Thames Water asks creditors for more time on its £20bn debt pile

The UK's biggest water company has pitched an “interim” deal that would stretch the repayment date on an unspecified chunk of the £20bn on its balance sheet from 2027 to March 2028. Thames supplies 16 million customers across London and the Thames Valley. Creditors are still hammering out a longer-term agreement meant to keep the company out of bankruptcy.

The debt has had Thames on the ropes for years. Shareholders walked away in 2024, leaving the company under the effective control of its lenders, who work together as London & Valley Water. That group is led by US hedge funds Elliott Management and Silver Point Capital, with institutional investors including BlackRock and M&G alongside them, and it handed Thames a £3bn lifeline in February last year to keep negotiations going.

The clock is tight. Last month Thames asked those creditors for a further £2.4bn emergency loan and warned it would not reach a longer-term debt deal before running out of cash by “the end of 2026 or the start of 2027”.

Prime minister Andy Burnham now faces a call on whether to allow a creditor takeover that would involve writing off fines and reducing Thames's environmental commitments. He is also weighing nationalising the company or approving another form of state control. Labour politicians and environmental campaigners argue he should instead put Thames into special administration, a temporary government hold while a new buyer is sought.

On Monday the Liberal Democrats pressed Burnham to tell parliament what he is doing about the water industry if he fails to publish a full plan by the end of the year. The party's environment spokesperson, Tim Farron, said Burnham had “talked up water in his conference speech earlier this year, but speeches don't stop sewage and families paying every higher bills can't wait years for a 10-year plan to start.”

Customer bills are heading up regardless. Regulator Ofwat has said water companies can lift annual tariffs by an extra £3.4bn, on top of the 36% average rise already agreed over five years to 2030, to pay for long-overdue work on leaking pipes, treatment works and new assets such as reservoirs.