Insolvencies rise in England and Wales amid economic pressures; Lib Dem MP to appeal approval of Thames Water debt restructuring plan – as it happened

Time to wrap up:

The number of people going financially insolvent across England and Wales jumped by 12% in January compared with the same month a year earlier, according to Insolvency Service figures.

More businesses also failed, with analysts warning that high taxes and a slow economy could lead to more insolvencies through this year.

Thames Water has avoided collapse, with a high court judge today giving approval for up to £3bn of high-cost borrowing.

But campaigners are vowing to fight the decision – arguing that Thames should be put into a special administration. A rival group of creditors who had pushed an alternative package are also planning to appeal.

Elsewhere in economics, UK wage growth accelerated at the end of last year – with total pay rising 6% in October-December.

Bank of England governor Andrew Bailey, though, has insisted that this doesn’t change the BoE’s view of the economy.

UK energy customers have been warned that bills are likely to jump by 5% in April, when the price cap is next adjusted.

Steel giant Tata has welcomed planning approval for its proposals for huge changes to steelmaking at its biggest plant.

Neath Port Talbot Council’s planning committee gave the go-ahead at a meeting on Tuesday to the way steel is produced at the South Wales site.

Tata has closed blast furnaces and is switching to an electric arc furnace-based steelmaking process which is greener, but needs fewer workers.

Almost 2,000 jobs will be lost, although the company and the Government have announced plans to help find new jobs for those affected and Tata says thousands of jobs will be preserved.

Rajesh Nair, chief executive of Tata Steel UK, said:

“We are very pleased to have secured approval to build sustainable steelmaking in Port Talbot.

“Amidst a challenging global market, this is a significant milestone for the project and we are committed to begin large-scale work on site this summer, ahead of the Electric Arc Furnace starting up from the end of 2027.

“This £1.25 billion investment is the most significant investment made in the UK steel industry in decades.

“The facility will secure high-quality steel production, preserve thousands of jobs, and safeguard steel making in Port Talbot for generations to come.”

The closure of the last blast furnace at Port Talbot last year has led to job losses and higher rates of mental illness, with unions warning that for every job that goes in the steel plant, about three or four jobs are supported in the wider community.

Ouch! Confidence among US homebuilders has dropped, on concerns over president Trump’s plans to impose tariffs on imports.

A gauge of housing market conditions produced by the National Association of Home Builders and Wells Fargo fell 5 points to 42, the lowest since September.

Worres about high mortgage rates are also weighing on the housing market, the survey shows, with the US Federal Reserve not expected to cut interest rates for several months yet.

Despite today’s High Court ruling, “the ongoing financial drama at Thames Water shows no sign of abating”, says. Mark Lloyd, chief executive of The Rivers Trust.

Indeed, Lloyd adds, it merely adds to “the public despair and lack of trust” in the water industry.

He says:

“The astounding level of debt and punitive interest rates agreed mean that a large proportion of customer bills will be spent on paying financiers rather than improving the environment, when we know that Thames Water are already not delivering many of their promised environmental improvements.

This is a reflection of poor regulation over decades, which has driven companies to debt rather than equity finance, and some very greedy owners who siphoned too much funding out of the company to make themselves rich rather than fix our creaking infrastructure.

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Back in Germany, auto supplier Continental has announced plans to cut a further 3,000 jobs by the end of 2026.

The job reductions will be in research and development, it said, with less than half of the cuts will be in Germany.

Continental said the cuts would “to a large extent” take place via natural turnover, such as from retirement.

Philipp von Hirschheydt, head of the automotive division at Continental, says:

“We are continuously improving our competitive strengths in the interest of our sustainable market success.”

Continental had already announced plans last February to cut 7,150 jobs by 2025.

18 Feb 202508.27 EST

UK farmers disappointed and furious after inheritance tax meeting with ministers

Joanna Partridge

Farmers have expressed their “disappointment” and “fury” following a meeting with the government over the planned changes to inheritance tax for agricultural properties.

Tom Bradshaw, the president of the National Farmers’ Union (NFU) which represents 40,000 farmers across England and Wales, said he had taken proposals to the Treasury to reduce the impact of the changes to agricultural and business property relief on family farms.

