Listed UK water companies are paying more in dividends than their privately owned peers for the first time since privatisation, according to analysis by the Financial Times. United Utilities, Severn Trent Water and Pennon Group, which are all publicly traded in London, have paid £3.6bn in dividends to shareholders since 2020, which is 61 per cent of the total for the UK’s water sector during the period. This is the first time the quoted segment has paid out the majority of dividends since Margaret Thatcher’s Conservative government privatised the water industry more than 30 years ago.
By comparison, listed companies were responsible for just a third of the sector’s total dividends for 2015-19, the FT found, with the remaining 67 per cent paid out by privately owned water companies.
The findings come as Ofwat, the sector regulator, is endorsing public ownership of water companies as a way of improving performance and aiding transparency. David Black, Ofwat chief executive, told MPs in November that he wanted to “encourage companies to list on the stock market”, and that there was a case for recovering the cost of listing companies from consumers.
However, dividend payments by both public and private water companies are contentious because the utilities have drawn public and political ire for a series of outages and sewage being pumped into rivers and coastal waters.
David Hall, visiting professor at the University of Greenwich, said:
“All of the water companies’ income comes from customer bills and by spending so much on dividends they are clearly reducing the cash available for infrastructure improvements — the result of which we can see in water outages, leakage and sewage pollution”.
