Water firms’ £1.4bn shareholder payouts branded ‘sickening’ amid sewage spills

Campaign groups hit out at the sector and the Government on Thursday.

Campaigners have reacted to the £1.4 billion given out by water companies in dividends (Rui Viera/PA)

(PA Wire)

Campaigners have criticised water companies for paying out £1.4 billion in dividends as the industry regulator urged several to address big holes in their finances.

Ofwat, which oversees the water sector in England and Wales, named Thames Water, Southern Water, SES Water and South East Water as the four worst-performing water companies that need to turn around their finances.

Its latest yearly report revealed four other firms are also causing concern over their long-term finances.

It comes as water companies continues to face scrutiny over sewage spills, crumbling infrastructure and governance issues.

Campaign groups hit out at the sector and the Government on Thursday after the regulator released dividend figures totalling £1.4 billion.

United Utilities dished out £452 million to shareholders and Severn Trent paid out £426 million during the year, the data shows.

Northumbrian Water also paid out £111 million, Anglican Water paid out £161 million and Thames Water paid out £45 million to shareholders.

Meanwhile, recent analysis by the Liberal Democrats found executives have been paid more than £41 million in bonuses, benefits and incentives over the past three years.

Louise Reddy, a policy officer for Surfers Against Sewage, said: “It’s sickening that water company bosses rake it in whilst our waterways fall to ruin.

“Water company finances are a shambles. They rack up enormous fines and make financial losses, all whilst paying out millions to shareholders and CEOs.

“That’s why we’re calling for a ban on shareholder payouts if water companies fail to comply with environmental regulations, as well as a cap on bonuses.”

GMB national secretary Andy Prendergast said: “Shareholders are trousering fortunes with money that should be used to restore infrastructure and tackle sewage spills and leakage.

“Ofwat and ministers have been asleep at the wheel. Naming and shaming companies is not enough – we need a regulator with sharper teeth.”

Megan Corton Scott, Greenpeace UK’s political campaigner, said: “What purpose do water companies actually serve, other than to line the pockets of their shareholders?

“They’ve treated our countryside like an open toilet and pumped our waterways full of sewage. They’ve sold off vital reservoirs and put our water supplies at risk.

“The Government needs to step in and force these companies to clean up their act and do the job we pay them to do before a single penny more is paid out to shareholders.”

Gareth Cunningham, director of conservation at the Marine Conservation Society, said: “Untreated sewage is pouring into our rivers and seas, and no UK river meets the legal water quality requirements for chemical pollution.

“Our commitment to cleaner, healthier waters must run deeper than corporate profits.

There's clearly no shortfall in money, but instead of using it to make essential repairs to our dilapidated sewage system, bosses and shareholders have simply lined their pockets

Paul de Zylva, Friends of the Earth

“We urgently need significant investment in rejuvenating outdated sewage systems, enforcing better regulation and more stringent government oversight to ensure that customer funds are invested where they truly matter.”

Paul de Zylva, nature campaigner at Friends of the Earth, said: “There’s clearly no shortfall in money, but instead of using it to make essential repairs to our dilapidated sewage system, bosses and shareholders have simply lined their pockets.

“Now water companies have the gall to ask customers to stump up the cash through higher bills to pay for the work, all in the midst of a cost-of-living crisis.

“The water regulator and the Government are just as culpable for these failings as the companies themselves.”

Ofwat recently gained new powers to stop companies paying dividends if they would risk their financial stability or to step in if the payments are not being linked to performance.

This is set to kick in for the next financial year.

Earlier this year, the watchdog said it wanted to make companies more accountable for their actions after saying too many were giving out bonuses to executives that do not reflect the company’s performance for customers and the environment.

Last month, it announced that water companies who were under-performing against their targets will return around £114 million to customers by taking it off their bills for next year.

David Black, Ofwat’s chief executive, said: “We expect companies to maintain a level of financial headroom so they can manage periods of volatility and meet their obligations to customers and the environment.

“Where we have seen cause for concern, we have also seen some companies responding to the challenge and we expect them to continue to work on improving their financial resilience.”

Rebecca Pow, the water minister for the Government’s Department for Environment, Food and Rural Affairs (Defra), said it was encouraging to see more investment into the sector.

“However, we are clear that water companies must not profit from environmental damage,” she said.

“That is why we gave Ofwat new powers to impose tougher rules on water company dividends and we welcome the tighter restrictions on bonuses too.”

A Water UK spokesperson said: “Financial resilience is an important foundation for allowing companies to deliver what is set to be the largest investment programme in the sector’s history.

“Water companies have recently proposed £96 billion to ensure the future security of our water supply and to reduce overflow spills into rivers and seas as fast as possible.”