Thames Water

Before I begin, let me say that this is a solemn day, as we remember our dear friend and colleague Jo Cox—I got to know her when we were living in Brussels in our 20s. I pay tribute to her formidable sister and their family for all their vital work to honour her memory.

I will make a statement regarding the position of Thames Water and the proposed recapitalisation package under consideration. This Government were elected with a clear mandate to clean up our rivers, lakes and seas, having inherited record levels of pollution incidents from water companies. Thames Water has underperformed for 15 years. It has regularly missed performance targets, it has unacceptable levels of serious pollution incidents, and the company is heavily indebted. This situation, which delivers poor outcomes for consumers and the environment, cannot continue.

To fix this, over the course of the past two years, the company has been undertaking a recapitalisation process to seek vital long term funding. The Government have been clear throughout that any investor will need to have a credible and robust turnaround plan, the implementation of which must be monitored by regulators and must restore the company’s financial resilience and operational performance. Ofwat, with the support of Government, have been in discussions with the London and Valley Water consortium—a group of Thames Water’s creditors—regarding the terms of a proposal. On 6 March, the consortium presented its proposal for Thames Water to both Ofwat and the Government. Ofwat has been continuing its discussions with the consortium since then, and I wanted to update the House on the next stage of the process.

Ofwat is currently evaluating the consortium’s proposal and, as the independent regulator, is responsible for deciding whether to accept it. If Ofwat decides to accept the proposal, this would be subject to a public consultation and a court sanctioned restructuring process. A recapitalisation process of this size is complex and will take time. As the Environment Secretary, I have several duties, set out in section 2 of the Water Industry Act 1991. These include protecting consumers, securing the proper delivery of water and sewerage services, and ensuring that companies can finance those services and that statutory obligations are properly carried out. Today, I can confirm that I have sent a letter to Iain Coucher, Ofwat’s chair, outlining my early views on the proposal linked to my section 2 duties. These should not be taken as, nor do they constitute, a direction from Government to Ofwat.

I do not believe that the current proposal goes far enough to protect customers and the environment. I have three particular concerns about the proposal: the unfair cost to customers, delays to vital infrastructure investments, and delays to environmental improvements. The 16 million Thames Water customers are front and centre of my consideration, and I am primarily worried about the impact on them. There is an expectation in the proposal that customers will fund—and therefore bear an undue cost for—investment in the company.

In addition, I am not convinced about the proposal’s request to reduce performance standards, nor about the significant delay to vital infrastructure investments. This would mean delays to environmental improvements, particularly those related to waste water treatments linked to statutory requirements, as well as to projects that are important for drinking water safety and supply. I am therefore concerned that the long term resilience of the water and waste water systems may not be adequately protected. The Government will always act in the national interest, and my priority as Environment Secretary is protecting customers and the environment. We will stand ready for all eventualities.

I conclude by emphasising this Government’s commitment to turning around the water sector. In under two years, we have taken swift, decisive action. We have introduced the Water (Special Measures) Act 2025 to raise standards, enforce accountability, and make pollution cover ups a criminal offence. We have banned more than £4 million in bonuses for polluting water bosses; we have unlocked £104 billion of private investment to rebuild vital infrastructure; and we have commissioned Sir Jon Cunliffe to lead the most comprehensive independent review of the water sector since privatisation. Together, those steps have paved the way for the landmark clean water Bill announced in the King’s Speech. The Bill fulfils the commitments we set out in the water White Paper earlier this year and will deliver the fundamental reforms that are so desperately needed. This once in a-generation Bill will create a single powerful water regulator, moving away from a system where water companies mark their own homework by putting in place stronger, active supervision. This will strengthen water companies’ financial resilience and the long term stability of the sector, with modernised economic regulation and new powers to drive turnaround where companies perform poorly.

Additionally, the reforms will strengthen the consumer advocate, providing a more independent, authoritative voice that can challenge the system, drive improvements in outcomes and ensure that customers’ interests are put first. We will also improve water quality by cutting pollution at its source. Finally, we will avoid the situation we are discussing today happening again: our reforms will give the new regulator the powers to ensure water companies do not accumulate unmanageable levels of debt. More broadly, they will secure the long term stability of the sector and ensure that companies are financially resilient. Put simply, our reforms will deliver better outcomes for customers and the environment.

I commend this statement to the House.

I thank the Secretary of State for coming to the House at the earliest opportunity to update Members before making announcements elsewhere. She is a shining example to her Cabinet colleagues of how this House should be treated.

I call the shadow Secretary of State.

First, I echo the Secretary of State’s comments in remembrance of her dear colleague Jo Cox. Her loss was felt across the House and across party political lines, and I send all of our very best wishes to her loved ones and friends.

