Alistair Carmichael MP Chair of the House of Commons Environment, Food and Rural Affairs Committee, has written separately to Thames Water Chair Sir Adrian Montague and CEO Chris Weston to ask for further clarification of the information they provided when they appeared before the Committee in person on 13 May in an uncomfortable session as part of its ongoing inquiry into reforming the water sector.

Writing to Sir Adrian Montague earlier today, Alistair Carmichael began his letter by saying:

Photo: Thames Water Chair Sir Adrian Montague

“I have considered the terms of your letter with some care and have also had the benefit of discussing its terms with the Committee.

“You will understand, I hope, the seriousness of the situation in which we currently find ourselves... That evidence given to a select committee is accurate in every respect is a matter of the highest possible importance….

“In matters such as this, the greatest clarity is necessary and regrettably your letter does not remove all ambiguity. I note your assertion that in the heat of the moment you "may have misspoken". I find the use of "may" in this context to be problematic. Only you can tell us whether you did misspeak or not. It then begs the question of what you mean by the term "misspoken". Your clarification on that would be appreciated.

“The "misspeaking" in this context is significant in the way in which it colours your evidence to the Committee so I would be grateful if you could clarify the point at which you realised that you had misspoken. Was this only when approached by the Guardian? Or had you realised this, or had it brought to your attention by others? If the latter, by whom? “

Requesting a response to the letter by 5pm on Friday 30 May, Alistair Carmichael also asked Sir Adrian to indicate in his reply any further areas of his evidence that “may have been less than completely accurate.”

In a separate letter to Thames Water CEO Chris Weston, the MP said the Committee required further information on several matters that were raised in the evidence session and more generally in relation to its inquiry into reforming the water sector.

Photo: Thames Water CEO Chris Weston

Referring to commitments the Thames chief made when he appeared before the Committee, the Committee Chair has asked him to provide more information on a number of searching questions as follows:

"The Environment Agency has announced that it will significantly increase its inspection and enforcement regime for Thames Water. During the evidence session, you promised to provide Thames Water’s analysis of the future cost of penalties arising from this enhanced monitoring.

"You were asked about conditions in the terms of the £3 billion emergency loan. The Committee would like to know the factors upon which the drawdown of the second half of the loan is conditional.

"You also offered to write in response to Barry Gardiner MP's question regarding other loan offers on better terms.

"The original loan agreement contained wide releases exempting Thames Water’s directors from civil liability, which would prevent the special administrator of Thames Water from bringing claims against the directors and advisers. These were subsequently removed by the Court of Appeal. The Committee would like to know what the intended purpose of these releases was, as was discussed during the evidence session."

On bonuses, the letter says that the Committee "remains concerned about a culture of paying bonuses despite poor company performance."

Referring to a discussion about bonuses for senior executives as part of new equity investment during the evidence session, the letter explains that on 21 May, the Secretary of State told the Committee that plans to pay out these retention bonuses had been dropped by Thames Water. Alistair Carmichael goes on to say:

"However, a spokesperson for your company has said that the board has “paused” these payments.

"Who were the intended recipients of the bonuses?

"Have elements of these bonuses already been paid out? If so, will this money be recouped?

"What is the total figure from the loan earmarked for bonuses, and what will now happen to these funds?

"Have these bonuses been dropped or paused pending further consideration? If paused, under what circumstances might they be restarted?"

Legal and advertising fees

The letter also flags up Committee concerns about bill payers’ money being spent on advertisements and funding legal cases against Ofwat, the Environment Agency and the Drinking Water Inspectorate.

Carmichael writes:

"I would appreciate a breakdown of money spent on these activities over the past five years, and details relating to the rationale for this spend. 

As discussed during the evidence session, we are aware that Thames Water has also been paying legal fees for its case before the High Court and the Court of Appeal. I would appreciate a breakdown of these fees included as well.

Replacement rates of assets

Referring to the fact that the Committee has heard that replacement rates for assets may not be sufficiently high across the sector, the MP also asked Chris Weston to provide more detailed information on:

• Replacement rates for assets during Asset Management Period 7.
• How this will change under Asset Management Period 8.
• What assessment has been made about the sufficiency of these rates.

Other issues the Committee Chair has asked for further information on included the CEO's committment to looking into a case which saw constituents who were left without water for up to four days being denied compensation - Carmichael has asked to know what the outcome was and the reason why compensation was initially refused.

Tackling water poverty

The letter also asks for information on how Thames Water measures the extent of water poverty in its area and how it measures its success in tackling it, together with details of what steps the company is taking to ensure that it meets the water companies' public commitment to end water poverty by 2030.

Data transparency

Alistair Carmichal also raises "alleged examples of poor transparency from water companies", saying the Committee would like to know what data on water quality and security is routinely published by Thames, where the information is placed and how often it is updated, so that bill payers, campaigners and bathers can assess the status of water in their area.

The EFRA Chair has asked for Chris Weston to provide a response by 4 June.