Thames Water

Victoria Atkins Excerpts

Tuesday 3rd June 2025 Commons Chamber

[Victoria Atkins (Louth and Horncastle) (Con)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if he will make a statement on Thames Water’s financial situation.

[The Secretary of State for Environment, Food and Rural Affairs (Steve Reed)]

I thank the right hon. Lady for securing this urgent question. I want to begin by making clear that Thames Water remains stable, and the Government are carefully monitoring the situation. Customers can be assured that there will be no disruption to water supply.

Thames Water is a commercial entity currently engaged in an equity raise, and KKR pulled out of that process earlier today. As Thames Water has said, the company will continue to work with its creditors as part of the equity raise to improve its financial position. There remains a market-led solution on the table, and we expect the company and its directors to continue the process that is under way and fix the financial resilience of the company in the interests of its customers. I want to be clear that the Government are prepared for all eventualities across our regulated industries and stand ready to intervene through the use of a special administration regime, should this be required to ensure the continued provision of vital public services.

The situation facing Thames is taking place within a wider context. Only last year, we saw record levels of pollution in our rivers, lakes and seas. It is clear that our water system is broken. We have already passed legislation so that the regulator can ban the undeserved multimillion-pound bonuses that so outraged the public, and we have further strengthened accountability through the introduction of up to two years in prison for polluting water bosses who break the law. We have increased the regulator’s resources and launched a record 81 criminal investigations into water companies, and we have followed the “polluter pays” principle, meaning that companies that are successfully prosecuted will pay for the cost of that prosecution so that further prosecutions can follow. We have worked with the water companies to secure £104 billion of private sector investment to rebuild our broken water infrastructure. That means new sewage pipes, fewer leaking pipes, and new reservoirs across the country, as we work to end the sewage scandal that we inherited from the previous Government.

I launched the Independent Water Commission, under Sir Jon Cunliffe, so that it could outline recommendations for a once-in-a generation opportunity to transform our water industry and ensure that it delivers the service that the public deserve and our environment needs, and today Sir Jon published an interim report setting out the commission’s preliminary conclusions. The Government will respond in full to the commission’s final report in due course, and will outline further steps to benefit customers, attract investment and clean up our waterways.

Whether we are talking about Thames Water or about other companies serving other parts of the country, the era of profiting from pollution is over. This Government will clean up our waterways for good.

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[Victoria Atkins]

Thank you, Mr Speaker, for granting this urgent question. May I begin by correcting the Secretary of State? When he refers to private sector investment, he is in fact referring to the bill increases that each and every one of us will pay—£31 a year—so when he talks about private sector investment, he means bill payers’ investment.

Some 16 million residents and bill payers will have been concerned by this morning’s news that the private equity firm KKR has pulled out of its rescue deal with Thames Water. According to a source close to KKR, one of the reasons it pulled out was its concern about negative rhetoric directed at Thames Water and the rest of the industry in recent weeks by the Secretary of State and other Ministers. In other words, the Secretary of State and his Ministers have talked themselves out of this rescue deal. I am bound to say, if only they could do the same thing with the Chagos islands deal.

On which date did the Secretary of State discover that KKR was thinking of pulling out of this deal, and what involvement did he have in the phone calls over the weekend between KKR and No. 10 spads to try to rescue it? I ask because in recent weeks there have been briefings to the press that he is considering temporary renationalisation. The Treasury has apparently instructed him that he will need to find up to £4 billion from the budget of the Department for Environment, Food and Rural Affairs to cover the cost of this manoeuvre. Let me put that in context: the entire farming budget for this year is roughly £2.5 billion.

Can the Secretary of State therefore explain the options to which he has just referred, and do they include a plan for temporary renationalisation? From which budget would a temporary renationalisation come: DEFRA or central funds? That question is particularly relevant in view of the upcoming spending review, on which there has been detailed briefing, including the suggestion that the DEFRA budget is to be slashed.

The Secretary of State referred to the Cunliffe report, which we will of course look at very carefully, but can he confirm—this recalls yesterday’s shambolic defence review announcement—that there is no funding for this latest review, and that it will do nothing to resolve the immediate issue of Thames Water’s solvency, which he has mishandled, just as he has mishandled the family farm tax, the fishing industry and the sustainable farming incentive?

[Steve Reed]

I am grateful to the shadow Secretary of State for making it clear to the House that she does not understand the principles of private sector investment, and neither is it particularly clever to stand at the Opposition Dispatch Box and make up figures to attack.

This Government stand ready for all eventualities, but I will make no apology for tackling the poor behaviour of water companies and water company executives that took place under the previous Government and that we are correcting. We even heard stories, which have been confirmed to me by water companies, of previous Conservative Secretaries of State shouting and screaming at water company bosses but not actually changing the law to do anything about the bonuses that they were able to pay themselves. This Government are taking action, working with customers, water companies and investors to ensure that we have a successful water sector that works for the environment, customers and investors in a way that it completely failed to do under the previous Conservative Government.

--- Later in debate ---

[Steve Reed]

I thank the hon. Gentleman for his question. We are ready for every eventuality, and there are teams in place to carry this out. Let me reassure him that I have no intention of using public money to bail out this company; we are looking for a market-led solution to its challenges. I thank him for his kind personal words—we will all keep persevering until we have cleaned up our waterways for good.

[Victoria Atkins]

On a point of order, Mr Speaker.

[Mr Speaker]

It is not to continue the argument, is it?

[Victoria Atkins]

indicated dissent.

[Mr Speaker]

Okay, shadow Secretary of State. Let us see if it is a point of order.

[Victoria Atkins]

It is just to correct the record, Mr Speaker. The Secretary of State has given the impression in his answers—without, I am sure, intending to—that the investigations of which he is very proud, from July last year, were a direct result of Labour winning the election in July. That is simply incorrect. As I have drawn to his attention on Twitter, courtesy of a press release on 20 February last year, we in fact invested some £55 million in further investigations, which is the—