What’s happening with Thames Water, why’s it in court and could it be nationalised?

Published

6 months ago

February 18, 2025

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It’s crunch time for the UK’s biggest water provider Thames Water as its fate will be announced on Tuesday morning.

Thames Water finances hang in the balance with debts of £16bn and existing investors declaring the business “uninvestable”, due to the high fines it faces for environmental and other regulatory breaches and the clampdown on shareholder payouts.

But why is the utility provider in this position, what’s happening at court, and could it be nationalised if it doesn’t get the money it needs?

The short-term solution is for Thames Water to borrow its way out of the problem.

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In following this strategy the company has sought High Court approval for a £3bn rescue plan centred on an emergency loan.

That’s being provided by so-called A-class creditors who hold around £11bn in debt racked up by Thames Water Utility Holdings, the business that serves about 16 million customers in London and the South East.

The decision on that request will be made on Tuesday morning.

Thames Water has previously said it will run out of cash by 24 March and the £3bn loan – delivered in two tranches of £1.5bn – would prevent the business from collapsing.

A controversial court battle

Two sets of creditors both want to lend Thames Water the £3bn sum, with the company favouring the A-class creditors.

But water campaigners have criticised the terms of the loan, which comes with an interest rate of 9.75% payable over two and a half years with up to a further £100m due in fees.

They’ve called on environment secretary Steve Reed to block the arrangement and force the company into special administration, effectively temporary re-nationalisation.

The terms of the loan dictate it must be repaid first if administration does happen and existing creditors would have repayment dates set back two years.

A second group of B-class creditors, who hold around £750,000 of subordinate debt, face being wiped out completely in a restructuring.

What if the loan isn’t approved?

High Court approval is contingent on 75% of its creditors agreeing to the rescue plan.

Failing that Thames Water would have to consider a plan that leaves creditors no worse off.

If the £3bn loan is not approved the chances of the company entering a special administration regime or nationalisation, are raised.

If nothing is done and no solution is reached then nationalisation could happen. The government is reportedly preparing for such an event by contacting private sector administrators.

What would happen if the deal is approved?

If the loan is approved Thames Water wants a full restructuring, taking in new shareholder investment and swapping debt for a portion of the company for existing creditors.

Thames Water last week said it was challenging the amount it can raise bills by.

It had sought a 53% hike to bills from 2025-30.

That demand was rejected and instead, a 35% rise was allowed as part of a price determination for all suppliers across England and Wales.

Is there an alternative to nationalisation?

Companies like the UK’s biggest energy supplier Octopus Energy have expressed interest in its technology arm, managing the utility businesses’s functions.

Infrastructure CK Infrastructure Holding and water provider Castle Water are also understood to have submitted proposals to invest in Thames Water.

Nationalisation is not the preferred method in government.

Mr Reed has said he wants a “market solution” and opposes nationalisation.

Underinvestment, mismanagement, and dividend payments have all been blamed for Thames Water’s precarious financial position.

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Tesla approves $29bn share award to Elon Musk

Published

7 hours ago

August 4, 2025

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Tesla approves bn share award to Elon Musk

Tesla’s board has signed off a $29bn (£21.8bn) share award to Elon Musk after a court blocked an earlier package worth almost double that sum.

The new award, which amounts to 96 million new shares, is not just about keeping the electric vehicle (EV) firm’s founder in the driving seat as chief executive.

The new stock will also bolster his voting power from a current level of 13%.

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He and other shareholders have long argued that boosting his interest in the company is key to maintaining his focus after a foray into the trappings of political power at Donald Trump‘s side – a relationship that has now turned sour.

Musk is angry at the president’s tax cut and spending plans, known as the big beautiful bill. Tesla has also suffered a sales backlash as a result of Musk’s past association with Mr Trump and role in cutting federal government spending.

The company is currently focused on the roll out of a new cheaper model in a bid to boost flagging sales and challenge steep competition, particularly from China.

The headwinds have been made stronger as the Trump administration has cut support for EVs, with Musk admitting last month that it could lead to a “few rough quarters” for the company.

Tesla is currently running trials of its self-driving software and revenues are not set to reflect the anticipated rollout until late next year.

Musk had been in line for a share award worth over $50bn back in 2018 – the biggest compensation package ever seen globally.

But the board’s decision was voided by a judge in Delaware following a protracted legal fight. There is still a continuing appeal process.

Earlier this year, Tesla said its board had formed a special committee to consider some compensation matters involving Musk, without disclosing details.

