Thames Water, drowning in £16bn of debt, has managed to stay afloat – for now. A £3bn emergency loan has been approved by the High Court, buying the embattled utility more time to sort itself out. But at what cost?
For starters, this is not free money. The loan comes with an eye-watering 9.75% interest rate and at least £100m in fees. Mr Justice Leech, who approved the deal, didn’t mince words about the financial burden, calling the costs “eye-watering.” It’s hard to disagree.
This so-called rescue plan is nothing more than a desperate attempt to borrow its way out of a mess largely of its own making. The first £1.5bn will drip-feed the company until September 2025, but that’s contingent on Thames Water meeting certain conditions, including securing fresh investment from shareholders. Meanwhile, existing creditors have been pushed back by two years, and B-class creditors are staring down the possibility of being wiped out completely – hence their likely appeal.
Nationalisation has been a looming threat, with the government keeping a special administration plan on standby to prevent a total collapse. Some campaigners argue that nationalisation is the only way forward, though the government remains opposed. Instead, Thames Water is pushing for a full financial restructuring, with shareholders injecting new cash and creditors swapping debt for equity.
Chief Executive Chris Weston is spinning this as a victory. “This is good news for our customers,” he says, assuring everyone that the loan will help “deliver critical infrastructure upgrades.” What he doesn’t mention is that Thames Water is now demanding customers pay the price for its mismanagement. The company wants a 53% increase in bills by 2030 – well above Ofwat’s approved 35% rise – which would add an extra £151 a year to household water costs.
Decades of poor decisions, underinvestment, and financial engineering have led to this moment. And once again, it’s the customers left footing the bill.
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