I thank you, Mr Speaker, and I thank the Secretary of State for advance sight of her statement and for a briefing call on this announcement. As you know, I have been trying for months to coax the Secretary of State to the Dispatch Box to explain major events within her portfolio, from the Government’s EU handover negotiations to their lack of support for farmers. Finally, she emerges into the light. We all assumed that it would be to announce progress towards resolving the many issues facing Thames Water and its customers; instead, it is to make a statement about a letter to the regulator. There is nothing new in this statement—no change in the situation of Thames Water, and still no certainty for billpayers.

Thames Water has repeatedly failed its customers and the environment with a record of pollution, leakage and chronic under investment. The latest figures lay this bare. The company is responsible for around a third of the nation’s worst pollution incidents, even as billpayers face steep increases in their bills. These are not abstract failures; untreated sewage has been poured into the rivers and chalk streams that local communities cherish, while customers are asked to pay more for less. The priority now must be a financial arrangement that keeps the company afloat and protects billpayers and taxpayers. While the Secretary of State’s Government are in chaos, paralysed by the Prime Minister’s weakness and the Mayor of Greater Manchester’s leadership ambitions, Thames Water continues to fail. If no deal is reached, Thames Water could collapse—again, at enormous cost to taxpayers.

The Secretary of State has said that she does not want a scenario where customers “pick up the bill for the company’s failures”, but when the Conservatives tried to amend the Water (Special Measures) Act to prevent consumers from being on the hook in the event of a company going into special administration and tried to impose a lending ratio limit on water companies to prevent this situation from happening again, Labour voted it down. Why? I also remember that under the former Secretary of State, the right hon. Member for Streatham and Croydon North (Steve Reed), an investor pulled out of a previous rescue deal, partly due to political risk—in other words, the former Secretary of State had talked himself out of a deal. How is the current Secretary of State avoiding the failures of the now Secretary of State for Housing?

There are those who are urging nationalisation, a word that is thrown around carelessly by Labour Back Benchers and by Reform—in fact, I think I heard it just now. None of them ever explains that nationalisation would be extremely expensive, potentially costing the taxpayer up to £20 billion. For those who are wondering what that means, it is roughly equivalent to the defence funding shortfall we have heard so much about in recent days. However, there are reasonable concerns about how Thames Water’s failures will be managed during the Government’s restructuring of the sector and the abolition of Ofwat, so can the Secretary of State please confirm that the existing penalty regime will not be downgraded or diluted, which has been briefed to the newspapers? What safeguards will be put in place to ensure Thames Water remains fully responsible for its environmental and operational failures? How will the Government ensure that billpayers are not left bearing the cost of past mismanagement, and have they offered or begun any process to recommend an alternative deal? Ministers have still not explained how investment in the sector will actually be paid for. Indeed, the Secretary of State’s predecessor had to admit that so called private water industry investment is in reality paid for by higher bills, and the Secretary of State has repeated that today. Families already struggling with the cost of living should not become the safety net for a company that rewarded its executives while letting its infrastructure crumble. This is an important moment for the Government to show that they can balance financial stability with strong regulatory oversight and put accountability and the interests of billpayers and the environment at the heart of water reform. The Government must now deliver on the big promises they made during the election for the water sector.

Public trust in the water industry is already at rock bottom.

I am always happy to receive brownie points, Mr Speaker, so thank you for what you said.

The shadow Secretary of State rightly says that untreated sewage has poured into our waterways, and it did, in the long years that her party was in government. They cut the Environment Agency’s enforcement budget and moved to an approach where water companies marked their own homework—the so called self monitoring approach. She has some brass neck in lecturing us when we saw a series of failures under her Government.

We are here today, and we as a Government inherited record levels of pollution in our waterways, because of the failure by the Government of the right hon. Lady to see what was happening before their eyes. It was a failure of regulation, a failure of the regulators and a failure of the previous Government.

I am proud of what we have achieved in the two short years that we have been in power. I am proud of the Water (Special Measures) Act 2025. When did the Conservatives ever cap polluting water bosses’ bonuses? Never. The right hon. Lady lectures me about amendments to our Act. Our Act did more in less than a year than her party did in 14 years to ensure a fairer deal for customers and a better deal for the environment.

The right hon. Lady asks about nationalisation. I gently say that a special administration regime is not the same as nationalisation. [Interruption.] I am just clarifying for the House; I do not wish to have an exchange with her across the ballot box—sorry, the Dispatch Box—if I can possibly help it. The ballot box might be at some other point. There is a difference between nationalisation and a special administration regime. With nationalisation, the Government would be taking ownership of the company. With a special administration regime, the Government would finance a special administrator appointed by the courts to run the company.

