Business Comment: Benefits pour in on Anglian investors

Here's a poser: what sort of business raises its dividend by twice the amount that profits have increased and then says its customers will have to foot the bill for the windfall tax? Tricky one, eh?

It never rains in Anglian Water country, or hardly ever, but it pours all the time if you are a shareholder. Yesterday the Anglian board sprayed another pounds 93m in the direction of shareholders, made millionaires out of the men who run Hartlepool Water and then pleaded poverty when it came to the windfall levy.

Clearly the water companies are either past caring or beyond shame. Or perhaps both. As the first water company to report, Anglian is in a difficult position. It is hard to set the pace for the rest of the sector while simultaneously explaining why the windfall tax breaches all the rules of natural justice.

But if Anglian supposes it can empty out the coffers before Gordon Brown gets there it is labouring under a terrible misapprehension. On the other hand, if it believes it is within its rights to pursue a legal challenge to the windfall tax then it shows a lamentable lack of judgement. There are many things wrong with the levy, as this column has repeatedly stated. But all governments have a right to raise tax revenue the way they see fit.

The argument that customers have done as well as shareholders out of privatisation of the water industry is also a flimsy one. Anglian may be one of the better performers - careful husbandry of resources means that it has never had a hosepipe ban despite being the driest part of the country. But customers have also paid for that with the highest water bills in the land.

Set against Anglian's objective of reducing dividend cover to two times earnings, the pounds 40m of efficiency savings and the pounds 2m it is providing to bale out customers having difficulties with their bills begins to look like a drop in the ocean.

The interesting question is whether those water companies which are even less deserving of sympathy will match the payouts on offer from Anglian. The betting is they will.