However he said the exchequer secretary James Murray, and farming minister Daniel Zeichner were not receptive to their proposals.

“Disappointment doesn’t describe how I feel at the moment,” said Bradshaw, adding:

“There is no movement, the government resolutely believes that they are correct in the decision they have made and that they are generous in the exemptions they are giving us. They don’t care about the human impact, they don’t care about the intergenerational impact.”

Farmers have been protesting against the planned changes to agricultural property relief and business property relief since they were announced in October’s budget, which would see farms and other business property fall within inheritance tax from April 2026. Inheritors would have to pay 20% of the value of agricultural and business property above, which the government said would raise money to help improve public services.

The NFU and farming groups have warned that the proposed changes would push up food prices, impact domestic food supply and force many family farms to sell up to pay their tax bill.

Bradshaw told reporters he and representatives from other farming and countryside groups - the Tenant Farmers’ Association (TFA), Country Land and Business Association (CLA), and Central Association of Agricultural Valuers (CAAV) - proposed a “clawback” mechanism.

The clawback would see those inheriting a farming business only eligible for paying tax if they decided to sell the business within a certain time period after inheritance, which the NFU says would be at a time when cash was available to pay the tax bill.

“We are offering them a solution which still raises the funds, but at the moment the door is shut from Treasury,” Bradshaw said. “The reaction from our members is going to be one of fury, one of real anger, one of desperation.”

He added:

“We recognise the fiscal hole that the country faces and we recognise the challenges that government are under”.

Bradshaw insisted the prime minister was “disingenuous” to suggest that there was a choice between inheritance tax and funding the NHS

The meeting came just days after Keir Starmer cut short a visit to a housing development in Bedfordshire after it was interrupted by a protest of tractor-driving farmers. That day, Stamer defended the introduction of inheritance tax for farms as necessary for the sustainability of public services such as the NHS.

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Victoria Vyvyan, president of the CLA, said she left the meeting with “boiling blood”.

“They were adamant and deaf to what we trying to say,” she said.

The Treasury has been contacted for comment.

Just in: Thames Water’s Class B creditors have been granted permission to appeal today’s court ruling in favour of their rival Class A creditors.

The Class B creditors are lower-ranked in the pecking order, meaning they would be repaid after the As.

The Bs had proposed a rival debt restructuring plan to the one approved today – which had a lower interest rate.

The judge, though, was withering in his assessment of the Class B’s offer.

He wrote in his judgment that “I am very far from satisfied that the Class B AHG have made a binding commitment” for their own £3bn plan. He also wrote that he was “less than impressed” by the evidence of one of the class B investors, an investor from hedge fund Polus Capital.

Newsflash: Millions of households acrss Britain face a greater than expected increase to their energy bills of £85 a year from April after Europe’s gas storage levels slumped, according to analysts.

The average gas and electricity bill for households across England, Scotland and Wales is expected to rise by nearly 5% from April to £1,823 a year for a typical household under the energy regulator’s price cap.

The forecast by the influential consulting firm Cornwall Insight is higher than its earlier prediction that prices would rise to £1,785 a year this spring after colder weather and limited renewables caused gas storage levels to fall across Europe.

The energy industry regulator for Great Britain, Ofgem, will confirm the figure for the energy price cap covering the three months from 1 April on 25 February. The regulator increased the cap in January by 1.2% to a rate equivalent to £1,738.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight, says:

“Households have been hit hard over the past few months, and with bills set to rise for a third consecutive time the pressure is not letting up. While we’re not seeing a return to the peak of the energy crisis, the market is more volatile than it has been in quite some time, and households are bearing the brunt of cold weather and low gas storage levels across Europe.

Over in Germany, investor morale has risen at the fastest rate in two years this month, on hopes that the economy will pick up under a new government after Sunday’s election.

The ZEW economic reseach institute has reported that investor morale improved this month; its economic sentiment index increased to 26.0 points from 10.3 points in January.

Analysts polled by Reuters had pointed to a reading of 20.0.

ZEW president Achim Wambach says:

“This rising optimism is probably due to hopes for a new German government capable of action.”

The centre-right CDU party are leading in the polls, followed by the far-right AfD, with current chancellor Olaf Scholz’s SPD party third.

