
What does Thames Water's £3 billion rescue loan deal mean for customers?
Thames Water's plans for a £3 billion loan have been approved by a judge, designed to prevent it from going bust in the near future.
The deal was approved in the High Court on Tuesday, which would give bosses at the London water company time to find a permanent source of funding.
But why does it need the emergency money, and what does it mean for consumers?
– What happened?
After weeks of hearings in the High Court, a £3 billion funding plan for Thames Water has been approved as part of a loan deal agreed internally last year.
The utility company supplies about 16 million households across London and the South East.
But it has at least £16 billion of debt, and had previously warned it only had enough money to keep running until March 24.
The new financing is designed to stop it from going bust, albeit temporarily.
– Why are people angry about Thames Water?
Thames Water has been at the centre of a growing scandal in the wider water industry.
Bills will climb steeply over the coming years, while privately-run water firms are still pumping raw sewage into rivers and waterways.
That is despite a succession of penalties from regulators Ofwat and the Environment Agency.
Meanwhile, many bosses, including those at Thames Water, have still been given large bonuses in the last year.
Thames Water also requested last week that Ofwat allows it to raise consumer bills over the next five years by more than the 35% it previously granted.
– Why does Thames Water need this emergency money?
The company's debts are so high and its cash reserves are so low that it would have gone out of business in March.
The taps in people's homes would still work – but it would be damaging for the big finance firms to which Thames owes billions of pounds.
Many of them would have seen those debts written off, resulting in hefty losses.
Thames Water would instead come under temporary government control until a new buyer is found.
Labour previously said it wants to avoid that scenario, citing extra costs to taxpayers of running the water company.
-So what happens next?
The £3 billion is thought to be enough to last Thames Water for about one year.
It buys bosses some more time to find a permanent source of funding, which will likely come by selling the company.
Potential suitors are lining up, with four bidders understood to have thrown their hat in the ring to buy Thames.
One is Castle Water, a firm owned by the Conservative Party treasurer Graham Edwards.
Another is investment firm Covalis Capital, which would bring in French utility giant Suez to run Thames day-to-day.
– What's the catch?
The new loan is being provided by Thames' creditors – namely companies it already owes about £11.5 billion.
They are mostly made up of hedge funds and other big finance firms, including Abrdn, M&G and others.
They are charging an unusually high interest rate of 9.75%, plus fees.
Over the 2.5-year life of the loan, and including fees, that could mean about £800 million in interest payments, experts have said.
Earlier this year, a group of MPs said it would force households to pay an extra £250 over the next five years to cover the costs.
Currently, about 28% of Thames' bills service its debts, a figure which is expected to rise to 31% this year.
– How did things get this bad?
When Thames Water was privatised in 1989, it had no debt.
It has had a succession of different owners since then, including an Australian investment bank called Macquarie.
In December 2005, before Macquarie bought the utility, Thames Water's net debt was £2.4 billion.
When Macquarie sold it around a decade later, the debt pile had ballooned to more than £10 billion.
The other problem is that interest payments on much of its debts rise with inflation, which has been high in recent years, adding to the pressure.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


The Guardian
4 hours ago
- The Guardian
Public ownership of England's water companies could cost close to zero, says thinktank
Ministers could bring water companies into public ownership for minimal cost through a process designed to safeguard vital public services when the companies running them are failing, a thinktank report has argued. According to the report by Common Wealth, ministers could use a process known as special administration to take over a company like Thames Water and, rather than transfer it to another private company, keep it under permanent public ownership. Writing for the thinktank, Ewan McGaughey, professor of law at King's College London, said that while a figure of £99bn was commonly cited as the cost of taking over the industry in England, this was based on an estimate from a thinktank paid for by water companies. According to McGaughey, the estimates use a metric known as regulatory capital value, designed by the industry regulator Ofwat for calculating maximum dividends. This takes the assumed value of companies in 1990 and adds on capital investment per year and inflation but, the report said, takes no account of real market values. The actual market value of water companies, the report argued, seems to be lower, with the US private equity company KKR offering a £4bn injection of equity to take over Thames Water, when its supposed regulatory capital value is nearer £20bn. It goes on to say that when debt levels of water companies are taken into account, for example Thames Water is about £20bn in debt, it would be possible for the government to argue that their appropriate value in law was notably less, even close to zero. This would be based not just on debt, but also on the amount of money needed for infrastructure repairs and the scale of dividends already paid to shareholders. While polling shows strong public support for the general idea of nationalised water suppliers, and the idea is liked by some Labour MPs, government officials say regulatory capital value is the standard measure for the companies' value, and that nationalisation would need the state to plug the gap left by billions more pounds of private investment that would vanish. But according to McGaughey, who specialises in corporate law and insolvency, the rules setting out special administration would allow this to be used to remove licences from any water company deemed to show serious poor performance, something he argues in the report could be justified with every English water company over the dumping of sewage into waterways alone. Once this was done, shareholders and secured creditors such as bondholders would be given 'appropriate value' for their stakes, with McGaughey saying this would, in effect, be nothing. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion While special administration is usually carried out to find a new private owner, McGaughey said there was 'nothing in the law to require that the new owner is private'. He added: 'On the contrary, the duty of the special administrator is to the public, and it's in the public interest to consider public ownership. There would be a case for judicial review if the secretary of state did not consider public ownership.' Such a move, McGaughey added, would be likely to see bondholders take legal action. However, he said, this happened in the past when Railtrack and Northern Rock were put into special administration without any compensation for investors, and the investors lost. 'The government just needs to stop being so timid,' he said. The Department for Environment, Food and Rural Affairs said: 'The government has no plans to nationalise water companies. It will cost billions of pounds and take years to unpick the current ownership model, during which time underinvestment in infrastructure and sewage pollution would only get worse.'


