Thames Water spent at least £136 million on legal and advisory fees over the past year as part of its urgent efforts to secure emergency funding, according to a leaked internal document. The figure exceeds the £130 million the utility company paid in regulatory fines for sewage spills and other violations during the same period.
The detailed document, obtained by The Guardian, outlines the costs associated with “Project Crabtree”, the codename for the massive restructuring plan intended to save the debt-laden water company from collapse. Thames Water is burdened by a staggering £20 billion debt, and had scrambled to avoid nationalisation by seeking rescue capital.
Legal Giants Receive Tens of Millions in Fees
Top law firms Linklaters and Akin Gump were paid £45 million and £26 million respectively. Ten other firms received over £1 million each, while consultancy giants like AlixPartners, Bain, Deloitte, KPMG, Kroll, and Teneo were collectively paid £39 million.
These legal and advisory fees have now been revealed to exceed Thames’s earlier public estimate. In a letter dated 30 May 2025 to MP Alistair Carmichael, Thames CEO Chris Weston had stated legal fees totalled £67.6 million. However, the internal figures show fees to Linklaters, Akin Gump, A&O Shearman, and Quinn Emanuel reached £79 million, raising questions about transparency.
Debt Talks and Rescue Deal with Creditors
Thames Water is in advanced negotiations with regulator Ofwat and a group of creditors, after private equity firm KKR walked away from a potential takeover. The creditor consortium, which includes Aberdeen, BlackRock, Invesco, M&G, Elliott Management, and Silver Point Capital, has proposed a £17 billion recapitalisation plan. This includes £5.3 billion in new funding and would require regulatory concessions such as the lifting or reversal of some fines.
Court documents reveal that January and February 2025 saw the highest advisory fees, coinciding with a key legal battle. Linklaters alone was paid over £15 million in those two months.
Criticism Over Bonus Payments and Public Cost
Thames Water has also come under fire for not recovering bonuses paid to top executives amid its financial crisis. The situation has further drawn public anger as hosepipe bans were imposed by Yorkshire Water and South East Water due to drought conditions, worsening public trust in UK water providers.
Liberal Democrat MP Charlie Maynard, who challenged the recapitalisation deal in court, labelled the spending “a massive fee bonanza for advisers.” He questioned Ofwat’s assurances that these costs would not be passed on to customers, warning that “this is money out the door, whether it’s billed directly or added to the balance sheet.”
Thames and Ofwat Insist Customers Won’t Pay
Thames Water insists that customers will not bear the cost of these recapitalisation fees. A company spokesperson said: “Fees relating to the recapitalisation will not lead to an increase in any customer bills. Adviser fees are commercially sensitive.”
Ofwat echoed the claim, stating that water bill calculations do not include advisory costs linked to the emergency restructuring.
Meanwhile, the creditors argue their proposed plan involves writing off billions in debt and represents the biggest investor loss on a UK infrastructure asset in history, aimed at restoring public trust, improving environmental outcomes, and stabilising the company — without taxpayer support.
