Thames Water Creditors to Vote on £2.4bn Emergency Loan

By Amara Osei

London & Valley Water will vote Thursday on a £2.4bn emergency loan that would lift Thames Water’s funding facility to £5.4bn and keep the utility operating until autumn 2027.

The proposal would increase the funding facility to £5.4bn from the £3bn “super senior” facility approved last year at a 9.75% interest rate. Thames Water said this month it had drawn £2.65bn of that £3bn.

London & Valley Water’s class A creditors include BlackRock, Elliott Management and Silver Point Capital. Those creditors have approved 15 previous consent requests from Thames Water.

What is the emergency cash for?

Thames Water said it needed the extra £2.4bn because it could not reach a longer-term deal for its debt pile before running out of cash by “the end of 2026 or the start of 2027.” The company has been on the brink of collapse for several years and has not paid down its debt.

Thames Water serves 16 million customers in London and the Thames Valley. Its debt pile now stands at about £20bn.

Thames Water previously said customers would not bear the interest on the £3bn loan. 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.”

What would it cost households?

We Own It estimated the £2.4bn loan would cost each household £40 in interest alone if approved on the same terms and added to bills. The campaign group calculated £454 per household if the entire loan amount were included.

London & Valley Water rejected the household-cost scenario. A consortium spokesperson 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.”

Who could take control?

Thames Water’s shareholders walked away in 2024, leaving the utility under creditors’ effective control as they worked to avoid bankruptcy. Andy Burnham is now deciding whether to allow a creditor takeover, which would write off fines and reduce environmental commitments.

Burnham is also considering nationalisation or another form of state control. He has urged his advisers to return to the drawing board and draw up policies for the utility.

That review is an early test of Burnham’s promise to bring “the essentials of life” under public control. One option would convert about £100m of outstanding fines into a government stake, saving creditors money while giving ministers a say in how it is run.

Some Labour politicians and environmental campaigners say Burnham should instead put Thames Water into special administration. That process would mean temporary government control while a new buyer is sought.

Sophie Conquest, We Own It’s lead campaigner, said: “Since privatisation, £11.9bn has been extracted from Thames Water. They have already had more than enough of our money.” Conquest continued: “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.” She added: “During a cost of living crisis, this government cannot continue to reward Thames Water’s failures at our expense.”

What happened in the 2025 court challenge?

Charlie Maynard, the Liberal Democrat MP for Witney, joined campaigners and junior creditors in an unsuccessful 2025 court challenge to the £3bn 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.”

Maynard continued: “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.”

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

Helm 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.”

A spokesperson for the London & Valley Water consortium said: “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.”

The Thursday vote will determine whether Thames Water receives enough private liquidity to keep operating through autumn 2027. Approval would let the company continue its infrastructure investment, but it would not resolve the utility’s roughly £20bn debt or settle whether the government takes control or seeks a new buyer.