In a letter addressed to Ofwat’s chief executive David Black, 30 MPs from the Labour and Green parties are demanding that Thames Water be placed into special measures. The group is concerned about the possibility of a costly public bailout and is calling for the company to be restructured under public oversight.
Last month, Thames Water was approved to seek a £3 billion cash loan in order to avoid temporary nationalization. However, the MPs argue that this loan will result in added costs for customers, with a 10% interest rate translating to an additional £250 per household over five years. Currently, 28% of Thames Water customers’ bills go towards servicing debt, and this is expected to increase by 31% this year.
Labour MP Clive Lewis, one of the letter’s initiators, believes that Thames Water is a prime example of the issues within the private water sector. He argues that approving a hedge fund bailout would only reinforce a flawed system where mismanagement and shareholder interests take priority over customers and the environment. Instead, Lewis and other MPs are calling for Thames Water to be placed into the special administration regime (SAR) and brought under public ownership.
The letter, which is also signed by MPs Paula Barker, Julia Buckley, Dawn Butler, Kim Johnson, Andy McDonald, and Rachael Maskell, highlights Thames Water’s £15.2 billion debt, which they claim is the result of years of financial mismanagement, excessive dividend extraction, and underinvestment.
While the Labour government has stated that Thames Water will not be placed into SAR while still a viable company, they have also announced plans for a “root and branch reform” of the water industry and its regulators. However, nationalization is not currently being considered as an option. Lewis and his fellow MPs argue that public ownership of water companies should be on the table.
The letter concludes by stating that Thames Water is incapable of reform without intervention, and that placing the company 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.
In response, Thames Water’s chief restructuring officer Julian Gething maintains that their plan is the only viable solution for putting the company on solid financial footing. He assures customers that the approval of the loan will not affect their bills, but rather unlock billions of pounds for much-needed network upgrades and maintenance.
Ofwat has stated that a comprehensive financial and operational turnaround at Thames Water is essential, and that they are already supporting this through their turnaround oversight regime and the appointment of an independent monitor. They also assure that the existence of SAR serves as an important backstop to protect consumers, and they will not hesitate to take necessary steps if the conditions are met.
Based on information from The Guardian, the letter from the MPs highlights the concerns surrounding Thames Water’s financial stability and operational negligence. To read the original article, please visit: https://www.theguardian.com/business/2025/jan/31/mps-demand-ofwat-puts-thames-water-special-measures