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Thames Water has been asked to explain a £37.5m dividend payment made to a parent company.

Ofwat, the water regulator, asked the firm to explain how the sum does not break rules designed to protect customers and the environment.

They added they are investigating whether the dividend was in line with company licence requirements.

Ofwat said after receiving notification that the firm paid a dividend to shareholders, they “requested Thames Water provide more information to demonstrate how, specifically, the dividend payment meets the licence requirement to take account of service delivery for customers and the environment, as well as investment needs and financial resilience”.

“We will review any additional information the company provides and decide whether there is a case for further action,” they added.

Ofwat has not yet opened a formal enforcement case against Thames Water.

Thames Water said the money was simply being moved to a parent company in order to help pay its debts.

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They added that no dividends have been handed to “external shareholders”.

Thames said it was working with the regulator “to provide further context and clarification”.

In May, rules were introduced ensuring water companies do not pay dividends unless they have delivered for customers and the environment.

Thames Water revealed an 18% rise in pollution incidents during the first half of its financial year today, and shared its debt pile grew by 7% to £14.7bn in the same period.

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Ofwat is able to impose penalties of up to 10% of Thames Water’s relevant turnover.

MPs also plan to bring Thames to parliament to answer questions about its finances.

Interim bosses said “immediate and radical action” is needed to improve its environmental and financial performance, but added: “Turning around Thames will take time.”

The UK’s biggest water supplier reported a 54% drop in pre-tax profits to £246.4m in the six months to 30 September.

Revenues rose 12% to £1.3bn in this period – but Thames spent a record £1bn on improving its network.

Former boss Sarah Bentley stepped down abruptly in June amid concerns over the firm’s financial security.

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Thames fined for pollution and performance

It comes after Thames Water reported 257 category one – the most serious – to category 3 pollutions over the six months to the end of September.

Thames was also fined more than £3m in the summer over an incident that saw human waste flow into rivers for more than six hours.

Earlier this autumn, Ofwat fined the company £51m for failing to reach its performance targets. The fined sum will be paid back through reductions to customer bills.

In June, Sky News reported on how fears Thames could be crushed by its debt prompted the government to ready a rescue plan.

Its investors later agreed a further £750m of investment. Thames said it had the money it needed despite its net debt rising.

Thames has been pushing for Ofwat to allow an increase in bills from 2025 to help fund its investment plans, with the focus on six key areas including tackling leaks, customer complaints, supply interruptions and pollution.

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Sky News joins police raid on Turkish barbershop – and all is not as it appeared

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Sky News joins police raid on Turkish barbershop - and all is not as it appeared

In a small town in Suffolk, a team of police officers walk into a Turkish barbershop.

It’s clean and brightly painted, the local football team’s shirt displayed on one wall. Two young men, awaiting customers, hair and beards immaculate, tell officers they commute to work here from London.

Step through the door at the back of the shop and things look very different.

In a dingy stairwell, a bed has been crammed on to a landing, and a sofa just big enough to sleep on is squeezed under the stairs. The floor and steps are covered with empty pizza boxes, food containers and drink bottles. There’s a pair of socks on the floor and a T-shirt on the bed. An unopened prescription sits on a table.

At least one person is clearly living here, but possibly not by choice.

“This could be linked to exploitation, this could be linked to some forms of modern slavery,” says John French, the modern slavery vulnerability advisor for Suffolk Constabulary.

“You have to ask yourself when you come across this sort of situation, why would someone want to live in these sorts of conditions?”

John French speaks to Paul Kelso
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John French speaks to Paul Kelso

Behind a second door, this one padlocked, is a second room. This one cleaner, but clearly not safe.

Phrases in Turkish and English have been scribbled on post-it notes stuck to the wall and officers find a driving licence with a local address.

“Judging by the state of the room, this could be an ‘Alpha’ living in here,” says Mr French.

“An ‘Alpha’ is someone who’s previously been exploited,” he explains. “They have been given a little bit of trust and act like a kind of supervisor. They are very important to us, because we want to get them away from others before they can influence them.”

A brand-new Audi SUV is parked at the back.

What’s going on here?

We are in Haverhill, a small town in Suffolk bypassed by the rail network and the prosperity enjoyed elsewhere in the county, its central street bearing the familiar markers of town-centre decline.

There’s a Costa, a Boots, a branch of Peacocks, and several pubs and cafes, but they’re punctuated by “cash intensive” businesses including barbers, vape stores and takeaways, and several vacant premises that stand out like missing teeth.

It’s the cash intensive businesses that have brought the attention of police, these local raids part of the National Crime Agency’s (NCA’s) Operation Machinize, targeting money laundering, criminality and immigration offences hidden in plain sight on high streets across England.

There are 17 premises of interest in Haverhill alone, among more than 2,500 sites visited since the start of October, resulting in 924 arrests and more than £2.7m of contraband seized.

In a single block of five shops on the High Street, four are raided. A sweet shop yields a haul of smuggled cigarettes stashed in food delivery boxes.

In the Indian restaurant three doors down a young Asian man is interviewed via an interpreter dialling in on an officer’s phone. They establish his student visa has been revoked, and he has had a claim for asylum rejected.

The aim is to disrupt criminality using any means possible, be they criminal or civil. Criminal or not, the living conditions at the barbers are likely to fall foul of planning and building regulations enforceable with penalties including fines and closure, so officials from the council and fire safety are on hand.

Trading Standards are here to handle counterfeit goods seizures, and immigration officers are on hand to check the status of those questioned, pursuing anyone without permission to be in the UK.

