Starmer vows to make underperforming water bosses ‘personally responsible’

Sir Keir Starmer has vowed to make utility bosses personally responsible for sewage failings after it was announced that Thames Water was being put into special measures.

As the watchdog laid out plans to tackle pollution on Thursday, the Prime Minister signalled a tougher crackdown on the water sector when asked about Thames Water’s troubles.

He said the Government is exploring further regulation in the sector, which comes as Ofwat gave companies permission to increase water bills by an average of almost £100 by 2029, reflecting a yearly increase of £19. 

The prospect of tougher rules could pave the way for criminal sanctions across the industry, which has been heavily criticised in recent years for polluting Britain’s waterways. 

Sir Keir said: “I think the previous government let water, and all of the issues relating to water, get completely out of hand. 

“We’ve seen a lot of coverage of the sewage and the pollution which we’ve got to get to grips with.”

To solve the problem, he said water bosses should take individual responsibility for failures, while once again distancing the Government from nationalisation.

He said: “I know from running a big organisation that when there’s personal responsibility at the top it does rather focus the mind.”

The Prime Minister’s comments come amid growing uncertainty surrounding Thames Water, as the embattled business fights for survival. 

It emerged on Thursday that Britain’s biggest water company, which serves 16 million customers in London and the south east, will face more intrusive oversight from Ofwat after being put into special measures.

In its announcement, Ofwat criticised Thames Water’s “inadequate” business plan, claiming it “lacked ambition”.

The watchdog also revealed that parts of its plan “did not have the assurances of Thames’ own board”, which led to it limiting the amount the company can charge customers. 

Chris Walters, an Ofwat director said: “It is difficult for us to stand behind a plan that a board can’t stand behind.”

As part of its announcement on Thursday, Ofwat gave water companies permission to increase bills by average of £94 over the next five years, a decision which Chancellor Rachel Reeves described as a “bitter bill” for households.

The so-called turnaround oversight regime being imposed on Thames is the first time that Ofwat has been forced to step in and place a water supplier into a form of special measures since its formation nearly 40 years ago.

Ofwat said it is also considering the appointment of an independent monitor to report back to the regulator about the group’s financial status.  

Thames is drowning in £16.5bn of debt and has only £1.85bn of cash to keep it going until May 2025. It must now improve its operational performance to escape the regime, which could include cutting sewage spillages and proving its finances are in a healthier position.  

The company’s chief executive Chris Weston is seeking an emergency rescue by a new consortium of shareholders and Ofwat said today it could also step into the process.

The regulator would be able to limit the amount of debt any new owners take on, and introduce plans to break up Thames or list it on the London stock market if necessary.

Thames will only be allowed to increase its bills by 22pc under a draft ruling from Ofwat, just half the 44pc increase it had requested as it battles to shore up its finances.

Thames had requested a bill rise of £191 from £436 to £627 but the regulator said the company should be only allowed a £99 rise.

Customer bills are set to rise by £94 over the next five years on average, which is a third less than the bill increase requested by Britain’s 16 water companies. This works out at an increase of £19 per year. 

On average, companies had requested a £144 increase but Ofwat rejected the plan and has provisionally granted the smaller increase. 

Southern Water has suffered one of the steepest cuts to its request, with its plea for a £306 hike cut to £183 by the regulator.

On investment, which is funded by bill increases, Ofwat said water groups can spend £88bn, which is £16bn lower than they requested. 

Ofwat chief executive David Black, who is expected to meet Mr Weston on Friday, said: “Customers want to see radical change in the way water companies care for the environment.  

 “Our draft decisions on company plans approve a tripling of investment to make sustained improvement to customer service and the environment at a fair price for customers.”

“Let me be very clear to water companies. We will be closely scrutinising the delivery of their plans and will hold them to account to deliver real improvements to the environment and for customers and on their investment programmes.”

Ofwat has opened a consultation into its proposed bill rates, which closes on August 28. A final decision is expected in December.

Thames proposed plans in April to Ofwat to boost spending to £19.8bn as it seeks to upgrade its infrastructure and cut spills of sewage, funded by a large hike in bills.

The company has said bills must rise to make the company “investible” and an attractive proposition for any investors.

Its current shareholders have so far refused to put any more money into the group until its finances and Ofwat’s decision become clear. They refused to inject £500m of capital into the company earlier this year due to the uncertainty.

Ofwat’s decision is a draft determination, meaning water companies and the regulator will continue negotiations until a final decision in December. Thames Water chief executive Chris Weston said on Tuesday the draft determination was not the “end of the road”.

“We would expect continued engagement with Ofwat between the draft determination and final determination to work out what that means for our revenue and what it means for customers in the period up to 2030,” he said.

“There will be a huge amount of detail. It is going to take us a while to unpack that and understand exactly what it means for us.”

Water UK, the industry lobby group, said Thursday’s announcement represented the “biggest ever cut in investment by Ofwat”. 

A spokesman said: “Ofwat is right to want to ensure customers receive value for money and that is why protections are in place to ensure customers only pay for projects that are new, necessary and value for money. 

“But for far too long, Ofwat has failed to be realistic about the levels of investment needed and what it will take to deliver and maintain necessary infrastructure.”

Ofwat rejected Water UK’s comments, claiming they amounted to “posturing by a trade body”.