Water firms face staggering £60 billion debts amid Thames Water collapse threat

29 June 2023 , 12:36

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Recent reports have warned that Thames Water's £14 billion debt is growing unmanageable for the firm (Image: Getty Images)

Water firms are lumbered with more than £60billion of debt - at least half of it exposed to soaring inflation.

Those figures, published by industry regulator Ofwat, date from March 2022.

Since then, inflation has risen even higher, potentially driving firms’ interest bills skyward.

The total amount of borrowings jumped by £1.26billion to £60.56billion between 2021 and 2022.

Of that, £29.1billion is linked to the Retail Price Index measure of inflation.

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RPI stood at 11.3% last month, hence the risk of higher borrowing costs for suppliers.

Ofwat’s figures showed Thames Water, now threatened with collapse, had the biggest debt mountain, at almost £14billion.

Water firms face staggering £60 billion debts amid Thames Water collapse threat

Former CEO of Thames Water, Sarah Bentley who stepped down weeks after being forced to give up her bonus over the company's environmental performance (John Alex Maguire/REX/Shutterstock)

Around 56% of its borrowers were, at the time, linked to RPI.

Another measure of firms’ debts is what is called “regulatory gearing”.

In 2019, Ofwat set it at 60% for five years.

But its data from last March showed most firms were above that threshold.

It will get even tougher for suppliers as Ofwat is proposing to reduce the level to 55% over the next five years.

Here’s how much debt your water firm is sitting on:

Emergency plans are reportedly being drawn up to save the debt-laden Thames Water (Corbis via Getty Images)

Thames Water

Total debt: £13.84billion

Linked to RPI: £7.76billion (56.1%)

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United Utilities

Total debt: £8.17billion

Amount linked to RPI: £3.12billion (38.2%)

Anglian

Total debt: £6.6billion

Amount liked to RPI: £3.5billion (53%)

A Thames Water official stands in flood water on Hornsey Road, Holloway, north London, after a 36-inch water main burst, causing flooding up to four feet deep (PA)

Severn Trent

Total debt: £6.35billion

Amount linked to RPI: £1.03billion (16.2%)

Yorkshire

Total debt: £5.64billion

Amount linked to RPI: £3.12billion (55.4%)

Regulatory gearing: 72.5%

Dŵr Cymru (Welsh Water)

Total debt: £4.19billion

Amount linked to RPI: £3.48billion (83%)

Campaigners from Extinction Rebellion Wallingford and the Dirty Water Campaign were in Henley during the Royal Regatta to protest Thames Water sewage discharges into the River Thames (Maureen McLean/REX/Shutterstock)

Southern

Total debt: £4.1billion

Amount linked to RPI: £2.6billion (63.4%)

Northumberland

Total debt: £3.17billion

Amount linked to RPI: £1.08billion (34.1%)

South West Water

Total debt: £2.5billion

Amount linked to RPI: £552million (22.1%)

Water firms have come under repeated fire for pumping sewage into the country's waterways - a storm overflow at a beach in Worthing, West Sussex (Adam Gerrard / Daily Mirror)