Comment: Ofwat announcement of new powers on water company dividends

"For many years, water companies have generated big profits and shareholders have benefitted from dividend payments. This happened while sewage is coursing through our waterways posing a threat to human health, and that of precious ecosystems. It must stop.

Slowly but surely, action is being taken to address the travesty of failing to protect our waterways. Some water companies have ceased paying dividends in recent years. Coupled with the Government's plan to drive water company infrastructure investment to reduce sewage discharges from storm overflows, Ofwat’s move to clamp down on future dividends flying out the door while our waterways are subjected to irreversible damage is a step in the right direction, though the journey back to good ecological status is a long one.

Dividends fund the investment needed to improve infrastructure, but should be recycled back into those companies which need to invest to stop damaging our environment. Water companies need to strike the right balance to raise funds required for improving infrastructure and performance to avoid sewage spills being routine. Only once they are delivering the service consumers expect should shareholders deserve dividends beyond the cost of servicing debt capital.”

Further information

• Inquiry: Water Quality in Rivers
• Environmental Audit Committee
• About Parliament: Select committees
• Visiting Parliament: Watch committees

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