The right hon. Lady talks about public trust in our water sector being at record lows. All I can say is that we are clearing up her party’s mess. [Interruption.] It was under her Government that Thames Water was plunged into unmanageable levels of debt.

Order. Can I just say to the shadow Secretary of State that I want to hear the Secretary of State? We do not need a running commentary all the way through. I made sure that those on the Government Front Bench listened to her.

I am not surprised that there are not many Opposition Back Benchers here, given the Conservatives’ terrible record on the water industry. In our clean water Bill, which we will introduce later in the Session, we will take forward a desperately needed, once in a-generation reform of the water sector to introduce a powerful single regulator that holds water companies to account.

I call the Chair of the Environmental Audit Committee.

Thames Water customers are paying the price for the incompetent regulation that allowed Macquarie to saddle the company with eye watering debts at the same time as its environmental performance was so disgraceful. That debt ultimately led to shareholders writing the equity value down to zero. Those who bought the debt are now making this proposal. I entirely understand why the Secretary of State would not want customers to receive a service that was failing in its environmental responsibilities while they paid higher bills, but what assessment has she made as to whether Thames Water is a viable business? We have been told that this is the final offer from the company. Is there a viable business there that will deliver long term investment within a reasonable cost window for billpayers? If there is not, at what point does public administration become inevitable?

As I set out in my letter to the regulator, Ofwat, I am concerned that the proposal will mean delays to environmental improvements and to improvements to water infrastructure, with, as my hon. Friend rightly says, unfair cost being laid at the door of Thames Water customers. He asks whether it is a viable business and about next steps. This is a stage in the process where I have given my early views on this proposal. It is now for Ofwat to decide what to do next, and we wait to see what happens.

I call the Liberal Democrat spokesperson.

I start by associating myself closely with the Secretary of State’s remarks about Jo Cox. It was a privilege to serve alongside her in this place, and we still miss her deeply.

I am grateful to the Secretary of State for advance sight of the statement and for the helpful briefing that I received earlier. Since Conservative privatisation more than 35 years ago, some £85 billion of billpayers’ money has flowed out like a torrent into the pockets of mostly overseas shareholders and executives paying themselves unearned bonuses. That money could and should have gone into cleaning up our waterways and modernising infrastructure. Instead, sewage was released into our lakes, rivers and seas for 1.8 million hours last year, and more than 100,000 of those were in the Thames region alone. Some 20% of our water leaks out of its pipes before it even reaches our homes. For Thames Water, the figure is even worse, with 25% of that water wasted.

Now Thames Water’s investors are asking for more time for more opportunity to take money before they inevitably run. The Secretary of State is right, then, that the creditors’ offer is a disgrace. They get to keep making money, and Thames Water billpayers get to pay even more to keep them going, while getting the privilege of seeing long overdue infrastructure improvements delayed for yet another decade. Thames Water is taking the mickey. The Liberal Democrats say, “No more, and no thanks.”

It is clear that Thames Water has failed in its basic performance as a water company, and that gives the Secretary of State all the reason she needs to place it into special administration, so why is she not doing that instead? Her letter to Ofwat is, I am afraid, a sign of dreadful weakness. She has to beg an equally weak Ofwat to show a resolve that it institutionally lacks. Thames has failed in its performance, so just put it into special administration and migrate the company to a mutually owned model, where the billpayers own the company and call the shots. That way, investment will be made, sewage spills will stop and water leaks will cease. By doing that, she could begin the process whereby all our water companies are owned not by private equity, overseas investors or the sluggish state, but by the people. If she did that, she would win the favour of people from Witney to Windermere. Why does she not stop faffing about and do that instead?

I thank the hon. Gentleman, I think, for his support for my statement today, although it was slightly half hearted. He is right to say that there have been serious pollution incidents in different water companies, but especially in the Thames, and that is of grave concern to the public and to Thames Water’s customers in particular. I point out to him that there are two types of special administration regime. An insolvency SAR is an insolvency process and is for the company directors to determine. A performance SAR would be triggered if a company was in serious breach of its statutory duties or if the company breaches an enforcement order in a way that is so serious that it is inappropriate for the company to retain its licence. The Government stand ready for all eventualities, including a SAR.

Will the Secretary of State confirm that, in the event of a special administration regime, any compensation would be based on appropriate value as set out in the case of Lithgow v. the UK, not on regulated capital value, as suggested by the shadow Secretary of State. For Thames Water, appropriate value would take account of the £23 billion in infrastructure repairs needed to meet condition P of its licence and comply with its statutory obligation, as well as the £13 billion of dividend and debt interest already paid to creditors. Appropriate value would therefore be nil. The Secretary of State said that Ofwat is responsible for taking the decision to modify the licence. I urge her to read section 12A(7) of the Water Industry Act 1991, because she has the power to overrule.

