Monday, December 23, 2024

THIRD of your water bill goes up the spout!

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  • Average of 35p in pound goes on interest and shareholder payouts 
  • Worst offender among the ten water and sewerage suppliers is Wessex Water 
  • News comes after Ofwat’s decision to hit customers with bill increases

More than a third of water bills is spent servicing debt and paying dividends rather than fixing leaks and ending the sewage scandal, figures seen by The Mail on Sunday show.

In what campaigners say amounts to ‘a ÂŁ5 billion privatisation tax’, an average of 35p in every pound paid by customers for their water goes on interest payments and shareholder payouts, according to research by the University of Greenwich.

The worst offender among the ten water and sewerage suppliers is Wessex Water, which has nearly 3 million customers across South-West England.

Almost half of their household bills is swallowed up in debt and dividend costs.

The news comes after customers were left reeling by industry regulator Ofwat’s decision to hit them with bill increases of up to 53 per cent over the next five years. It means the average household will see their bills rise by ÂŁ86 next year – before the impact of inflation, which stands at 2.6 per cent.

Ofwat claims the extra cash will be used to fund investment and stop raw sewage polluting waterways. But the latest analysis of water company revenues suggests a large chunk of this will be used to pay interest on their mountainous debts and dividends to investors, many of whom are overseas.

Water waste: More than a third of water bills is spent servicing debt and paying dividends rather than fixing leaks and ending the sewage scandal

Water companies were privatised debt-free in 1989.

Since then, bills have almost doubled in real terms (see graphic) while the utilities –which are monopolies with no competition – are now drowning in ÂŁ60 billion of debts, having taken out ÂŁ85 billion in dividends. ‘This is daylight robbery,’ said Cat Hobbs, director of campaign group We Own it.

‘Why should we waste this huge chunk of our hard-earned cash on dividends and debt payments? Our bills should be paying to fix leaks and stop sewage.

‘We’ve been ripped off for 35 years now, it has to stop.’

The University of Greenwich analysis shows that in 2023-4 the ten water companies had revenues of almost £14 billion but shelled out £3.7 billion on finance costs and another £1 billion on dividends.

Investment in the network – known as capital expenditure – is generally funded out of the surplus from customer bills after other costs such as wages and business rates are covered.

‘All of that 35 per cent can be seen as unnecessary, compared with public ownership,’ said visiting professor David Hall, who conducted the research.

‘Another way of putting that is that we are all paying a 35 per cent privatisation tax, which adds up to ÂŁ5 billion.’

Customers of Thames Water, which is teetering on the brink of collapse and could be re-nationalised, paid 41 per cent of their bills on debt costs and dividends. The utility was fined ÂŁ18.2 million last week for paying ‘unjustified’ dividends that Ofwat said broke shareholder payment rules.

Thames is one of four companies that could appeal Ofwat’s cap on bills.

Another is Southern, where tens of thousands of customers were left without water for days last week.

Ofwat awarded it a 53 per cent bill increase over the next five years – the largest of any supplier – but Southern wants more.

A third of Southern’s customer bills goes on paying interest on its ÂŁ6 billion debt pile, according to Hall’s analysis.

‘It’s a scam,’ said Matt Staniek, who campaigns to save Windermere in the Lake District from pollution, and called the utility giants ‘parasitic monopolies’.

A spokesman for Water UK, which represents the utilities, said £236 billion had been invested since privatisation – double the annual levels seen before 1989.

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