The UK’s largest water companies have been accused of withdrawing tens of billions of pounds in investment and failing to invest, with plans to increase household bills in order to fund future spending. According to research by the University of Greenwich, since the privatisation of water and sewage firms in England and Wales over thirty years ago, investors have withdrawn £85.2bn from 10 such firms. Critics claim that underinvestment in infrastructure is responsible for sewage spills and water leaks.
The companies, including Thames Water, United Utilities and Severn Trent, want to raise customers’ bills by 33% over the next five years in order to improve services for households. David Hall, visiting professor at the Public Services International Research Unit at the University of Greenwich has argued that water companies are “treating their customers like a cash cow”. The research found that between privatisation in 1989 and 2023, investment by shareholders in the leading firms dropped by £5.5bn after inflation. Meanwhile, “retained earnings” – profits that can be invested in a business once dividends have been paid – saw a reduction of £6.7bn in real terms. By contrast, firms paid £72.8bn to shareholders in dividends.
Water and sewage firms want to spend around £100bn over the next five years. Meanwhile, there were 464,056 sewage spills in 2023, a 54% increase on the previous year. The Environment Agency defines sewage as anything that enters a household drain, including run-off from roads, as well as domestic cleaning, personal washing and toilet waste.
The regulator for the industry, Ofwat, strongly refuted the findings of the research, stating that investment in the sector had been over £200bn. Dividend payments were £52bn rather than £72.8bn once adjusted for inflation. Ofwat will furnish draft plans for spending and price increases affecting bills between 2025 and 2030 on 12 June. Water companies may appeal recommendations
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