I think there were a number of questions there. As I have said, there is obviously a difference between a special administration regime and nationalisation. My hon. Friend refers to regulatory capital value, and he is right to suggest that the price of any company is a complicated matter, but in the event of a special administration regime, the state would seek to recoup the investment it had made upon SAR exit. Nationalisation would be a different matter.

What assurances can the Government give my constituents across Bexley that the £88 million of investment that is under way in our community to secure our fresh drinking water supply for the next 50 years is not derailed by this Government announcement, which means further uncertainty for Thames Water and its customers?

I think it is right that both the regulator and the Government hold Thames Water to account, and I find the hon. Gentleman’s question slightly bizarre. I can reassure his constituents, and other customers of Thames Water, that the Government will always ensure continuity of service, but I make no apology for ensuring that customers are at the front and centre of my consideration of this proposal.

I thank the Secretary of State for her statement. Thames Water is by far the worst water company when it comes to sewage spills, pollution incidents, flooding across overloaded sewer systems, customer complaints, regulatory penalties—the list goes on. The establishment of a robust, proactive regulator is a step in the right direction, but should not a company as bad as Thames Water be taken over by being put into special measures so that it can start again and work in favour of residents rather than shareholders, as an example to others that enough is enough?

My hon. Friend is right to say that Thames Water has a terrible record going back—as I said in my statement—at least 15 years. He is also right to say that sewage spills in the Thames Water area are completely unacceptable. As I have said, the Government stand ready for all eventualities, including a special administration regime.

The Secretary of State is absolutely right to put customers at the forefront, but the problem, as she said in her statement, is that this will all take rather a long time to unwind. At present, uncertainty is the real concern for customers, especially the uncertainty about whether they will be charged extra on their bills. The Secretary of State has given a letter to Ofwat, but what specific changes does she want to see in the deal to encourage her to agree to it, so that we can move forward rather than having uncertainty?

Quite simply, I do not want customers to pick up the bill for the repeated failures of Thames Water, but I hear the hon. Gentleman’s concerns about uncertainty, and I would like to see this situation resolved.

If Members google “Caledonian Road”, which is in my constituency, they might think it is a river, but it is not. Over the past decade, Thames Water has delivered to Islington seven major floods. Since privatisation, it has delivered to shareholders £7 billion. Last year, it delivered to my constituents a 31% increase in water rates. Residents are fed up, businesses are fed up, I am fed up, and I am sure that the Government are fed up. How much more do we have to take before Thames Water is finally given the boot?

My right hon. Friend is absolutely right to emphasise the appalling record of Thames Water, and the impact that it is having not just on her constituents but on businesses in her constituency. As I have said, there are two different options for a special administration regime, and we remain open to all eventualities.

Ten months ago, the Government appointed FTI Consulting to advise them on taking Thames Water into special administration. Can the Secretary of State update the House on the outputs of that work and how much it has cost to date?

We appointed FTI Consulting because, in the event of a special administration regime, it is right to have prepared for that eventuality and to have that contingency arrangement in place, but I am afraid that the figure for which the hon. Gentleman has asked is not at my disposal.

The Secretary of State is absolutely right: Thames Water has let down my constituents and Londoners more broadly with years of chronic under investment, while paying record levels of bonuses and dividends. I recently visited my local sewage treatment works, and saw proposed improvements to increase storm surge capacity on site and to improve filtration levels to clean up our waterways. Will the Secretary of State assure me and my constituents that those much needed planned improvements will not be further delayed by ongoing institutional uncertainty about the future of Thames Water, so that we can finally turn the page on 14 years of Tory neglect of our waterways?

I certainly want to turn the page on the failures of this company that have affected my hon. Friend’s constituents and those of other Members. Thanks to the Water (Special Measures) Act 2025, for which my hon. Friend voted, polluting water companies do not now receive bonuses. However, he is right to suggest that we need to resolve this situation and ensure that the improvements he has mentioned take place, and I have expressed my early concerns about this proposal because I do not want to see significant delays in such improvements.

It is tempting to say that there is a particularly bad smell about this company, but that would be a statement of the obvious. Although I am not normally a friend of nationalisation, I have a feeling that this company is on a one way journey to bankruptcy. Am I right in presuming that if that point ever arose, there would be no question of compensating shareholders for a bankrupt company that eventually had to be taken over by the state?

The company remains solvent, but if it were to become insolvent it would be for the directors to apply to the court for an insolvency special administration regime, and then those questions would be on the table.

What reassurances can the Secretary of State provide about basic customer services? For example, Turnpike Lane tube station in my constituency has been closed since last August, because Transport for London cannot reopen it owing to the leaks and other problems that Thames Water is far too incompetent to fix. Will today’s statement lead to better customer service?

