poor customer services to rising bills and the persistent sewage pollution we see in our rivers.

Yorkshire Water was classified by Ofwat as “lagging behind” but my constituents are having to pay that price upfront. In October 2025, the Environment Agency gave Yorkshire Water a red rating for serious pollution incidents. Those incidents had almost tripled in 2024, leaving the company with one of the worst pollution records in the country. Despite this performance, customers have repeatedly been asked to pay more while receiving less. One constituent described their experience as:

“Probably the worst consumer experience I have had in my life”.

Against that backdrop, many were rightly shocked by comments from the Yorkshire Water chief executive when she suggested criticism of the company reflected

“a level of expectation from customers that’s much higher”

than it had been. With water bills expected to rise by as much as 41% over the next five years, and a hosepipe ban that was imposed from July to December, my constituents are entitled to ask how low does she think their expectations should be? If expectations are too high, then perhaps the problem is not the public but the leadership of Yorkshire Water.

[Jim Shannon (Strangford) (DUP)]

I commend the Liberal Democratic party for all they do on water issues. That cannot be taken away from them: they are to the fore. Other parties may be a wee bit annoyed at that, but they are so active it is incredible. Well done.

Does the hon. Gentleman agree that the private companies do not appear to be tied to doing the right thing for the public as a whole, but to doing more for their investors? The ability to freeze bonus payments as a penalty should be used, and the consultation with the Department for Environment, Food and Rural Affairs must allow this measure to be implemented in a quick and cost-effective manner, as a matter of urgency. Does he agree that is one thing that could be done?

[Tom Gordon]

I thank the hon. Member for his intervention. It is a pleasure to take an intervention from him, as always. I completely agree with what he has outlined and the characterisation of the way that the water sector is, frankly, morally bankrupt. There is no interest in the public good. That is why my party has long been calling to see these companies reformed, where they have to put public benefit interest first rather than corporate shareholder responsibilities.

[Bell Ribeiro-Addy (Clapham and Brixton Hill) (Lab)]

I thank the hon. Member and alongside him I wish to put on record on behalf of my constituents what an absolute disgrace Thames Water is. In a desperate attempt to secure their investments, avoid special administration and keep the company within the private sector, Thames Water’s creditors are trying to strike a deal with Ofwat that would see them polluting our waterways for up to 15 years. That is a shameless attempt that proves that they cannot be trusted to put the best interests of their customers or the environment ahead of their own purses. Does the hon. Member agree that Ofwat ought to reject that deal and use the powers it has been granted through this Act and put Thames Water into special administration?

[Tom Gordon]

The hon. Lady hits the nail on the head. Water companies are trying to get away with doing grubby deals by the back door. Across the board—it is not just Thames Water and Yorkshire Water—the sector is not operating as it should, so we need proper wholesale reform of the water companies’ models.

If the expectations are too high, it is perhaps not the public who have the wrong end of the stick, but the leadership of Yorkshire Water. Clean water is not an unreasonable demand, but the bare minimum that we should be able to expect. My constituents can see the consequences of Yorkshire Water’s failure at first hand; they need only to go out into our wonderful countryside across Harrogate and Knaresborough, where the River Nidd, Crimple beck and Oak beck have all been affected by sewage outflows and overflows.

[Manuela Perteghella (Stratford-on-Avon) (LD)]

In my constituency, the River Avon and its tributaries are central to our natural environment and to leisure and tourism—the visitor economy. It is a disgrace that our waterways are still being polluted. Does my hon. Friend agree that water management data must be transparent, and that the Government must introduce monitoring of the volume, not just the duration, of sewage overspills?

[Tom Gordon]

I thank my hon. Friend for that very pertinent intervention. I have been to Stratford, and it is a lovely place. No community should be blighted by sewage at the hands of these water bosses. The point about volume, and not just hours of sewage dumping, is key.

The River Nidd, which once brought joy to families in Harrogate and Knaresborough, is now treated as a health hazard. Every year, kids are taken to hospital after playing and swimming in it. Dogs routinely fall sick and have to go to the vet if they dare go swim in the lido. That is not progress, but decline. Things are not getting better; they are still getting worse.

[Caroline Voaden (South Devon) (LD)]

My hon. Friend is being very generous with his time. In 2024, storm overflows at Harbertonford waste water treatment works discharged into the Harbourne river for more than 3,500 hours. In other words, raw sewage was pumped into the river, which flows into the glorious River Dart, for 40% of the year. As of this morning, the same storm overflow has been activated since 11 January. Does my hon. Friend agree that South West Water must not be allowed to get away with that?

