Thirty MPs demand Ofwat puts Thames Water into special measures

A group of 30 Labour and Green MPs have written to Ofwat to demand that Thames Water is taken into special measures.

In an open letter to David Black, the chief executive of the regulator, the MPs expressed fears of an expensive public bailout and demanded that Thames Water be placed into the special administration regime (SAR) and restructured under public oversight.

Last month Thames Water was granted approval to seek a £3bn cash loan, which the beleaguered company said was crucial to ensure it had enough money to stave off temporary nationalisation.

Any loan would burden customers with extra costs, the MPs’ letter argues, as the 10% interest rate on the £3bn loan would “[force] households to bear an additional £250 over five years to cover £800m in interest payments”. Currently, 28% of Thames Water consumers’ bills service debt, and this is expected to increase by 31% this year.

Clive Lewis, the Labour MP for Norwich South who initiated the letter, said: “Thames Water epitomises the systemic issues plaguing the private water sector. Approving a hedge fund bailout would reinforce a broken system where mismanagement and shareholder interests are rewarded at the expense of customers and the environment. Special administration offers an opportunity to reform the industry by bringing Thames Water into public ownership and ensuring the public has a voice in managing this essential resource.”

The letter, signed by Labour MPs including Paula Barker, Julia Buckley, Dawn Butler, Kim Johnson, Andy McDonald and Rachael Maskell, argues Thames Water’s £15.2bn debt is the result of “years of financial mismanagement, excessive dividend extraction and chronic underinvestment”.

The Labour government has maintained that Thames Water will not be placed into SAR while still a viable company. It says it is launching a “root and branch reform” of the water industry and its regulators, though nationalisation is firmly off the table. Lewis and other MPs have argued that public ownership of water companies should be considered.

The letter concludes: “Thames Water’s financial instability and operational negligence demonstrate its inability to reform without intervention. The SAR exists to address such failures, ensuring companies operate under public oversight while prioritising consumers and environmental protection. Taking Thames Water into SAR would allow for a comprehensive restructuring, set a national precedent for cleaning up the water industry, and restore public trust in regulatory oversight.”

Julian Gething, Thames Water’s chief restructuring officer, said: “Our plan remains the only implementable solution to putting the business on a firmer financial footing. Its approval will not affect customer bills, but will unlock billions of pounds for investment in our network, fixing pipes, upgrading our sewage treatment works, and maintaining high-quality drinking water.”

Ofwat said: “A comprehensive financial and operational turnaround at Thames is essential. We are already supporting this through our turnaround oversight regime for the company and the appointment of an independent monitor. The existence of SAR is an important backstop to protect customers. There is a high bar to making an application for SAR. However, we would not refrain from taking the necessary steps if the relevant conditions are met.”