MPs Urge Ofwat To Act As Water Bills Rise While Shareholder Dividends Continue
A pipe discharging into the River Thames in Henley, Oxfordshire
(Alamy Stock Photo)
3 min read
A group of Labour MPs led by senior back bencher Barry Gardiner have written to Ofwat chief executive David Black to express concern over the impact rising water bills will have on people struggling with the cost of living.
On Thursday Ofwat announced that, under its proposals, the average water bill would rise by 21 per cent over the next five years – a lower increase than the amounts requested by water companies, which have submitted their business plans to the regulator.
The companies say they need to raise extra money to pay for work to stop sewage spills.
The issue of major water firms discharging sewage into the country's lakes and rivers has grown in salience in recent years, and was a talking point during the election campaign.
While the increase is smaller than what companies wanted, the 40 Labour MPs who have signed the letter are nonetheless urging the regulator to use its powers under the Environment Act to do more to prevent poorly performing companies from making dividend payments to shareholders.
Signatories include Labour MPs elected for the first time at last week's General Election, Matt Turmaine, John Whitby, Steve Yemm, Lizzie Collinge, David Burton-Sampson, Cat Eccles, Julia Buckley and Lorraine Beavers.
In the letter seen by PoliticsHome, they have highlighted the work of select committees over the past year that has exposed how complicated company structures enable shareholders “to extract billions of pounds in dividends” while the firms make “multiple illegal discharges of sewage into our waterways”.
As an Environment, Food and Rural Affairs Committee member in the last parliament, Gardiner repeatedly pressed Thames Water bosses over whether it was appropriate to pay dividends while failing to meet key environmental and performance targets.
The new letter has highlighted that, according to River Action, E. coli bacteria was found in the Thames at a level that was “beyond the measurement scale of public health and safety” in late June. Thames Water called the study “alarmist”.
Thames Water, the country’s biggest water monopoly company, confirmed this week that it had paid two fresh dividends worth £158.3m in March. Ofwat was already considering action against the firm for a £37.5m dividend payment in October 2023.
The company’s chief executive, Chris Weston, also defended his £195,000 bonus package this week, saying executives need to be rewarded “to attract the right talent”.
Ofwat has confirmed today that Thames Water has been placed into special measures, meaning it will come under increased scrutiny and be forced to "fully re-evaluate" its current strategy to turn around the company.
The regulator has said it will have "full access" to Thames Water's financial information and the firm will need to release a "financial resilience plan".
Ofwat’s price review was originally due to be published in June, but publication was delayed until today as a result of the general election.
The new Labour government has said it has no plans to nationalise water companies, although MPs on the party’s left have urged the leadership to back the idea.
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