[Tom Gordon]

That is another fantastic example of how poorly water companies across the length and breadth of our country are performing. It is entirely unacceptable. My hon. Friend and many other Liberal Democrat colleagues have done a fantastic job of holding the water bosses to account. Her constituents are very lucky to have her, and I am sure she will continue to do that.

Last summer, I took part in the Knaresborough bed race, which ends with participants crossing the River Nidd after running around town, up and down hills, with kids on beds. It is a fantastic event. If Members have not seen it, they should google it—even better, they should come and watch it. Hopefully, I will get a place to do it again this year. But in recent years the river crossing at the end has become contentious. There was talk of scrapping it altogether because of the danger of having to cross the river when sewage overflows have been pumping. Locals advise those competing in the race to drink a can of full-sugar Coke at the end in the hope that it will kill off any bacteria and nasty things that they may have swallowed during the river crossing. When that is the best piece of advice that people can give to those competing in a sporting event, something has gone very wrong. The regulation of the water sector is completely failing. No one should have to fear sickness from their local river in 21st century Britain, but that is Yorkshire Water’s legacy in my constituency.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

The hon. Gentleman is making an impassioned speech about Yorkshire Water, which also serves Dewsbury and Batley. In 2024, there were at least 346 sewage dumps in local waterways in Dewsbury and Batley, lasting over 1,000 hours. That equals 1.5 months of continuous sewage discharge. Discharges around Batley beck, the River Calder and the River Spen are blighting our waterways and our community. In addition, sewage is backing up into streets and people’s homes because of a failure to maintain pipes or design the system correctly. Does the hon. Gentleman agree that water companies have been getting away with almost murder for too long and must be held accountable? Customers must not have to pay any longer for their failings and their profiteering.

[Tom Gordon]

I agree with the hon. Gentleman’s characterisation of Yorkshire Water. All too often, we hear that there will be investment and improvement, but it is frankly too little and often too late. There has been a lack of investment in infrastructure over decades, which has left the system creaking at the seams. I completely agree that we need to get a proper grip of the issues that I have outlined.

[John Milne (Horsham) (LD)]

I will add another name to the catalogue of water company disasters: Southern Water. In Rudgwick in my Horsham constituency, residents have complained for almost 20 years about effluent backing up into bathrooms, footpaths covered in soiled loo paper and having to keep children and pets indoors. Yet over the last decade, average Southern Water bills have shot up from £262 in 2016 to £702 today. Does my hon. Friend share my frustration that residents are paying vastly more with absolutely nothing to show for it?

[Tom Gordon]

That is a damning indictment of the state of water companies across the length and breadth of this country, especially at a time that is hard financially, when people have to tighten their belts more than ever before and are struggling with the cost of living crisis. That is what jars people: when they see their water bills going up more and more but they still have to deal with the grim situations that my hon. Friend outlined so eloquently. That is not an isolated story; it is a reflection of systemic failures across the industry and our country.

Since the introduction of the 2025 Act, Thames Water’s financial position has, as we have heard, continued to deteriorate, while sewage discharges persist. In the south-east just a few weeks ago, we saw repeated outages that left households without even the basic service of being able to turn on the taps. When water companies repeatedly fail and nothing visibly changes, the message to the public is clear: accountability is missing.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

I thank my hon. Friend for being so generous. As the Member of Parliament for Tiverton and Minehead, I represent two water companies, Wessex Water—who are no angels—and South West Water—who I have been chasing for several months in order to get a meeting on behalf of a constituent whose bakery was flooded to such an extent that she has now had to shut up shop and go home. I am supposed to be meeting them on Monday, but it has taken at least four days to get a time out of them. Does my hon. Friend agree that it is a disgrace that these companies are able to literally stick their fingers in their ears when people raise concerns on behalf of their communities?

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[Tom Gordon]

I thank my hon. Friend for her intervention. I do not envy her having to battle just one water company, but two. She has her work cut out for her—some of us are now breathing a sigh of relief in comparison. The problem is, as she outlined, that there is no accountability. It often takes public pressure, campaigning or us in this place banging the drum to talk about these issues to get those meetings set up and problems fixed when it is a basic obligation that water companies should already provide.