Scottish Sun
11 hours ago
- Scottish Sun
UK's ‘outrageous' migrant hotel bill revealed & it takes every penny in tax from all people in city as big as MANCHESTER
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) BRITAIN'S £4.7billion annual bill to keep migrants in hotels and look after them takes every penny of tax from 582,000 workers. The shocking new statistic is equivalent to every grafter in Manchester stumping up for asylum seekers through their pay packet. 4 Britain's £4.7billion annual bill to keep migrants in hotels and look after them takes every penny of tax from 582,000 workers 4 The shocking new statistic is equivalent to every grafter in Manchester stumping up for asylum seekers through their pay packet Credit: Getty 4 Jamie Jenkins, who did the research, said: 'This isn't just unsustainable. It's outrageous' Credit: PA Jamie Jenkins, who did the research, said: 'This isn't just unsustainable. It's outrageous. "A government that borrows billions each year, can't control borders, and taxes its citizens to pay for hotel rooms and housing for people who've just arrived is not working for the British public. 'It's time for a system that protects the people who pay in. That rewards contribution. That puts citizens first." Latest figures show there were 32,345 asylum seekers staying in up to 220 hotel. It costs £41,000 a year to house each, up from £17,000 in 2020. Ex-Office for National Statistics analyst Mr Jenkins found the average UK salary was £38,224. Each worker pays income tax and National Insurance contributions of £8,081. So 582,000's entire tax bills go on housing migrants — equal to the working population of Manchester. And it is significantly larger than the employed populations of Nottingham, Sheffield and Leeds. The total is also higher than the tax contributions of every UK mechanic and HGV driver combined. A total £4.7billion went on asylum support in 2023-24 — £3.1billion on accomodation. 13 migrants jumped from the back of a lorry at a Sainsbury's distribution centre in South East London The rest went on grants to local authorities, running sites like the disused Bibby Stockholm barge in Dorset, plus £49-a-week subsistence allowance. The £4.7billion total was up from 2022-23's £3.6bn. Nearly 15,000 people have crossed to Dover in 2025, up 42 per cent on this time year. French cops, given £480million of UK taxpayer cash, are failing to intercept them.

Leader Live
20 hours ago
- Leader Live
Wrexham: Property for sale in Bwlchgwyn for £500,000
The five-bedroom home in Bwylchgwyn, is up for £500,000 with Beresford Adams. In addition to the five-bedrooms, the property, set on a "large plot", boasts potential for an annexe, as well as open plan living accommodation and great views of Wrexham. A spokesperson said: "Beresford Adams are delighted to bring to market this unique design and well-built detached family home set on a large plot behind private gates in the popular village of Bwlchgwyn. "Offering spacious accommodation that includes 5 double bedrooms with the potential for an annexe or separate living quarters for family/older relatives, Open plan living accommodation enjoying the views across Wrexham and beyond and a master suite with en-suite & dressing room, its one not to be missed! "In brief the property comprises of an spacious entrance hall with beautiful bespoke solid staircase and internal doors, from the entrance hall on the ground floor to the right offers 2 double bedrooms with a living room space in recent years the vendors have used this space for family staying as separate living quarters and hobby/ music room, to the left of entrance hall is 2 double bedrooms, study area, family bathroom and utility room with door leading to rear on to ground floor. MOST READ: Plans for 121 affordable homes near Flintshire town recommended for approval LOOK: "Delightful" home in "idyllic" setting goes on the market in Wrexham Concerns raised over future of Grade I listed bridge in Wrexham "To enjoy the outstanding views from the large spacious windows the first floor includes a large open plan kitchen/ living/ family room with pleasant front aspects enjoying the views of Wrexham and beyond and rear garden aspects from the French doors leading to the patio area and benefits from a multi fuel burner, the modern kitchen includes floor & walled based cupboards and integral appliances. "From the galleried landing with its tall window from which to enjoy the views, gives access to the luxurious master suite which again enjoys outstanding views but benefits from a en-suite shower room & dressing room/ walk in wardrobe. "Externally the property is set behind private electric gates and has a large driveway with off road parking for 4/5 cars and in recent years has been upgrade with a resin drive. Double garage with electric doors, eave storage and potential to be converted into an annexe. To the rear the property enjoys a sunny aspect tiered garden with decking, patio and lawn."