More than half of Thames Water’s sewage treatment works are struggling to handle the volume of waste they receive, raising serious concerns about the future of the utility and the health of the River Thames. Independent analysis by the Oxford Rivers Improvement Campaign (ORIC) has revealed that out of 351 sewage treatment sites, 181 fall short of the required capacity to safely manage sewage. This includes 94 sites operating at 80–100% capacity, 70 between 60–80%, and 17 functioning at less than 60%, with some facilities like those in Hanwell and Bourton-on-the-Water treating less than half the sewage they receive.
The consequences of this undercapacity are stark. Untreated sewage discharges, known as storm overflows, are happening more frequently, especially in vulnerable headwater streams and tributaries outside London. These smaller water bodies are less able to dilute pollutants, making the raw or partially treated sewage more damaging to the ecosystem. The research, compiled over two years using data obtained via Environmental Information Requests and cross-referenced with population growth figures, paints a troubling picture of infrastructure struggling to keep pace with demand.
This troubling state of affairs is compounded by the fact that Thames Water, which serves nearly 16 million people, has been grappling with long-term underinvestment. The company was fined £104.5 million in 2021 by the water regulator Ofwat after breaching environmental permit conditions at 157 sites due to failures in maintaining and upgrading its assets. More recently, in May 2025, Thames Water faced a £122.7 million penalty, underscoring ongoing regulatory frustration with the company’s environmental performance.
ORIC co-founder Mark Hull expressed astonishment at the company’s apparent lack of knowledge about its own capacity, noting that Thames Water does not know the treatment capacity of 120 of its sewage works. Of the remaining 181, over three-quarters have infrastructure too small to cope with sewage volumes during rainfall, leading to a doubling of raw sewage discharge hours from 2020 to 2024. Last year alone, these discharges totaled an alarming 120,000 hours.
John Bryden, Head of Improving Rivers at Thames21, an environmental charity involved in the research, emphasized the urgent need for upgrades. “Thames Water’s underperforming sewage works need to be upgraded to meet modern regulatory requirements — where housing growth is planned, upgrades to sewage works are needed before the development is constructed,” he said. Bryden advocates a combination of traditional engineering solutions like bigger treatment tanks and sewer lining, alongside green infrastructure such as sustainable drainage systems and treatment wetlands, to tackle the problem effectively.
Thames Water’s Waste and Bioresources Director, Tessa Fayers, acknowledged the challenges and outlined the company’s commitment to invest heavily over the next five years. “We know how much people enjoy and appreciate rivers, which is why over the next five years we will deliver a record amount of investment to address our ageing infrastructure and meet the demands that come with population growth and climate change,” she said. Fayers also highlighted the complexity of river health, pointing out that farming, industry, road runoff, wildlife, and increasingly extreme weather all contribute to environmental pressures.
Fayers stressed the company’s transparency efforts, noting that Thames Water was the first water company to publish a real-time data map of storm overflows on its website, even before it was legally required. She also explained that the existing sewage system was historically designed to prevent sewage backing up into homes, which complicates efforts to eliminate storm discharges entirely. The company’s Storm Overflow Action Plan aims to address these issues, but Fayers warned it would take many years and significant investment to fully resolve them.
The infrastructure crisis at Thames Water has broader political and economic implications. The Labour government is reportedly considering renationalising the utility, a move reflecting growing skepticism about the effectiveness of private ownership in managing essential public services. This debate echoes actions taken in France, where the government renationalised the energy utility EDF just over two years ago amid similar concerns.
Thames Water’s financial troubles have been exacerbated by private equity involvement. In a dramatic turn, private equity firm KKR withdrew from a proposed £4 billion rescue deal, citing the advanced age of Thames Water’s capital equipment as a key concern. Creditors who have lent approximately £13 billion to the utility have put forward an “immunity for cash” bailout deal that would grant regulatory leniency in exchange for financial support. However, if this offer fails, the state may have to intervene under a “special administration” scheme, effectively bringing Thames Water back under public ownership.
Ayabonga Cawe, Itac chief commissioner, highlighted the broader lessons from Thames Water’s woes. He noted that utilities are “capital-hungry behemoths” with return cycles unlike typical profit-maximising firms. The Thatcher-era privatisation of public utilities, including Thames Water, has led to a situation where private equity and venture capital “fixes” ultimately cost taxpayers more than nationalisation would have. The public ends up footing the bill through higher bills and regulatory compromises, while investors reap dividends and management bonuses.
Cawe warned that running utilities like typical businesses risks underinvestment and environmental damage. He pointed out that Thames Water’s £122.7 million penalty from Ofwat is a symptom of this crisis. The utility’s appetite for lucrative dividend payouts has come at the expense of maintaining and upgrading ageing infrastructure, leading to widespread environmental breaches. This situation forces taxpayers to shoulder the consequences, whether or not they are shareholders.
The Thames Water case underscores the complexities of managing natural monopolies that provide critical public goods. Utilities require significant, long-term investment and have pricing decisions that ripple through the economy and society. The financial engineering that often accompanies private ownership can complicate the policy and regulatory roles of the state, especially when infrastructure is neglected in favor of short-term profits.
As the Labour government weighs its options, the story of Thames Water serves as a cautionary tale about the limits of privatisation in essential services. Nearly four decades after the “Thatcherist” experiment sold off the “family silver,” the British taxpayer may once again have to step in to save a vital utility. The renationalisation debate is not just about ownership but about ensuring sustainable, accountable management of infrastructure critical to millions of people and the environment.
Ultimately, Thames Water’s challenges reflect a broader struggle to balance financial imperatives with environmental stewardship and public welfare. The path forward will require substantial investment, regulatory vigilance, and perhaps a rethinking of how essential services are owned and operated in the 21st century.