Since the introduction of the 2025 Act, we have seen issues across the country. The failure of water companies is a source of frustration and distrust in politics. People feel that the legislation that was passed is simply not working, or that we got it wrong. One of the most high-profile elements of the Water (Special Measures) Act was the commitment to block bonuses for executives at failing water companies. Water companies are upping their game and thinking about the way that they structure their payments to try and circumvent these measures and the bonus ban. Ofwat investigated Yorkshire Water last year, but said that it did not breach the legislation or regulatory guidance on executive pay. The payments made to the chief executive of Yorkshire Water, Nicola Shaw, through the offshore parent company Kelda Holdings were what they called “fixed fees” for group-level responsibilities and funded by shareholders. While technically that might not constitute a breach of the ban, it is a demonstration of how open to exploitation the system and the legislation are. Rather than a bonus ban, we have ended up with a bonus rebrand.

[Josh Newbury (Cannock Chase) (Lab)]

The hon. Gentleman is making a powerful speech on behalf of his constituents. Last year, it emerged that Thames Water was planning an enormous additional compensation package under the guise of a management retention plan. After being grilled by those of us on the Environment, Food and Rural Affairs Committee, and an understandable public outcry, it announced that it would no longer go ahead with that. Does the hon. Gentleman agree that any water company setting its moral bar lower than Thames Water should take a long, hard look in the mirror?

[Tom Gordon]

I completely agree with the hon. Member. I thank him and the Chair of the EFRA Committee, my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), who is also here today. The work that they have been doing in highlighting the issues endemic to water companies across this country could not have come sooner. The fixes that they have highlighted in their reports are important for driving this conversation as we look towards the future.

Turning back to Yorkshire Water, in the past two years, those payments—which were apparently not bonuses but rather “fixed fees”, or whatever Yorkshire Water called them—totalled more than £1 million, on top of the near £700,000 annual basic salary, at a time when pollution incidents were rising and trust was collapsing. Yorkshire Water’s chief executive has since said that it was a “mistake” not to disclose those payments and not to have been more transparent. Well, that is too little too late when Yorkshire Water has been caught with its hand in the cookie jar. My message to Yorkshire Water is simple: it can rename a bonus to a “fixed fee” and apologise for getting caught out, but the stench of sewage still clings to it, and to the bosses at Yorkshire Water.

I remain concerned about the overreliance on fines as a primary enforcement tool. In recent years, we have seen Yorkshire Water and many other companies facing record-breaking fines, but the problem remains: the lack of accountability that they face, even when such astronomical penalties are imposed on them. Simply put, we cannot fine our way out of failure when customers end up footing the bill.

[Dr Roz Savage (South Cotswolds) (LD)]

I thank my hon. Friend for his impassioned speech on this very important subject. My constituents in the South Cotswolds will be deeply disappointed by this White Paper. Does my hon. Friend agree that the Government need to get literally upstream of this question, and address the question of water company ownership? When we look to Europe, we see models such as mutual or public-benefit ownership working much more effectively. Does he also agree that the profit motive does not sit well with an essential public utility?

[Tom Gordon]

I thank my hon. Friend for putting across that argument, and I completely agree with her. She has outlined the case and the reasoning very well.

Moving on to today’s water White Paper, it is right that we recognise that the current regulatory system has failed, that Ofwat has not provided the hands-on oversight required, and that prevention must replace crisis management. Proposals for a new regulator, stronger inspections and greater transparency are a step in the right direction—if long overdue—but a White Paper and those new proposals will only be as strong as their enforcement.

I want to press the Minister on three specific points. First, will the Minister confirm that the new regulator will have an explicit duty to close remuneration loopholes, so that executives cannot simply comply with the letter of the law while undermining its purpose? Secondly, will the Minister commit to ensuring that criminal liability for water bosses is not merely theoretical but actively pursued where there is evidence of serious or repeated environmental harm? Thirdly, will the Minister set out how enforcement action will target decision makers, not just balance sheets, so that customers are no longer left paying for failure through higher bills? Those are the tests that will determine whether today’s White Paper represents a genuine reset or simply another missed opportunity.

Ultimately, this debate is about accountability. Pollution on this scale is not an accident; it is a result of decisions, incentives and failures of leadership. When executives are rewarded while rivers are polluted, that is not mismanagement; it is environmental vandalism. Nicola Shaw remains in post despite rising bills, collapsing trust and one of the worst pollution records in this country. In any other industry, that level of failure would end in resignation. So today I say clearly: Nicola Shaw, do us a favour and go.

A new regulator must come into post and go further than we have seen with Ofwat. Water bosses who preside over illegal pollution should not just have their bonuses blocked; they should face criminal consequences for their environmental damage and harm. No more hiding behind corporate structures, no more excuses and no more polluting with impunity: if they poison our waterways, they should answer not just to shareholders but to the full force of the law.