The special committee said in the filing on Monday: “While we recognize Elon’s business ventures, interests and other potential demands on his time and attention are extensive and wide-ranging… we are confident that this award will incentivize Elon to remain at Tesla”.

It added that if the Delaware courts fully reinstate the 2018 “performance award”, the new interim grant would either be forfeited or offset to ensure no “double dip”.

The new compensation package is subject to shareholder approval.

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Motor finance operators can breathe big sigh of relief

Published

7 hours ago

August 4, 2025

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Motor finance operators can breathe big sigh of relief

Bank stocks have enjoyed a boost as traders digest the Supreme Court’s ruling on the car finance scandal.

Some of the country’s most exposed lenders, including Lloyds and Close Brothers, saw their share prices jump by 7.55% and 21.62% respectively.

It came after the court delivered a reprieve from a possible £44bn compensation bill.

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Banks will still most likely have to fork out over discretionary commissions – a type of commission for dealers that was linked to how high an interest rate they could get from customers.

The FCA, which banned the practice in 2021, is currently consulting on a redress scheme but the final bill is unlikely to exceed £18bn. Overall, the result has been better than expected for the banks.

Lloyds, which owns the country’s largest car finance provider Black Horse, had set aside £1.2bn to cover compensation payouts.

Following the judgment, the bank said it “currently believes that if there is any change to the provision, it is unlikely to be material in the context of the group”.

The judgment released some of the anxiety that has been weighing over the Bank’s share price.

Jonathan Pierce, banking analyst at Jefferies, said the FCA’s prediction was “consistent with our estimates, and most importantly, we think it largely de-risks Lloyds’ shares from the ‘motor issue'”.

Bank stocks have responded robustly to each twist and turn in this tale, sinking after the Court of Appeal turned against them and jumping (as much as 8% in the case of Close Brothers) when the Supreme Court allowed the appeal hearing.

Concerns about this volatility motivated the Supreme Court to deliver its judgment late in the afternoon so that traders would have time to absorb the news.

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FCA considering compensation scheme over car finance scandal – raising hopes of payouts for motorists

Published

1 day ago

August 3, 2025

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FCA considering compensation scheme over car finance scandal - raising hopes of payouts for motorists

Thousands of motorists who bought cars on finance before 2021 could be set for payouts as the Financial Conduct Authority (FCA) has said it will consult on a compensation scheme.

In a statement released on Sunday, the FCA said its review of the past use of motor finance “has shown that many firms were not complying with the law or our disclosure rules that were in force when they sold loans to consumers”.

“Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way,” the statement continued.

The FCA said it estimates the cost of any scheme, including compensation and administrative costs, to be no lower than £9bn – adding that a total cost of £13.5bn is “more plausible”.

It is unclear how many people could be eligible for a pay-out. The authority estimates most individuals will probably receive less than £950 in compensation.

The consultation will be published by early October and any scheme will be finalised in time for people to start receiving compensation next year.

What motorists should do next

The FCA says you may be affected if you bought a car under a finance scheme, including hire purchase agreements, before 28 January 2021.

Anyone who has already complained does not need to do anything.

The authority added: “Consumers concerned that they were not told about commission, and who think they may have paid too much for the finance, should complain now.”

Its website advises drivers to complain to their finance provider first.

If you’re unhappy with the response, you can then contact the Financial Ombudsman.

The FCA has said any compensation scheme will be easy to participate in, without drivers needing to use a claims management company or law firm.

It has warned motorists that doing so could end up costing you 30% of any compensation in fees.

The announcement comes after the Supreme Court ruled on a separate, but similar, case on Friday.

The court overturned a ruling that would have meant millions of motorists could have been due compensation over “secret” commission payments made to car dealers as part of finance arrangements.

The FCA’s case concerns discretionary commission arrangements (DCAs) – a practice banned in 2021.

Under these arrangements, brokers and dealers increased the amount of interest they earned without telling buyers and received more commission for it. This is said to have then incentivised sellers to maximise interest rates.

In light of the Supreme Court’s judgment, any compensation scheme could also cover non-discretionary commission arrangements, the FCA has said. These arrangements are ones where the buyer’s interest rate did not impact the dealer’s commission.

This is because part of the court’s ruling “makes clear that non-disclosure of other facts relating to the commission can make the relationship [between a salesperson and buyer] unfair,” it said.

It was previously estimated that about 40% of car finance deals included DCAs while 99% involved a commission payment to a broker.

Nikhil Rathi, chief executive of the FCA, said: “It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated.

“We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”