I am very sorry to hear about the circumstances in my hon. Friend’s constituency, and I will happily raise them with the regulator. We need to get that fixed as soon as possible.

In recent months, 35,000 houses in West Oxford have had their water pressure cut by Thames Water, in some cases by as much as 50%. Veronica in Osney Island says that her upstairs shower is now nothing but a dribble, and is barely usable. This is not a service; it is a scam, and my constituents are having to foot the bill for it. Their bills were put up last year. Can the Secretary of State explain to them what we are waiting for? Why can we not just let this failed company fail, and start again?

I entirely understand why the hon. Lady and her constituents are fed up with the company’s poor performance, and I have written to Ofwat expressing my concerns. I do not want her constituents to pick up the bill for that poor performance.

For far too long, Dartford residents have put up with very poor performance and high water bills. It is extremely likely that Thames Water leaks contributed to the collapse of the Galley Hill road in 2023, as a result of which Swanscombe residents have been pretty much trapped in their town over the past three years. As the Secretary of State has said, it is vital that the company does not have its performance standards diluted or receives protection from fines as a consequence of the deal that is on the table. Does she agree that any deal must put consumers and environmental protections first, and that investors should not benefit at the expense of billpayers and vital infrastructure improvements?

As I said in my statement, customers are at the front and centre of my consideration of this serious issue. The Environment Agency will continue to investigate any pollution incident and any breach of statutory obligations of any water company, including Thames Water, and will continue to take enforcement action against those companies, including the imposition of fines.

I have a huge list of complaints about Thames Water across Mid Buckinghamshire, and I am sure it is identical to that of the Secretary of State next door in Wycombe, so I add my voice to my hon. Friends’ calls for real detail about the plan, rather than just ambition. In the meantime, there is something that is causing Thames Water and every other water company to chase their tails: their inability to have a proper voice in the planning system. When a village such as Ickford in my constituency, which already has its sewage pumped away by road in tankers because the system just cannot cope, is told that it has to connect another 90, 100 or 150 properties, it is never going to work. Given the huge demand for house building and data centres in Buckinghamshire, what action will the Secretary of State take to ensure that the water companies can have their say and say no when they cannot connect areas?

I thank my constituency neighbour for his question. Like him, I have had complaints about Thames Water in my constituency. With regard to his broader question, I reassure him that when we bring the clean water Bill to the House, there will be provisions for more intense regional planning, which involves water companies, local authorities and other stakeholders, so that we can avoid the sort of situation that he talks about.

My constituents have been catastrophically failed by Thames Water over many years by major floods that have closed local businesses, constant leaks and bursts, traffic disruption, loss of supply and terrible support for vulnerable customers. This is the consequence of shocking negligence by asset stripping investors, and there is no evidence that Thames Water can recover itself or that it will ever have a credible plan to deliver. I welcome the Secretary of State’s statement and ask her for further detail on the timescale for resolving the situation. When does she expect Ofwat to reach a decision on the offer from investors? How will she ensure that, following such a decision, action is taken swiftly to bring this scandal to an end and to bring Thames Water back into special administration, so that it can be run for the public good and for the good of the environment?

My hon. Friend is right to raise the impact of this issue on local businesses as well as residents in her constituency. I spoke to the chair of Ofwat yesterday evening, as well as sending the letter, and I know that he and the board of Ofwat are considering the proposal in great detail. I suspect that we will hear from them soon.

Enough is enough. Frankly, the sight of US hedge funds picking over the carcase of Thames Water’s pipe network is revolting—it stinks. The plan includes three quarters of a billion pounds of payments to hedge funds, shareholders, debt holders and bankers. It is completely unacceptable. Thames Water is bust: it is insolvent. Now is the time to put it into special administration. It cannot meet its financial obligations, and it cannot meet its performance obligations. I urge the Secretary of State to get on with it, put Thames Water into a special administration regime, and then buy it out for a pound. That would be a good deal for the taxpayer.

May I welcome the hon. Gentleman to the party? It was a long time coming. I do not remember any mention of the sewage crisis in the Reform manifesto at the last election.

I think some Opposition Members are suffering from amnesia and have forgotten the asset stripping that happened, which has led to infrastructure failing across Bexleyheath and Crayford, and to the 30% increase in bills last year. We have tried every option to keep Thames Water organisationally solvent, but my patience, and that of my constituents across Bexleyheath and Crayford, is running out. Will the Secretary of State outline how ready we are as a Government if we need to take the company into special administration? In Bexleyheath and Crayford, our patience is running out.

We have seen really poor performance over a number of years, and I absolutely appreciate my hon. Friend’s impatience on behalf of his constituents—he is right to express that. One of the problems that we have had with the regulatory regime is that the current economic regulator did not step in and stop Thames Water going into unmanageable levels of debt. As I said in my statement, our water White Paper and the clean water Bill set out that the new regulator will have new powers and responsibilities to ensure that companies do not get into that situation in the first place.