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‘A full spectrum of criminality’

Sal Melki, the NCA’s deputy director of financial crime, explains why the agency is targeting apparently small operations.

“We’re finding everything from the laundering of millions of pounds into high value goods like really expensive watches, through to the illicit trade of tobacco and vapes, and people that have been trafficked into the country working in modern slavery conditions. We’re seeing a full spectrum of criminality.

“We want to disrupt them with seizures, arrests, and prosecutions and make sure bad businesses are replaced with successful, thriving businesses that make us all feel safer and more prosperous.”

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The last visit is to a small supermarket. Through the back door is another hidden bedroom, this one not much larger than a broom cupboard, with a makeshift bed made from a sheet of plywood and a duvet.

The man behind the counter, who says he’s from Brazil via Pakistan, claims not to live in the shop, but his luggage is in a storeroom. He’s handcuffed and questioned by immigration officers, and admits working illegally on a visitor visa.

“If he is proven to be working illegally he’ll be taken to a detention centre and administratively removed,” an immigration officer tells me. “That’s not the same as deportation, the media always gets that wrong. He’ll be given the chance to book his own ticket, and if not, he’ll be removed.”

Shortly afterwards he’s put in a police car, his large red suitcase squeezed onto the front seat, and driven away.

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Post Office agrees fresh extension to scandal-hit Fujitsu Horizon deal

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Post Office agrees fresh extension to scandal-hit Fujitsu Horizon deal

The Post Office has agreed a further extension to its scandal-hit software deal with the Japanese company Fujitsu as it plots a move to a rival supplier in the next couple of years.

Sky News has learnt that the Post Office, which is owned by the government, is to pay another £41m to Fujitsu for the use of the Horizon system from next April until 31 March 2027.

The move comes as Post Office bosses prepare to sever the company’s partnership with Fujitsu, which is under pressure to pay hundreds of millions of pounds for its part in the scandal.

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Hundreds of sub-postmasters were wrongfully imprisoned for fraud and theft because of flaws with Fujitsu’s software, which it subsequently emerged were suspected by executives involved in its management.

Last week, Sky News revealed that Sir Alan Bates, who led efforts to seek justice for the victims of what has been dubbed Britain’s biggest miscarriage of justice, had settled his multimillion pound compensation claim with the government.

Sir Alan received a seven-figure sum, which one source said may have amounted to between £4m and £5m.

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In a statement issued in response to an enquiry from Sky News, a Post Office spokesperson said: “The Post Office has agreed with Fujitsu a one-year bridging extension to the Horizon contract for the period 1 April 2026 to 31 March 2027.

“We are committed to moving away from Fujitsu and off the Horizon system as soon as possible.

“We are bringing in a different supplier to take over Horizon whilst a new system is developed, and this process is well underway.

“We expect to award a contract for a new supplier to manage Horizon by July 2026, according to current timelines.”

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Will Post Office victims be cleared?

Fujitsu executives have acknowledged that the company has a “moral obligation” to contribute financially as a result of the Horizon scandal, but has yet to agree a final figure with the government.

It is said to be unlikely to do so until the conclusion of Sir Wyn Williams’ public inquiry.

The Department for Business and Trade has been contacted for comment.

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Diageo taps former Tesco boss ‘Drastic Dave’ Lewis to lead fightback

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Diageo taps former Tesco boss 'Drastic Dave' Lewis to lead fightback

Former Tesco boss Sir Dave Lewis is to become the new chief executive of Diageo, the struggling FTSE 100 drinks giant.

The world’s largest spirits maker, which counts Guinness and Johnnie Walker whisky among its stable of brands, said he would assume the role in January.

The search for a new boss began in July when Debra Crew was effectively ousted after two years in charge.

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The company’s share price fell 40% during her tenure as the industry grappled a drastic decline in the number of people drinking at home following the COVID pandemic and, more recently, the US trade war.

A planned fightback by Ms Crew was seen by investors as failing to go far enough.

Sir Dave led a six-year turnaround of Tesco, the UK’s biggest retailer, from 2014.

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He earned the nickname ‘Drastic Dave’ in his previous role at Unilever, the consumer goods giant, where he was credited with achieving similar success through cost-cutting and targeted marketing.

Diageo’s market positions have fared better than rivals during the downturn but its shares are still hovering around lows not seen for a decade.

Debra Crew was appointed chief executive after the sudden death of Sir Ivan Menezes in 2023. Pic: Diageo
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Debra Crew was appointed chief executive after the sudden death of Sir Ivan Menezes in 2023. Pic: Diageo

Only last week, the company downgraded its sales and profit outlook for next year.

Diageo chair John Manzoni told investors: “The Board unanimously felt that Dave has both the extensive CEO experience, and the proven leadership skills in building and marketing world-leading brands, that is right for Diageo at this time.”

Sir Dave said of the task facing him: “Diageo is a world leading business with a portfolio of very strong brands, and I am delighted to be joining the team.

“The market faces some headwinds but there are also significant opportunities. I look forward to working with the team to face these challenges and realise some of the opportunities in a way which creates shareholder value.”

Diageo shares were 7% up on news of the appointment.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, responded: “Lewis brings deep experience in consumer brands from his time leading Tesco and decades at Unilever, though he lacks direct exposure to the spirits industry.

“Investors may welcome his strong marketing pedigree, but any major strategic reset will take time, leaving near-term focus on navigating tough trading conditions.”

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