Committee publication · Correspondence · 9 July 2025
Correspondence from the Secretary of State regarding Thames Water’s Management Retention Plan and ownership, dated 25 June 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Secretary of State Steve Reed responds to Alistair Carmichael MP's June 2025 inquiry on Thames Water's Management Retention Plan and ownership. Reed confirms government awareness of April bonus payments to 21 managers, states new Water (Special Measures) Act rules prohibit unjustified executive bonuses, and outlines contingency preparations including special administration regime readiness. He clarifies Ofwat will enforce compliance and corrects mischaracterization of SAR as temporary nationalization.
Key findings
- Government became aware of £30 April bonus payments to Thames Water management in May 2025; new Water (Special Measures) Act empowers Ofwat to ban unjustified bonuses for Chief Executives and Chief Financial Officers across six water companies.
- Thames Water accessed £365m gross debt from restructuring plan on 14 May 2025, extending liquidity runway to mid-July 2025; government expects company to explore options to improve financial resilience.
- Defra has established contingency planning team appropriately resourced to monitor Thames Water and prepare for all scenarios including special administration regime if necessary.
- Government funding during SAR would normally be recouped post-administration; Shortfall Recovery Mechanism in Water (Special Measures) Act 2025 allows unrecouped costs to be recovered from customer bills rather than taxpayers.
- SAR duration is matter for appointed Special Administrator and court; government expects SAR to last only as long as necessary to rescue or transfer the business, not permanent nationalization.
Tone
FactualTopics
Key actors
Steve Reed, Alistair Carmichael MP, Thames Water, Ofwat, Environment, Food and Rural Affairs Committee, Water (Special Measures) Act 2025
Notable line
“It is hence not for government to seek assurances, but for companies to follow these new rules and help rebuild trust with their customers.”
Key Quotes
“Government will always act in the national interest on these issues. Thames Water must meet its statutory and regulatory obligations to its customers and to the environment …”
“I expect to see the end of unjustified bonus payments to bosses of polluting water companies.”
“I became aware of the payments made on 30 April when I was alerted by the department in May.”
“While the company is stable, we have stepped up our preparations and stand ready for all eventuali- ties – including being ready to apply for a Special Administration Regime if necessary.”
“A Special Administration Regime (SAR) is not temporary nationalisation.”
“Exit from a SAR is a matter for the court and the Special Administrator who is appointed by, and answerable to, the court.”
Source · parliament.uk record ↗