24 Oct 2025
Dear Secretary of State for the Environment, Emma Reynolds MP
Open letter: Government and Ofwat must say no to the Thames Water creditors’ proposed deal
Today, Thames Water was named the worst water supplier in England by the Environmental Agency.
However, instead of being faced with consequences for their reckless destruction of our rivers and seas, Thames Water’s creditors (a group of investment companies who have given themselves the name London and Valley Water) want to be rewarded for their failure.
As I’m sure you’re aware, in the plan they recently submitted to Ofwat, they have stated that a ‘full return to legal, regulatory and environmental compliance’ would not take place until at least 2035-2040. Instead, they have put forward their own ‘improvement accountability framework’. Thames Water creditors want to set their own rules.
This deal means that Thames Water would be polluting illegally into the next election, as well as the subsequent two elections.
It would also mean that your government would be breaking multiple promises it has made on sewage pollution:
1) Your predecessor Steve Reed pledged this July to cut sewage pollution in half by 2030. However, Thames Water’s creditors have put forward only an ‘ambition’ to cut sewage 30% by 2030. This falls significantly below the government’s promise.
2) Reed also said of Thames Water in June that ‘it is only right that the company is subject to the same consequences as any other water company’. Accepting this deal would mean that - unlike the other water companies - Thames Water would be setting its own rules and regulations. This would set a dangerous precedent for all other English water companies who will also want to set their own terms for compliance. We cannot afford this race to the bottom at a time when the performance of all water companies is at a record low.
3) Your government was elected on a promise to strengthen regulation in our water sector. Special administration is a crucial part of the the regulatory process, as highlighted by your Water Minister Emma Hardy in February 2024:
“Unless owners and shareholders believe that there is a genuine risk of them losing their licence, they have no real incentive to promote good corporate behaviour or environmental performance [...]If multiple and deliberate breaches of environmental law and repeated deception of the regulator by the provision of falsified performance information is not enough, what fear can those in the sector really have?”
It is clear that the only viable alternative to the Thames Water creditors’ untenable proposal is special administration. Under section 24 of the Water Industry Act 1991, special administration can be triggered by insolvency or by a breach of statutory duties. Both of these criteria have already been met many times over by Thames Water, and its licence should be removed without delay.
Our water sector has become a pressing issue for constituents, who are acutely aware of paying soaring bills only to receive water shortages and sewage-filled rivers. Consumer satisfaction with value for money in the water sector is at a record low.
Anything other than special administration would be a political risk. Under special administration, the government can write off significant proportions of Thames Water’s debt pile and secure a better deal for the public purse, while ensuring that environmental regulations are meaningfully enforced. The previous government’s plans under Project Timber involved a 40% debt haircut for some creditors. We could cut more.
I hope you will make the right decision about the future of Thames Water.
Yours sincerely,
We Own It