A Liberal Democrat MP is vowing to appeal against today’s High Court judge’s decision to approve plans for a £3bn rescue loan for Thames Water from some of its existing creditors.

Charlie Maynard, MP for Witney in Oxfordshire, has claimed that the restructuring approved today was “simply throwing good money after bad”.

Maynard had led a group of clean river campaigners arguing that Thames Water should be put into a government-handled administration, rather than getting a loan lifeline.

At a hearing in London earlier this month, lawyers for Maynard said that the company plan was a “poor short-term fix” and a “bridge to nowhere”, and that the company should be put into special administration (SAR) instead.

And today, Maynard says (via PA Media):

“I stand by my evidence to the court that allowing Thames Water to take on £3 billion more debt is not in the interests of their millions of customers.

“They will all be paying the price for this futile, expensive and extremely short-term bailout.

“This restructuring is simply throwing good money after bad. The money from our bills which is being spent on interest repayments is desperately needed to repair water infrastructure, improve customer service and clean up our rivers.

“I intend to keep fighting for Thames Water’s customers by appealing this judgment.

“The only way to get Thames out from under this mountain of debt and back onto a stable financial footing at this point is to put the company into special administration with a swift exit plan.”

The number of companies and individuals falling into insolvency in England and Wales jumped, year-on-year, last month.

New data from the Insolvency Service shows there were 1,971 registered company insolvencies in England and Wales in January 2025, 6% higher than in December 2024. and 11% higher than in January 2024.

This included 269 compulsory liquidations, 1,546 creditors’ voluntary liquidations (CVLs), 142 administrations and 14 company voluntary arrangements (CVAs).

Company insolvencies over the past year have been slightly lower than in 2023, which saw a 30-year high annual number, but have remained high relative to historical levels, the Insolvency Service says.

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Seperately, 9,706 individuals entered insolvency in England and Wales in January 2025 – that’s 12% more than a year ago, but 3% lower than in December 2024.

These year-on-year increases highlight the economic pressures on households and companies, as they juggle inflationary pressures, higher borrowing costs and higher taxes.

Sophie Burke, restructuring and insolvency partner at City law firm Fladgate, predicts we could see a further rise in corporate failures, saying:

‘’The latest insolvency statistics reflect weak consumer confidence and sustained economic pressure on businesses, in particular in consumer-facing sectors.

Administrations have increased from December 2024 to January 2025 and Fladgate LLP has witnessed this directly in a sharp increase in the number of administrations that Fladgate has advised on since the start of 2025. The operating landscape for businesses in 2025 has had a turbulent start and this may lead to further increases in insolvencies.’’

Gavin Kramer, senior associate at law firm Collyer Bristow, warns that any increases in taxes coud push more firms under:

“While the number of insolvencies has not reached the level of the 2008 recession, it’s nonetheless clear that businesses are still struggling, and that there remain very few signs of growth in the British economy.

Many major sectors, especially retail, are already operating on thin profit margins. If, as seems possible, the Spring Budget includes further tax rises on either businesses or consumers, this may result in an increase in businesses’ operating costs increase and lead consumers to rein in their spending.

When a business is in financial difficulties there are of course restructuring options which can keep the business afloat as a going concern and save as many jobs as possible. However, unless growth and consumer confidence pick up, it may be difficult for financially precarious businesses to successfully restructure and recover.”

Here’s a handy Q&A about the approval of Thames Water’s £3bn rescue loan deal by a high court judge today, from PA Media:

Q: What happened?

After weeks of hearings in the High Court, a £3 billion funding plan for Thames Water has been approved as part of a loan deal agreed internally last year.
The utility company supplies about 16 million households across London and the South East.

But it has at least £16 billion of debt, and had previously warned it only had enough money to keep running until March 24.

The new financing is designed to stop it from going bust, albeit temporarily.

Q: Why are people angry about Thames Water?

Thames Water has been at the centre of a growing scandal in the wider water industry.
Bills will climb steeply over the coming years, while privately-run water firms are still pumping raw sewage into rivers and waterways.

That is despite a succession of penalties from regulators Ofwat and the Environment Agency.