Communities such as Chalfont St Peter have suffered appalling circumstances in recent years, including flooding and sewage bubbling up through the drains. Thames Water has promised capital investment to address these issues. What assurances can the Secretary of State give that customers will not be asked to pay the price for years of financial mismanagement through higher bills, and that any future restructure or special administration regime will not mean that existing capital investment commitments are lost?

I thank my constituency neighbour for her question. She is right to talk about the problems in her constituency, which I know very well. I sent my letter yesterday evening precisely because of the issue that she mentions. I do not want to see severe delays to the capital investment that is necessary to improve the situation, as she has suggested, and I do not want customers to pick up the bill for it.

I echo the tributes to Jo Cox, whom I worked with when she was at Oxfam. We miss her greatly.

My constituents in Putney, Roehampton, Southfields and Wandsworth Town have been let down by Thames Water for years. The Tories lost a grip of the situation and cut back the Environment Agency. In 2025, Thames Water dumped sewage in the Thames for over 107,000 hours, but bills are rising and I get constant emails from constituents because there is nothing to show for it. They are paying the price, so I welcome the Secretary of State’s standing up for customers and the environment. What would she say to my constituents to assure them that they will not have to pay any more for this investment fund masquerading as a public service?

My hon. Friend puts her finger on the issue. As I said in my statement, there are three principal reasons why I sent Ofwat my early concerns about the proposal, and one of those reasons is the delay of the investment that we need to ensure that there are improvements to environmental performance, which I know is an issue of concern across the House. I do not want customers to pick up the tab for that delay.

Is it not clear that 30 years of the regulatory system has absolutely failed in the face of the greed, incompetence and profit taking of Thames Water? Surely to goodness it is time that Thames Water stopped being allowed to continue with this disastrous policy. The company was brought into public ownership, but it is public ownership with a difference, because it includes local authorities, local communities and the workforce—rather than the directors—who know something about water delivery. We need an efficient supply, an end to the flooding that happens in my constituency and others, and an end to the abominable polluting of the Thames and the seas around this country, which is caused by the greed of the directors of Thames Water.

I do not always agree with the right hon. Gentleman, but I do so on this issue. There has been real regulatory failure here—there has been a failure of the regulators, and a failure of the regulation itself. The Conservatives decided to cut the enforcement budget of the Environment Agency, and there has been a shift towards self monitoring, which essentially means that the water companies have been marking their own homework. It is like telling Ofsted not to visit any schools—that is the equivalent of the regime that we saw under the Conservatives. The right hon. Gentleman is right to say that customers and the environment need to be at the heart of the solution to this issue.

We all have examples of Thames Water letting our residents down. Just last week I heard from one of my farmers, who has had Thames Water discharging raw sewage into the ditch next to his fields. It has flooded his fields and contaminated the land, which is no longer in use. I welcome the progress made by the Secretary of State, but as she acknowledges, more may well be needed. Will she reassure my constituents that she will always put the interests of consumers, the environment and public health ahead of the interests of investors?

Absolutely, and I could not agree more with my hon. Friend. As I said in my statement, customers are front and centre in my consideration of this issue. It is completely unacceptable that farmers are suffering the consequences of the raw sewage crisis in our country, and they should not have their land contaminated. That is their livelihood, and it takes a great deal of work and cost to decontaminate the land.

Will the Secretary of State guarantee that no taxpayer money will be used to bail out Thames Water or its shareholders?

Well, we have to see. I have sent a letter to express my early concerns about the situation, and the Government remain open to all eventualities. If there was a special administration regime, which some people are calling for, then the Government would obviously be financing a special administrator to run the company. That would have to happen, because we would have to have continuity of service. If the hon. Gentleman does not want that to happen, he has to suggest an alternative.

I thank the Secretary of State for her statement and for robust way in which she is standing up for residents and the environment on this very important issue. My constituents are appalled by the sewage pollution in the River Thames and by the poor quality of customer service offered by Thames Water. We have had numerous breaks in supply and there was an issue with subsidence that closed a road in Reading. Can she tell me more about the process that will be followed by Ofwat and the action she will take through the clean water Bill?

The clean water Bill will introduce a supervisory regime whereby the new regulator, which will have more teeth, will have a team of people for each and every water company, really getting a grip on the performance of each water company and holding it to account. What we have seen up until now, as I said to the right hon. Member for Islington North (Jeremy Corbyn), is the shift we saw 15 years ago towards a system where companies were basically marking their own homework. That cannot be right; that is not a proper regulatory system. That is just laissez faire and letting companies get away with the sorts of pollution incidents that we have seen.

