Thames Water Creditors Weigh Emergency £2.4bn Loan as Cash Runs Short

Creditors of the struggling utility Thames Water are due to vote on Thursday on whether to provide an emergency £2.4bn loan to keep the company running. Campaigners have raised concerns that the borrowing could add £40 to each household's bills in interest alone.

The consortium, known as London & Valley Water, will decide whether to lift the company's funding facility to £5.4bn. That would allow Thames Water to keep operating until autumn 2027. Its class A creditors include BlackRock, Elliott Management and Silver Point Capital, and they granted a £3bn loan last year at an interest rate of 9.75%.

This month, Thames Water said it needed the further £2.4bn because it could not secure a longer-term deal on its debt before its cash ran out, which it expects to happen by "the end of 2026 or the start of 2027". The company has so far drawn £2.65bn of the £3bn available under the "super senior" facility, and the creditors have approved 15 earlier consent requests from it.

Thames Water has said customers will not have to pay the interest on the £3bn loan. Analysis by the campaign group We Own It found that if the new loan were granted on the same terms and passed on to bills, it would cost £40 per household in interest, or £454 per household if the full amount were included. London & Valley Water insisted the cost would not be added to bills.

The company serves 16 million customers in London and the Thames Valley and has been close to collapse for several years under a debt pile now put at about £20bn. Its shareholders walked away in 2024, leaving creditors in effective control while they seek a deal to avoid bankruptcy.

Andy Burnham is now weighing whether to permit a creditor takeover, which would involve writing off fines and scaling back environmental commitments. He is also considering nationalisation or another form of state control. Some Labour politicians and environmental campaigners argue the company should instead go into special administration, a temporary form of government control while a new buyer is found. One option under review would convert about £100m of outstanding fines into a government stake.

Sophie Conquest, 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." She called for the company to be allowed to fail and be placed in special administration, followed by permanent public ownership.

Charlie Maynard, the Liberal Democrat MP for Witney, who unsuccessfully challenged the £3bn loan in court in 2025 alongside campaigners and junior creditors, said the government had had more than two years to decide and should act now. Oxford economist Prof Dieter Helm doubted that a turnaround could be "properly funded" and said further loans were merely delaying an "inevitable" special administration.

A Thames Water spokesperson said the extra liquidity would let investment continue uninterrupted while the business seeks a recapitalisation, adding that bills are set by Ofwat and the funding adds no costs for households. A spokesperson for London & Valley Water said the costs are borne entirely by the class A creditors and that the arrangement avoids any need for taxpayer funding.