Over a quarter of the average water bill in England is being spent on debt and dividends as water companies come under fire underinvesting in the sewerage network.
Research by the think–tank Common Wealth has found that water companies’ operating profit margins are significantly higher than other FTSE 350 companies, including Shell and Sainsbury’s.
Ewan McGaughey, a professor of law at King’s College London, said this is because water companies have been allowed to “put their bills up to the maximum” and paid “a great deal of dividends”.
Water companies have come under fire for the amount of raw sewage pouring into rivers, lakes and seas. Critics say firms have prioritised making large profits for their investors at the expense of properly maintaining their infrastructure.
Thousands of environmental campaigners have participated marches (Photo: Mark Kerrison/In Pictures via Getty Images)Research for the trade union Unison recently found water companies have paid £4.8bn in dividends to shareholders since they were privatised in 1989.
A spokesperson for Water UK, which represents the industry, said companies have invested £236bn in their infrastructure over the same period.
However, the industry has also admitted it has not done enough to prevent sewage spills. Last year there were 450,398 sewage spills in England, lasting a total of 3.61 million hours.
In April the average water bill in England and Wales increased by £10 per month to pay for the works required to reduce the amount of sewage being spilled into rivers, lakes and seas. Further bill increases are expected over the next four years.
Common Wealth has carried out an analysis of what water bills are being spent on and found that 28 per cent is being spent on interest payments to banks or dividends to shareholders.
Water companies have accumulated huge amounts of debt since privatisation, in part to maintain payments to shareholders. The UK’s largest water company, Thames Water, has been at close risk of bankruptcy as it struggles to pay off its debts.
Chris Hayes, chief economist at Common Wealth, argues this is the cost of privatisation and said water companies have “pivoted from physical engineering to financial engineering”.
The analysis also looked at the operating profit margin of water companies, which is the amount of money left over after a company covers its day-to-day spending, including staff wages, maintenance and repairs.
It found the average profit margin of water companies between 2020 and 2024 was 18.1 percent, higher than the FTSE 350 average of 14.4 per cent.
The profit margins ranged from 5.1 per cent (Dwr Cymru) to 31.9 per cent (Wessex Water).
The majority of operating margins were larger than other major companies in other sectors, such as Shell (9.7 per cent) or Sainsbury’s (3.14 per cent).
A large operating profit could be a sign that a company is spending less money on maintenance and more on paying off debts or rewarding shareholders.
“The margins are very high because Ofwat hasn’t been regulating properly,” McGoughey said.
“They’re in a monopoly industry. So water companies put their bills up to the maximum allowed by the regulator. The regulator has been incredibly relaxed about allowing a great deal of dividends.”
Earlier this year the Government announced plans to abolish Ofwat and create a new body following fierce criticism of the water regulator.
The i Paper has been calling for major reform of the industry as part of its Save Britain’s Rivers campaign, a campaign that has recently been shortlisted for the National Ecotricity Impact Award for Environmental Journalism.
square POLITICS Save Britain's RiversGovernment warning to water firms ‘breaking law’ with new sewage dumping tactic
Read More
Earlier this year The i Paper revealed Ofwat had fined water companies just £2 for environmental breaches despite widespread evidence of rule-breaking.
In response to public outrage over the sewage scandal water companies have unveiled plans to invest a record £104bn in their infrastructure over the next five years.
This will be funded by increases to customer bills, with bills expected to increase by over a third before inflation by 2030.
The Government has ruled out nationalising water companies, arguing that such a move will cost £100bn as taxpayers would need to compensate existing shareholders and investors.
However, some experts, including McGaughey, argue that the law allows ministers to temporarily nationalise water companies without compensating shareholders, meaning the move could cost close to zero.
Hence then, the article about where your water bill actually goes as water companies pay billions in dividends was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Where your water bill actually goes – as water companies pay billions in dividends )
Also on site :
- commercetools Kicks Off NRF 2026 - including Updates on Stripe ACS, AI Hub, and Helping Enterprises Stay Discoverable and Shoppable in Agentic Commerce
- inDrive turns to ads and groceries to diversify revenue
- Iran protests live: US rhetoric rises as Tehran announces 3-day mourning