Thames Water is in crisis, so I thank the Secretary of State for not approving the deal. It is sinking under £20 billion of debt. It is like a leaky ship that cannot stay afloat. Last year, my constituents were, on average, paying an additional £203 a year. They simply cannot continue to pay the price for this failure. When will she stop pouring money into this leaky ship, put Thames Water into special administration and put everyone out of their misery?

I thank the hon. Lady for welcoming the fact that I have sent the letter with my early concerns. As I said, there are two different ways for a special administration regime. One is insolvency, which is a matter for the directors of the company and would have to go through the courts. The other is the performance tsar.

Thames Water is clearly failing its customers and the environment. I thank the Government for their action this week, which makes it very clear to Thames Water that it will not be allowed off the hook for fines, it will not be allowed off the hook for performance targets, and it must not be allowed to mark its own homework. I want to probe the Secretary of State on a specific aspect of its failure. We on the Environment, Food and Rural Affairs Committee asked Thames Water how much it had spent on the legal proceedings to try to avoid a special administration regime. The company replied: “we estimate that our legal fees for work done in connection with our liquidity extension transaction, as implemented through the interim restructuring plan at the High Court and Court of Appeal, was approximately £67.6 million”.

That was last June. I will be writing to Thames Water to ask for an update on those costs. Given that shocking amount being wasted on legal fees—almost 3% of what customers are paying in bills—does the Secretary of State agree that Thames Water must spend its money on fixing broken pipes, not bonuses and not bumper legal payouts?

Yes, we want Thames Water’s priority to be investing in the water infrastructure needed to improve the service it gives its customers and to drive environmental improvement.

As the Secretary of State pointed out, Thames Water has 16 million customers. It does not serve them; it fails them. That is nearly a quarter of the entire UK population and they do not get any choice—this is a natural monopoly. We are all stuck with the water company that supposedly serves the area we live in, but what do customers get? They get bills going up through the roof, pollution in our rivers and seas, and crumbling infrastructure. In her statement, the Secretary of State nodded towards special administration, which would be an improvement on the status quo, but is it not time to come clean with the British people and admit that the privatisation experiment has totally failed, and to take this struggling, failing company back into public ownership, where it belongs?

The hon. Lady is right to point out that these are natural monopolies and that there is no competition. I do not think nationalisation is a silver bullet in this regard. I point out to her that the Government are facing big fiscal pressures in all sorts of other areas, but we stand ready for all eventualities.

Thames Water was responsible for a third of all major pollution incidents in 2025. Now its creditors want to jack up my constituents’ bills, delay improvements to infrastructure and dodge future fines. My constituents are being failed. I welcome the action the Secretary of State has taken today, but I urge her to go even further and put Thames Water under special measures.

It is because of my concern about the delays to improvements in infrastructure and the environment that I sent the letter to Ofwat. Can I reassure my hon. Friend on one point? I have never even considered the idea that the Environment Agency would let this company off any fines. The agency will continue to perform its duties in holding Thames Water and all other water companies to account, and will enforce against them should they breach their statutory obligations.

My constituents are facing an average water bill of £658 a year, yet Thames Water continues to fail them. Sewage has poured into the River Mole, which runs through my constituency. The rec next to the Esher treatment works, where children play, has had sewage in it. I told the House last week that there was sewage outside the local primary school in Thames Ditton, as well as in the middle of the village. Will the Government get a grip on this regulatory and state failure, put the company into special administration, and create a public interest company that serves my constituents properly?

I am really sorry to hear about the sewage incident outside a local primary school. If the hon. Lady would like to take that up with me separately, I would be happy to follow it up. The Government are concerned about the underperformance of the company, which is why I expressed early concerns about this proposal. She is right to say that we need a solution that delivers for customers and the environment.

My residents are rightly angry that Thames Water has discharged sewage into the River Stort, one of our rare and precious chalk streams, for hundreds of hours. I have raised the issue in this House before, and Thames Water told me that its improvement plan will not be in place until 2028. That is clearly not good enough. Does the Secretary of State agree that this is the latest in a litany of failures by Thames Water? What assurances will she give my constituents that she will ensure that the need to protect our precious chalk streams will be a priority future consideration in the future of Thames Water?

My hon. Friend is right to say there have been 15 years of failure, with the company letting down customers and businesses in his constituency. Chalk streams are an absolute priority for me, both as a Member representing a constituency in the Chilterns and as Environment Secretary.

The Government have been very clear in their support for Thames Water’s proposed £5.7 billion White Horse reservoir in Oxfordshire. Given that Thames Water may run out of money in months, what assessment has the Secretary of State made of the risk that a collapse could lead to the Government having to bear the cost of the reservoir?

