Powerful investors, including foreign wealth funds, are trying to derail plans to prevent sewage-dumping water firms from dishing out billions of pounds in dividends.
Regulator Ofwat wants firms which illegally dump tons of waste into our rivers and seas to stop funnelling huge sums to their shareholders. Instead, the watchdog believes they should use the cash to fix the UK’s antiquated water systems. In addition to despoiling waterways, firms have also been criticised for hosepipe bans after a heatwave left water supplies dwindling.
Analysis by The Mail on Sunday revealed water companies had already paid their backers nearly £3billion in dividends in the first part of this year alone.
Anger: Regulator Ofwat wants firms which illegally dump tons of waste into our rivers and seas to stop funnelling huge sums to their shareholders
That took the total since 2010 to £20billion, benefiting investors from countries including China, Abu Dhabi and Malaysia. Critics say the cash that was siphoned into investors’ coffers should have been invested in improving Britain’s ageing water infrastructure. Ofwat wants the power to halt the vast dividends when firms fail to meet official targets.
But its chief executive David Black told the MoS he is facing ‘strong opposition’ to the proposal.
He said companies argue the payments are important and claim that restricting them would make the water sector ‘less attractive’ to investors. Ofwat’s latest report has found poor performance is the norm.
Black said: ‘Too many companies are performing too poorly in too many areas.’ He took particular aim at Thames Water and Southern Water, saying: ‘They have got a combination of poor finances and really poor operational performance.’ Between them, the pair have almost £20billion worth of debt.
Over the past three years, bosses of the UK’s biggest water firms have been paid £50million, which includes significant bonuses. ‘We think the public is very frustrated by the perception that company executives are rewarded when performance is poor,’ said Black. He wants powers to compel shareholders to invest more in infrastructure.
Ofwat has been accused of turning a blind eye to company failures. But Black said: ‘It is very easy to criticise the regulators but ultimately it is the companies that are responsible for delivering outcomes. That’s where the focus ought to be.’
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