[Dr Rosena Allin-Khan (in the Chair)]

I remind Members that they should bob if they wish to be called in the debate. Timings-wise, we will stick to approximately five minutes per person at the moment, which should make possible one or two interventions as well.

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[Gideon Amos (Taunton and Wellington) (LD)]

It is a pleasure to serve under you in the Chair, Dr Allin-Khan. I congratulate my hon. Friend the Member for Harrogate and Knaresborough (Tom Gordon) on bringing to the Chamber an issue that has sparked vivid examples of the complete and abject failure of our privatised water companies. I welcome this debate, although the news that it brings is very disappointing, is it not? Our rivers are, of course, precious. The Tone runs through and unites almost all parts of Taunton and Wellington. It is a lifeline for biodiversity, for families and countryside lovers and for the whole natural world. When rivers are healthy, our communities and our nature flourish, but when they are polluted, we all suffer.

That is why the recent revelations about Wessex Water are infuriating. Just a few weeks ago, we learned that the company’s former chief executive officer, Colin Skellett, received a £170,000 bonus from the Malaysian parent company, YTL Utilities. Despite a Government ban on bonuses, the current CEO and chief financial officer received £50,000 in additional payments through the same route. Those payments came after Wessex Water’s criminal conviction in November 2024 for pollution that killed more than 2,000 fish, and after the company was fined £11 million for additional sewage failures. That is all in the context of the £4.25 billion paid out by Wessex Water to private shareholders since privatisation. I cannot think of a more graphic failure of the Conservatives’ privatisation programme. Imagine if that £4 billion had been invested in our rivers and infrastructure over that time. That is exactly the kind of behaviour that the Water (Special Measures) Act 2025 was meant to prevent, but companies are getting around it by using parent company fee payments, fee payments generally and complex corporate structures to circumvent the rules.

In Committee, my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) warned that that would happen and pushed for a stronger regulator. We called for Ofwat to be scrapped and replaced with a regulator with real teeth. We also called for a new ownership model for water companies, for the public to be brought in through public interest companies, and for mutual ownership so that customers have a stake in the ownership and profits are reinvested in the company rather than going to private shareholders on the other side of the world. Many bill payers in the Wessex Water area would be surprised to find that that is where the money they pay ultimately ends up.

The fundamental problem is that while executives are exploiting loopholes to line their pockets, rivers are getting worse and dying. Customers are paying through higher bills, and communities are watching their local rivers fill with sewage. I checked just before coming to the debate, and north of Bradford-on-Tone and in Heron Gate and Lower Henlade in my constituency, sewage works are pumping sewage into the River Tone right now. Water company bosses should not be rewarded for that kind of behaviour through whatever corporate sleight of hand they are attempting to use. That is as real in my constituency as it is anywhere else.

As so often happens, volunteers have come to the fore. They banded together, and the Friends of French Weir Park and I applied for and got bathing water status to try to improve the water quality of the river, but we need investment.

[Tom Gordon]

My hon. Friend highlights the involvement of the fantastic community groups that have had to pick up the pieces of this broken system. Does he agree that, in an ideal world, we would not need organisations such as the Nidd Action Group in my constituency, even though the work they do is fantastic?

[Gideon Amos]

That is absolutely right. Water companies should be run in the interest of the public, not of the private shareholders’ pockets. That would be a welcome reform for communities in Taunton and Wellington and, no doubt, across the country.

In Taunton and Wellington, Wessex Water needs to reform and put this right. I welcome the action it is beginning to take, but we need real investment in the River Tone to improve bathing water quality, and water quality generally. Our sewage works must get the investment that they need. The Government must close the loopholes whereby bonuses are paid in all but name, and we need to ban the parent company payments that circumvent those rules. We need to strengthen enforcement powers, give regulators teeth and hold companies accountable so that communities such as mine can have confidence that the water they pay for comes from a company that is set up and run in the interest of the public, not private profit.

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[Tom Gordon]

Thank you, Dr Allin-Khan. It has been a privilege to hear from Members from across the House and the country. They have shared examples about their water companies, and the failures and systemic issues that are pervasive across the sector.

In particular, I thank my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) for his determined campaigning on this issue over the years and in the run-up to the general election; it came up time and again when we were candidates, and those Liberal Democrats who were elected to this place owe him a great debt of gratitude for banging the drum. I also thank everyone who intervened—I cannot rattle through everyone in the time I have, but I look forward to seeing the water White Paper and to chewing it over in depth and with more time, hopefully in the main Chamber.

Question put and agreed to.

Resolved,

That this House has considered the enforcement of the Water (Special Measures) Act 2025.