Meanwhile, many bosses, including those at Thames Water, have still been given large bonuses in the last year.

Thames Water also requested last week that Ofwat allows it to raise consumer bills over the next five years by more than the 35% it previously granted.

Q: Why does Thames Water need this emergency money?

The company’s debts are so high and its cash reserves are so low that it would have gone out of business in March.

The taps in people’s homes would still work - but it would be damaging for the big finance firms to which Thames owes billions of pounds.

Many of them would have seen those debts written off, resulting in hefty losses.

Thames Water would instead come under temporary government control until a new buyer is found.

Labour previously said it wants to avoid that scenario, citing extra costs to taxpayers of running the water company.

Q: So what happens next?

The £3 billion is thought to be enough to last Thames Water for about one year.
It buys bosses some more time to find a permanent source of funding, which will likely come by selling the company.

Potential suitors are lining up, with four bidders understood to have thrown their hat in the ring to buy Thames.

One is Castle Water, a firm owned by the Conservative Party treasurer Graham Edwards.
Another is investment firm Covalis Capital, which would bring in French utility giant Suez to run Thames day-to-day.

Q: What’s the catch?

The new loan is being provided by Thames’ creditors - namely companies it already owes about £11.5 billion.

They are mostly made up of hedge funds and other big finance firms, including Abrdn, M&G and others.

They are charging an unusually high interest rate of 9.75%, plus fees.

Over the 2.5-year life of the loan, and including fees, that could mean about £800 million in interest payments, experts have said.

Earlier this year, a group of MPs said it would force households to pay an extra £250 over the next five years to cover the costs.

Currently, about 28% of Thames’ bills service its debts, a figure which is expected to rise to 31% this year.

Q: How did things get this bad?

When Thames Water was privatised in 1989, it had no debt.

It has had a succession of different owners since then, including an Australian investment bank called Macquarie.

In December 2005, before Macquarie bought the utility, Thames Water’s net debt was £2.4 billion.

When Macquarie sold it around a decade later, the debt pile had ballooned to more than £10 billion.

The other problem is that interest payments on much of its debts rise with inflation, which has been high in recent years, adding to the pressure.

Mr Justice Leech, who approved Thames Water’s £3bn rescue loan, has also hit out at the “eye-watering” costs of finance and adviser fees involved in the deal.

That includes £210m paid by Thames to its legal and other advisers, and a total of £800m for finance, debt servicing and professional and advisory fees, according to today’s ruling.

He says:

Customers and residents who are struggling with their bills will be horrified at these costs and mystified how the Thames Water Group has been able to fund them or why it has agreed to do so.

Indeed, Mr Justice Leech adds that he might have been tempted to block the plan, if he had believed Thames would actually incur those £800m of costs – but in reality, he suspects the Class A creditors who proposed the loan will end up taking ‘a substantial haircut’ on their loans in future…

Campaigners for a better water system are renewing calls for Thames Water to be put into public ownership, after the high court granted the company a £3bn debt lifeline this morning.

Matthew Topham, lead campaigner at campaign group We Own It, said:

“This judgment is nothing but a stay of execution for Thames Water. The privatised company will limp on for a few more months like a profit-thirsty zombie.

“This crisis loan will keep Thames afloat in the short-term, but their underlying business model is rotten and should be condemned.

“It relies on piling up debt and raising customer bills so they can pay huge bonuses and dividends – all whilst pumping raw sewage into our waterways.

“The reason they’re getting bailed out is because they ran out of other people’s money to line their pockets with. It’s only a matter of time before they end up on the edge of bankruptcy again.

“This is the ‘doom loop’ of privatised water and there is only one way to break the cycle – public ownership.

“The Environment Secretary, Steve Reed, has the power to put Thames into a special administration regime (SAR), effectively a form of temporary nationalisation.

“Under the SAR it’s possible to negotiate a significant reduction in the corporate debt, putting the company on a much better financial footing.

“Once the debt has been slashed, the only long-term solution is full public ownership. Handing it back to the private sector would be a betrayal of the customers and our environment. In that scenario we’d end up back here again in a year’s time, just with more sewage in our rivers and more money in the water bosses’ pockets.”

