Water companies in England paid an average of £2 bn a year to their shareholders since they were privatised thirty years ago, reports The Guardian. Dividends paid amount to £57 bn from 1991 to 2019, almost half the amount spent towards maintenance and enhancement of water infrastructure over that time.
An analysis by David Hall and Karol Yearwood, of the Public Services International Research Unit at Greenwich University, shows England’s nine privatised companies have accumulated debts that amount to £48 bn over the past thirty years, costing £1.3 bn in interest in 2019. The analysis concludes companies borrowed in order to pay dividends, while capital expenditure ─ £123 bn ─ was covered with revenue from user charges.
England’s water companies have been criticised for failing to tackle leaks and offer their customers value for their money, while they pay out large sums to investors and executives. The CEOs with the highest salary packages were those at Severn Trent (£2.4 m) and at United Utilities (£2.3 m). As a way of comparison, Scottish Water, publicly owned, paid £366,000 to its highest paid executive. This same company invested about 35% more in water infrastructure per household than English water companies since the year 2002.
Moreover, the Environment Agency Chair, Emma Howard Body, in the latest performance assessment of the 9 water companies in England, dating from 2019, said the sector’s poor performance is unacceptable. The assessment showed that the performance of most companies had deteriorated, reversing the trend of gradual improvement since 2011, and highlighted an increase in serious pollution incidents.
According to Dr Dieter Helm, Economic Policy Professor at Oxford University, “The water companies behaved exactly how we believe a commercial company does behave” and should not be blamed for exploiting the system, pointing to a “complete regulatory failure to control the companies”.
Industry regulator Ofwat said: “Over the past few years, we have challenged how companies approach their decisions on dividends. We expect companies to have strong governance arrangements and to be fully transparent about how dividends reflect delivery of obligations and commitments to customers and the environment.” The Guardian has compiled the responses of companies on their practices and policies.