Listen to the article
By Sean Rayment
One of Britain’s most senior intelligence officials has warned the government that the sale of Thames Water to a Chinese-controlled company could pose a risk to national security.
Sir Simon Gass, who served as chairman of the government’s Joint Intelligence Committee until two years ago, said proposals to hand Thames Water over to the Hong Kong-based infrastructure firm CKI required “close scrutiny from a national security perspective”.
He cautioned that any takeover could give the Chinese authorities access to customer data across London, including that of individuals working in “key and sometimes sensitive positions across government”.
The former intelligence chief voiced his concerns after it emerged that ministers were preparing to take Thames Water into temporary public ownership in a rescue deal that could pave the way for a sale to CKI.
The multinational company, which already owns Northumbrian Water and UK Power Networks, has indicated it would be willing to operate under the new regime of tougher fines for environmental breaches, which Thames’s creditors argue is financially unsustainable.
However, the potential move has prompted criticism on both sides of the Atlantic at a time of heightened concern over Chinese involvement in sensitive UK infrastructure.
Sir Simon, whose long diplomatic career included serving as ambassador to Iran and as the prime minister’s special representative for Afghanistan and Pakistan, said any decision would need to be carefully assessed by the security services.
As chairman of the Joint Intelligence Committee, he was involved in advising the government on rules introduced in 2021 that gave ministers the power to block the sale of UK companies to foreign-controlled entities where national security was at risk.
The committee oversees MI6, MI5 and GCHQ, and provides intelligence assessments to the prime minister.
Sir Simon now acts as an adviser to SC Strategy, the consultancy established by his predecessor, Sir John Scarlett, which advises companies on foreign, defence and national security policy.
He said: “Water-supply infrastructure in various countries has been extensively targeted by cybercriminals, while US intelligence agencies have warned of intrusions into infrastructure systems originating from China and Russia. What is obvious is that acquisition of Thames Water by a Hong Kong company would require close scrutiny from a national security perspective, not just as a commercial infrastructure deal.
“Of all water companies, Thames Water is likely to be considered particularly sensitive given that its catchment area is home to so much of Britain’s decision-making and wealth-generation capability. It will certainly hold huge quantities of data on customers who work in key and sometimes sensitive positions across government.”
Writing in The Times, he concluded: “If CKI emerges as a possible new owner of Thames Water, the government should explain how it has weighed national security considerations before taking a decision on investment in a sector which it has itself identified as very sensitive.”
Four years ago, the National Security and Investment Act set out 17 sensitive areas of the economy in which the government must be notified of acquisitions so it can consider whether they raise national security concerns.
Now ministers are considering adding the water industry to this list, as understanding of the risks associated with the sector — as with others — evolves.
Some external threats, such as cyber or physical attacks on the water network, have long been identified. Water-supply infrastructure in various countries has been targeted by cybercriminals, while US intelligence agencies have warned of intrusions originating from China and Russia.
But physical threats or supply issues are not the only national security concerns. Referring to the water industry, the government itself has acknowledged that “investment is one route through which malicious actors could threaten critical infrastructure by providing access to sensitive information and assets”.
