Environmental activists are challenging the approval of a £3 billion high-interest loan to Thames Water. They argue that the “costly short-term fix” is not in the public interest. The Court of Appeal will hear the case on Tuesday, with protests expected outside the courthouse.
Liberal Democrat MP Charlie Maynard, representing campaigners, will argue that the bailout’s nearly £1 billion in interest and fees is excessive. The legal battle, lasting three days, will question whether the debt package truly benefits consumers.
Thames Water, which serves 16 million customers and employs 8,000 people, has been struggling with £19 billion in debt. Last month, the High Court approved the £3 billion package, but campaigners won the right to appeal. They believe the bailout deepens what they call the “costly short-term fix.”
A legal team, working for free, represents groups such as Windrush Against Sewage Pollution, the Rivers Trust, and the Angling Trust. They argue that special administration under the 1991 Water Industry Act would be cheaper. They insist the loan does not solve Thames Water’s deep financial troubles.
The company says the loan is necessary to prevent an immediate cash shortfall and attract new investors. However, the debt comes with a 9.75% interest rate and will cost £898 million in fees and interest over six months. Financial advisers alone have received £210 million for structuring the bailout.
High Court judge Mr. Justice Leech called these costs “eye-watering” but approved the plan. Maynard, representing over 25 MPs, 34 charities, and Thames Water customers, will argue the judge made a mistake.
Lawyer William Day, representing Maynard, states that special administration would cost less than half of the bailout. He argues that Thames Water has not proven that the loan will secure long-term investment. “The company should not get approval just by saying, ‘We will give it a go,’” he said.
To fund its projects, Thames Water is raising average bills by £31 per year, increasing the typical household bill to £588 by 2030. The company is also taking legal action to raise bills even higher than the 35% increase allowed by Ofwat.
The approved bailout provides £1.5 billion in immediate cash, with an additional £1.5 billion available. This support aims to sustain Thames Water while it fights to increase customer bills.
A spokesperson for Thames Water defended the restructuring plan. “This is the best way to resolve Thames Water’s issues. It does not financially impact taxpayers or customers, and it allows us to improve critical infrastructure,” they said.
Campaigners remain firm, insisting the bailout is a “costly short-term fix” that fails to address Thames Water’s ongoing crisis. The Court of Appeal’s decision could reshape the future of the UK’s largest water utility.
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