The performance of private utility companies like Thames Water has been unacceptable.

The gas and water industries are natural monopolies; because of this, the Liberal Democrats staunchly opposed their privatisation in the 1980s/90s. However, I worry that renationalising these sectors would result in a lot of taxpayers’ money ending up in the pockets of the people who have already made vast amounts from these private utility companies.

The Liberal Democrats believe that implementing regulatory reforms is the best way to prevent private equity from accumulating excessive profits while delivering inadequate services. Fundamentally, water companies should never have been privatised in the first place, although I'm not convinced that renationalising them now is the best use of public money. However, holding water companies accountable for their failings is crucial. As a country, we cannot reward such abysmal service.

Recently, the Water (Special Measures) Bill has been passed through the House. It is welcomed by the Liberal Democrats; however, with just 15% of English rivers in good ecological health, and given the state of water quality, infrastructure, regulation, and finances, this Bill should be even more ambitious. It is for this reason that my Liberal Democrat colleague, Tim Farron MP, tabled amendments such as:

- Improving the quantity and quality of bathing waters and sensitive nature sites with legally binding targets and more regular, independent, and transparent testing of water quality.

- The creation of a public benefit model and a new water regulator with more powers to hold companies accountable. This model would be debt-free and operate as a not-for-profit. All mutual company ‘profits’ would be reinvested back into the water system for public benefit. By putting debt back onto private companies, customers and taxpayers will be better protected.

- Regulatory reform, including replacing Ofwat with a new regulator to bring the environmental and financial regulation of water companies together, to better hold water companies to account and to protect public health and the natural environment.

My colleague Charlie Maynard MP has also worked tirelessly to push the Government to take tangible action to hold Thames Water to account. I attach a segment of one of his speeches below, which may be of interest:

Ofwat is also failing to enforce financial viability. Just like every other water company in the country, Thames Water, which serves my constituency, has to have two investment-grade credit ratings, but it has not done so for nearly a year. It has been beaten with limp celery, but that is about it. It has £19 billion of debt and is quite possibly heading towards £23 billion of debt, and it has cash flows of just £1.2 billion. That obviously makes no financial sense, yet Thames Water is allowed to breach the rule with impunity. I have no doubt that other water companies, and companies in other sectors, take note of what Thames Water has been allowed to do and say, “We, too, can cross that line in water and other regulated sectors.” How is that good news? It introduces a moral hazard that does enormous damage to our country. Who is ultimately paying the cost of all this debt, and the enormous interest and advisory fees that go with it? Of course, it is the bill payers.

I do hope that this offers you some reassurance on this topic. I completely understand the allure of nationalisation; these sectors have been mismanaged for so long. We must push the Government to be much more ambitious in holding them to account. Should you wish to discuss this further, please do not hesitate to let me know.

The previous Government have a lot to answer for. It was on their watch that dumping sewage in our rivers and lakes reached record levels, as water companies piled up billions in debt. All the while, bosses rewarded themselves with generous bonuses for mismanagement and failure on so many levels. Many people who work so hard in those companies suffered under that mismanagement.

There is only so much point in looking backwards. What I am appalled by is that the new Government, who came into power with promises to get tough with the water companies and sort out the scandal, have so far shown themselves to be about as tough as Ofwat. The Water (Special Measures) Act [...] Government Members and Conservative Members rejected a whole host of basic common sense steps, proposed as amendments, which could have made the legislation genuinely impactful. 

At a local level, I am acutely aware of the threats posed to our wonderful chalk streams by sewage dumping, and I remain absolutely committed to holding Southern Water to account.

Now, Ministers have lined up insolvency practitioners to prepare for the potential collapse of Thames Water. Steve Reed, the Environment Secretary, has signed off the appointment of FTI Consulting to advise on contingency plans for Thames Water to be placed into a Special Administration regime (SAR). Liberal Democrats have been warning the Government for months that the only option to get a grip on Thames Water at this point is to put it into Special Administration. Thames Water has been allowed to continue to flounder, while customers are made to pay sky high interest payments on the company's billions of pounds of debt.

Liberal Democrats believe Special Administration would allow debt to be written down so more money can be spent on cleaning up the sewage in our lakes and rivers. The final whistle needs to be blown on Thames Water and we need a new, capable regulator in place as soon as possible.

The Government recently created the Independent Commission to review the water industry. Tim Farron MP, Liberal Democrat Spokesperson for the Environment, responded to the Commission’s call for evidence by writing a letter to Sir Jon Cunliffe, who is conducting the review, with our recommendations of how to improve the regulation of the water industry. The Commission’s final report has finally called for Ofwat to be replaced as regulator - at last, the Government has listened to the Liberal Democrat who have been calling for this since November 2022. We are glad that the Government are proposing to do this after years of inaction under the Conservatives and to all those local campaigners and volunteers who have fought so hard to clean up our waterways - this report is a reminder that we are here thanks to their hard work.

We now urge the Government to get on with setting up a new, stronger regulator to hold water companies to account and stop the sewage scandal once and for all.