The Financial Times has published two separate articles flagging up decades of under-investment by the water companies in their networks while paying £73 billion in dividends to shareholders.

From Waterbriefing

The articles draw on new research by the leading business publication which shows that six out of 10 companies increased their capital investment in the 1990s as part of their work to meet new European Union targets under EU water quality Directives.

However, according to the FT, the level of investment has not been sustained.

In an article dated 22^nd December entitled England’s water groups slashed investment in sewage network in recent decades, the newspaper says “eight of the 10 biggest water and wastewater companies are investing less in infrastructure now than they were in the1990s.”

A separate article published on 28^th December entitled Sewage spills highlight decades of under-investment at England’s water companies suggests that “investment fell as dividends flowed”. “Research by the Financial Times showed that total capital expenditure by the 10 biggest water and sewage monopolies had declined by 15 per cent since the 1990s — from £5.7bn to £4.8bn a year.”, the article states.

According to the FT, since privatisation in the 1990 by the ten companies have borrowed £53 billion, much of which “has been used not for new investment but to pay £72 billion in dividends.”

The FT has included the following comment by Professor Dieter Helm, leading utilities expert at Oxford University and previously chair of the Government’s independent advisory Natural Capital Committee which ran from 2012 to December 2020: “The purpose of private water companies has indeed been to profit-maximise.”

The article says Helm argues it was “implausible” that Ofwat could allow companies to “raise prices high enough to pay for the extent of the upgrades required for the (sewage) network during the next regulatory period” and that “wider reform of the regulatory system was needed.”

Both articles make reference to continuing public anger on the issues of thousands of storm overflows which allow water companies to discharge sewage into rivers and seas following heavy rain.

The story on 28th December says:

“While public anger towards water companies has been bubbling for years, it has erupted in the past few months, as unknown quantities of raw sewage and stormwater have repeatedly been poured into Britain’s rivers and seas, increasing pressure on the government and regulators to act.”