Thames Water creditors to vote on emergency £2.4bn loan as cash runs low

Campaigners say costly new funds will lead to higher bills, which company denies

A group of creditors to troubled Thames Water are poised to vote on whether to grant an emergency £2.4bn loan to keep the company afloat, as campaigners raise concerns it could add £40 to each household’s bills in interest alone.

A consortium of creditors, called London & Valley Water, will vote on Thursday on whether to increase a funding facility for the debt-laden utility company to £5.4bn to keep it operating to autumn 2027.

The company’s class A creditors, which include BlackRock, Elliott Management and Silver Point Capital, last year granted it a £3bn loan at a 9.75% interest rate.

This month, Thames Water said it needed a further £2.4bn cash injection because it would be unable to reach a longer-term deal to sort out its extensive debt pile before running out of cash by “the end of 2026 or the start of 2027”.

Thames Water has previously said that customers will not be on the hook for the interest on the £3bn loan, but it has almost run out of money and not paid down the debt.

Analysis by the campaign group We Own It showed that the £2.4bn loan, if it is granted on the same terms and added to bills, would cost £40 per household in interest alone, and £454 per household if the entire loan amount was included. London & Valley Water insisted it would not be added to bills.

Andy Burnham is now deciding whether to allow a takeover deal by the water company’s creditors, which would entail writing off fines and reducing environmental commitments. He is also mulling whether to nationalise the company or take another form of state control.

Some Labour politicians and environmental campaigners have said Burnham should instead put Thames Water into special administration, a form of temporary government control while a new buyer is sought.

Sophie Conquest, the lead campaigner at We Own It, said: “Since privatisation, £11.9bn has been extracted from Thames Water. They have already had more than enough of our money. If they cannot survive without yet another excruciatingly expensive bailout, this government must let them go bust and bring them into special administration, followed by permanent public ownership.”

The utility company serves 16 million customers in London and the Thames Valley. It has been on the brink of collapse for several years after it became overwhelmed by a debt pile that is now about £20bn. Its shareholders walked away in 2024, leaving the company under the effective control of its creditors while they work out a deal to avoid bankruptcy.

In 2025, Charlie Maynard, the Liberal Democrat MP for Witney, along with campaigners and junior creditors, unsuccessfully took the water company to court over the £3bn loan.

On the proposed £2.4bn loan, he said: “The creditors will likely hand Thames Water yet another massively overpriced rescue loan, which customers will end up having to pay for.

“This is just another short-term fix, paid for by customers and taxpayers. The government has had more than two years to make up its mind. It’s time it did so. Put Thames Water into special administration now.”

The creditors have approved 15 previous consent requests from Thames Water. The company said this month it had so far drawn £2.65bn of the £3bn available under the “super senior” facility.

Prof Dieter Helm, an economist at the University of Oxford, doubted that a turnaround of Thames Water could be “properly funded” and said further loans were merely postponing an “inevitable” special administration.

He said: “The future investment programme for the turnaround will not be properly funded. Thames – and indeed much of the rest of the industry – is caught between a political rock and a political hard place.”

Conquest added: “During a cost of living crisis, this government cannot continue to reward Thames Water’s failures at our expense.”

Burnham has been looking at ways to take control of Thames Water in an early test of his promise to bring “the essentials of life” under public control. He has urged his advisers to go back to the drawing board and create a list of policies for the utility company.

One option under consideration is to convert about £100m of outstanding fines into a government stake in the company, saving its creditors money but giving ministers some say in how it is run.

A Thames Water spokesperson said: “Additional liquidity from creditors will enable the investment to continue uninterrupted while the business seeks a recapitalisation. Customer bills are set by Ofwat, and this funding does not add any costs for households.”

A spokesperson for the London & Valley Water consortium said: “No customer bills will be used to pay for the costs of Thames Water’s rescue financing. These costs are borne entirely by the class A creditors.

“Creditors have stepped in to provide the billions of pounds of private capital needed to ensure Thames Water’s record infrastructure investment programme can continue, avoiding the need for any government financial support or taxpayer funding.”