Thames Water has been slapped with a record £122.7 million fine for failing to properly manage its sewage treatment infrastructure and for breaking rules around dividend payments, in what Ofwat has described as the most significant enforcement action in the water sector’s history.
The regulator’s investigation uncovered widespread failures in Thames Water’s operations, including poor upkeep of critical infrastructure, inadequate treatment facilities, and unauthorised dividend payouts. Ofwat said the punishment is to be paid by the company and its investors, not passed on to customers.
David Black, chief executive of Ofwat, was damning in his assessment:
“This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment. Water companies must not profit from failure.”
The company, which serves over 16 million people across London and the Thames Valley, has come under increasing scrutiny amid soaring bills, mounting debt, and worsening pollution levels. In April, Thames Water increased household water bills by an average of 31%, while grappling with around £19 billion in debt and ongoing attempts to secure a financial rescue led by US private equity firm KKR.
Of the total fine, £104.5 million relates to failures identified in the sewage investigation, while a further £18.2 million – the first such fine of its kind – was imposed for unauthorised dividend payments. These payouts, totalling nearly £170 million, were made in October 2023 and March 2024. Mr Black said the dividends were “undeserved” given the company’s poor performance and ongoing environmental breaches.
The record fine follows growing public anger over the environmental impact of water companies, particularly in relation to the discharge of untreated sewage into rivers, lakes, and coastal waters. In recent years, Thames Water has become a symbol of this broader crisis in the privatised water industry.
Mike Keil, head of the Consumer Council for Water, described the situation as “a serious betrayal of customers and the environment”, adding that people had “lost faith” in the current system of regulation and accountability.
Environment Secretary Steve Reed welcomed the fine, stating:
“The era of profiting from failure is over. The Government is cleaning up our rivers, lakes and seas for good.”
Despite the criticism, a spokesperson for Thames Water said the company is taking the matter seriously and is committed to improving its environmental performance.
“We take our responsibilities to the environment very seriously and are investing heavily to address the issues identified by Ofwat,” the company said in a statement.
Earlier this month, Thames Water CEO Chris Weston told a parliamentary committee that overly harsh penalties could deter crucial investment needed to stabilise the business. However, critics argue that financial accountability is essential if trust in the water sector is to be restored.
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Calls for public ownership have also been reignited following the fine. Tim Farron, the Liberal Democrats’ environment spokesperson, said:
“This fine is a damning indictment of how Thames Water has been run. It needs to be turned into a public benefit company, and Ofwat should be scrapped and replaced with a real regulator with teeth.”
Campaign group River Action echoed the Lib Dems’ stance, calling for full nationalisation of the company, arguing that the profit-driven model has failed to protect vital water resources.
With a Government review into water regulation currently underway, pressure is mounting on Ofwat to demonstrate that it is capable of holding private firms to account and enforcing meaningful change. For now, Thames Water’s record fine signals a potential turning point in the battle to restore public confidence and environmental integrity in Britain’s water system.