As a country, we have failed to build a reservoir for 30 years. That cannot be right. On the specific reservoir to which the hon. Gentleman refers, we will have to look at the details, but as it stands the company is ongoing; it is a solvent company and it should continue to complete the projects that it started.

I thank the Secretary of State for her statement, and my hon. Friend the Member for Hertford and Stortford (Josh Dean) for raising his concerns about the River Stort, which goes past my constituency. I spend many hours running alongside it, so I know what a beautiful area it is and that it needs to be protected. Mr Speaker, I cannot tell you the number of people—not just in Harlow but everywhere I go—who raise with me their dissatisfaction with Thames Water. I thank the Secretary of State for what she is doing to raise standards, but I am dubious that Thames Water is going to be able to reach them. If it does not reach those high standards, what is she going to do? People in Harlow do not want us to prop up a company whose failures hit the pockets of the public.

I thank my hon. Friend for conveying the concerns of his constituency of Harlow. [Interruption.] The Minister for Harlow? I did not know that we had created that position!

The Government are prepared for all eventualities, and I reassure my hon. Friend that whatever happens, the Government will ensure continuity of service for his constituents with regard to water supply and waste water services.

Order. I am only going to call Members whose constituencies have Thames Water. Clive Jones, I think you are one of those Members.

Thank you very much, Mr Speaker. Residents in Wokingham have endured years of sewage dumping by Thames Water and ever rising bills, while stakeholders have lined their pockets. The current ownership model is unsustainable, so will the Minister consider the Liberal Democrats’ call for water companies to be mutually owned public benefit corporations, putting customers and the environment first, rather than prioritising the interests of creditors and financial institutions?

When I served as the Economic Secretary to the Treasury, I worked on our plan to double the number of mutuals across the economy. More broadly, not just with regard to Thames Water, I would be happy to see more mutual ownership of water companies, but the question is how we get there.

The Secretary of State has made the right decision in seeking to protect billpayers and opposing giving Thames Water a free pass to continue polluting our rivers. The thousands of hours of sewage spills into chalk streams and their tributaries across North East Hertfordshire that Thames Water has continued to oversee are unforgiveable, if not technically illegal. Thames Water is failing in practically every possible way. The level of incompetence is staggering, given that it has 16 million captive customers. My constituents are not interested in Thames Water being given any more chances—[Interruption.]

Order. What is the hon. Member for Caerphilly (Chris Evans) doing, on his feet while another Member is speaking? Come on, Chris, you should know better than anybody!

Will the Secretary of State put an end to this unholy mess and rid us of this frankly parasitic company once and for all?

I thank my hon. Friend for mentioning chalk streams. Like my hon. Friend the Member for Hertford and Stortford (Josh Dean), I have chalk streams in my constituency, and they are close to my heart. My hon. Friend the Member for North East Hertfordshire (Chris Hinchliff) is right to say that Thames Water is the biggest water company in the country, with 16 million customers. The Government stand ready for all eventualities, including a special administration regime. The customers are at front and centre of my consideration of this issue.

My very first letter as a Member of Parliament was to Thames Water, following the unacceptable fact that thousands of hours of sewage had been released into the River Ver, one of our precious chalk streams. Whatever the future structure of Thames Water, what guarantees can the Minister put in place that the environmental obligations will be strengthened rather than weakened?

As I have said previously, regardless of how the situation develops, the Environment Agency will continue to investigate pollution incidents and take enforcement proceedings against any company involved, including Thames Water.

In March, my constituents in North Leigh and Eynsham went without water for nearly three days due to the collapse of a major waterpipe. They are angry that one third of their bill payments go towards Thames Water’s ballooning debt, and to paying vulture funds, like Elliott Associates, instead of maintaining and replacing ageing infrastructure. My hon. Friend the Member for Witney (Charlie Maynard) was right to challenge further borrowing by Thames Water in the Supreme Court. Does the Secretary of State now agree with the Liberal Democrats that Thames Water’s financial model is broken?

As I said in answer to a previous question, through the clean water Bill the Government will seek to ensure that the new water regulator—which will be integrating the functions of Ofwat, the EA, the Drinking Water Inspectorate and Natural England—does not allow companies to get into the sorts of unmanageable levels of debt that we have seen.

It is clear that the creditors’ consortium has material influence over Thames Water, as it is funding the company and bilaterally negotiating with the Government. Material influence means that the consortium meets the defined criteria of being an ultimate controller. Will the Secretary of State finally acknowledge that fact and work with Ofwat to enforce it?

We are working closely with Ofwat, which has been talking to the consortium of investors for two years. Through my officials, the Government have been in discussions with the consortium alongside Ofwat since November. I thank all the officials who have been involved in those discussions. We need to find a way forward that puts customers and the environment at its heart.