Thames Water has warned that crisis talks with its lenders are taking longer than expected and will continue into 2026, heightening the risk of the company falling into temporary government control. Britain’s largest water utility, which serves 16 million customers in south-east England, said it faces “material uncertainty” over its future despite reporting a profit of £414m for the six months to September, compared with a loss of £149m in the same period last year.
The company’s revenues rose by 40% to nearly £2bn after it was allowed to raise customer bills by 31% in April. However, Thames Water remains under the weight of £17.6bn of net debt built up since privatisation. The utility said a collapse into a special administration regime – a form of temporary nationalisation – “could occur in the very near term” if it cannot agree a formal takeover by its controlling creditors.
The bondholders, led by hedge funds including Elliott Investment Management and Silver Point Capital, have asked the regulator Ofwat and the government for leniency on future pollution fines, arguing that the prospect of hundreds of millions in extra costs makes a turnaround impossible. The standoff has already lasted months longer than anticipated, with discussions originally expected to conclude by the end of this year.
Thames Water revealed it paid £57m in advisory fees during the period to bankers, lawyers and PR consultants. Despite operational improvements – including a 20% drop in sewage spills and steady leakage performance during a dry summer – complaints surged by 75% to more than 55,000, largely due to the bill increase. The company lost £1.6bn before tax in the year to March, partly due to a £1.3bn credit loss.
Chief executive Chris Weston said the company was making good progress on operational transformation and managing recapitalisation, adding that it continues to work with stakeholders to secure a market-led solution. The government has so far resisted granting regulatory leniency, but ministers are also keen to avoid taking control of the struggling utility.
