Committee publication · Correspondence · 2 September 2025
Correspondence from Thames Water regarding legal fees, dated 1 August 2025
From: Environment, Food and Rural Affairs Committee
Inquiry: Reforming the water sector
Summary
Thames Water responds to the Environment, Food and Rural Affairs Committee's request for information about legal spending and regulatory actions. The company reports £7.5 million in external legal fees over 5 years related to Ofwat, Environment Agency, and Drinking Water Inspectorate oversight, with the majority (£5 million) linked to Ofwat. Thames Water confirms its legal function has been largely outsourced since 2010, maintaining only 7 in-house lawyers.
Key findings
- Thames Water spent £5.0 million on external legal fees related to Ofwat regulatory actions (15 July 2020 – 20 July 2025), comprising £516,523 from fixed-fee arrangements and £4.49 million from panel and ad hoc spend.
- Environment Agency regulatory matters cost £2.45 million, with £1.77 million from fixed-fee apportionment and £676,636 from panel/ad hoc work.
- Drinking Water Inspectorate regulatory matters cost £74,424, entirely from fixed-fee apportionment with no panel or ad hoc spend.
- Thames Water's legal function has been outsourced since 2010; the company maintains only 7 in-house lawyers (increased from 5 in summer 2023) to oversee external legal service providers.
- The company declined to disclose external legal spend on broader commercial disputes, Competition Act 1998 collective proceedings, and other matters outside direct oversight of the three named regulators.
Tone
ProceduralTopics
Key actors
Thames Water, Ofwat, Environment Agency, Drinking Water Inspectorate, Alistair Carmichael MP, Chris Weston
Notable line
“Thames Water's legal function has been largely outsourced since 2010. At the time of the outsourcing, the in-house legal team was transferred to the legal services provider.”
Key Quotes
“Thames Water's legal function has been largely outsourced since 2010. At the time of the outsourcing, the in-house legal team was transferred to the legal services provider.”
“We have interpreted your request as referring to direct regulatory oversight, rather than the alternative, which would encompass all 'complaints or legal actions' initiated against Thames Water by third parties.”
“… we have not included detail in relation to our external legal spend related to broader commercial disputes/ litigation and matters that do not fall within the direct oversight of Ofwat, the Environment Agency and the Drinking Water Inspectorate.”
Source · parliament.uk record ↗