The governor of the Bank of England, Andrew Bailey, has downplayed concerns that this morning’s jump in UK wage growth might change its position on the economy.

Speaking in Brussels this morning, Bailey argued that the latest UK jobs market data does not change the Bank of England’s broad expectations for the economy

Bailey told an event in Brussels organised by the Bruegel think tank:

“I don’t think we saw anything this morning that fundamentally changes that.”

He was speaking after this morning’s labour market report showed total pay grew by 6% per year in October-December.

The £3bn loan aproved for Thames Water today comes with a relatively high interest rate of 9.75%, and is structured in two parts.

First, the company gets an “initial tranche” of £1.5bn to give it liquidity until September 2025.

It could then receive two further tranches of £750m each, to further extend liquidity to May 2026 if required – depending on the success of Thames’s appeal to raise customer bills by more than Ofwat has allowed.

The loan comes from a group of creditors who own Thames’s class A debt, and was opposed by a second group who own class B debt (which is riskier and thus less protected than A).

The chief executive of Thames Water, Chris Weston, says the court’s decision to approve the £3bn emergency debt package will help the company push through its turnaround plan.

Weston says:

“We are pleased the Court sanctioned the Company Plan.

This is good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment.

Importantly, this decision will support the delivery of our turnaround which is underway.”

Had the debt deal not been approved, Thames Water had warned it could run out of cash at the end of March.

Even so, it is still in a sticky situation. The court heard evidence this month that the indebted company may need as much as £10bn in debt and equity investment to repair its finances…

18 Feb 202504.32 EST

Thames Water debt package approved

Jasper Jolly

Newsflash: Thames Water has won court approval for an emergency debt package worth up to £3bn that should stave off the collapse of Britain’s biggest water company for at least another few months.

The company has just told the stock market that London’s high court has decided that the deal could proceed, after hearing four days of complex arguments earlier this month over whether it should go ahead.

Thames, which has 16 million customers and 8,000 employees, has been on the verge of collapse for months, with debts of about £19bn. The financial difficulties have contributed to underinvestment in the pipes and drains needed to prevent sewage overflows into rivers and seas.

The deal will give Thames £1.5bn in upfront cash, plus up to £1.5bn more to see it through an appeal to try to increase bills by more than the 35% allowed by the industry regulator for England and Wales, Ofwat.

Thames had argued in court that it would run out of money on 24 March if the emergency debt deal did not go through. It will still have to raise billions of pounds more of equity to repair its finances over the longer term.

Sir Adrian Montague, Chairman of Thames Water, has welcomed the decision, saying:

“The Court’s approval of the Company Plan marks a significant milestone for Thames Water, enabling us to proceed with the implementation of the Liquidity Extension Transaction.

Its implementation is a key step in strengthening our long-term financial resilience and will allow us to continue progressing the equity raise process and a holistic recapitalisation transaction as well as complete the CMA appeal process in respect of Ofwat’s PR24 price review. Critically, it enables the management team to continue progressing the turnaround.”

Britain’s water quality at some sites is notoriously revolting, and now the water companies are revolting too!

South East Water and Anglian Water have both announced today they are appealing to be allowed to raise customers’ bills by more than regulator Ofwat approved last year.

Anglian Water says Ofwat’s decision to only allows its bills to rise by 29% in 225-2030 was unacceptable, as it plans an £11bn programme of infrastructure improvement. It is asking the Competition and Markets Authority to consider the issue.

Chief Executive Mark Thurston says:

“In the East of England, with four of the fastest growing cities in the UK, as well as the Cambridge-Oxford Arc, the levels of investment needed are significant. As a long term, purpose-driven business we are planning sustained investment over decades to build resilience against a changing climate, deliver essential investment in water and sewerage infrastructure, and protect and enhance the environment – all of which will create jobs and bolster the local economy, helping our region to thrive.

South East Water, which was allowed to raise bills by 24%, is also appealing.

Its chairman, Chris Train. says:

“Asking for the Final Determination to be referred to the Competition and Markets Authority for redetermination is not a decision we took lightly. We have scrutinised the Final Determination and agree unanimously that in its current format, it presents a risk to water security for our customers in the region.”

Last week, Thames Water announced it will also appeal against Ofwat’s decision: