UK sewage scandal: which water companies paid the most out to shareholders? University research explained

Water bills in England could be set to rise after companies committed to a £10 billion sewage clean up plan – but academic research claims shareholders have already pocketed more than enough to pay for system upgrades over the last decade. 

Despite being responsible for dumping raw sewage into England’s rivers and seas more than one million times over the last three years, shareholders at major water companies in England walked away with an average of £1.6 billion in dividend payouts each year between 2010 and 2021 – adding almost £70 onto every customers’ annual water bill –  according to research by the University of Greenwich. 

The research has revealed which suppliers have pumped the most profits into the pockets of their shareholders over the last decade, and what has been the impact on bills in each part of the country.

Water companies have denied the claims, arguing the university’s research is flawed and has been discredited. But the academic responsible told NationalWorld his research – which sought to shine a light on the payouts that firms try to keep hidden through complicated financial reporting – has been peer-reviewed and subject to intense scrutiny, and that the water industry has failed to provide evidence of any errors. 

Here we reveal which water companies pay the most money to shareholders, according to the research, which have the worst record for dumping sewage into rivers and the sea, and which waste the most water through failing to fix leaking pipes.

What is the water industry’s plan to tackle sewage dumping?

On Thursday (18 May) Water UK, the industry regulator, apologised on behalf of companies for “not acting quickly enough” to tackle sewage spills and announced a multi-billion pound investment plan to upgrade the country’s crumbling Victorian sewage system. But critics warn bill payers will have to foot the bill for the upgrades. Anglian Water has already confirmed its customers will pay a “small increase of a few percent a year”, according to LBC, adding around £90 onto bills each year until the end of the decade.

The water industry has been under widespread pressure from the public and the government to clean up its performance after recording more than 300,000 sewage dumping incidents last year, according to Environment Agency (EA) data. This is the equivalent of 825 sewage dumping incidents happening each day on average across England.

Earlier this week (17 May) new powers came into force for Ofwat, the economic regulator of water companies, which would allow it to take action against firms that pay out dividends to shareholders whilst  failing to meet performance standards. The new rules mean water companies will have to take account of environmental performance and customer delivery when deciding whether to distribute its profits to owners. England’s water and sewage industry has been privatised since 1989.

Ruth Kelly, chair of Water UK, apologised for the sewage spillages saying “more should have been done” to address the issue sooner but added the problem “cannot be fixed overnight”. However, Kate Norgrove, executive director of advocacy and campaigns at WWF, said the apology “only scratches the surface of the urgent action needed” and called for better monitoring of water quality and further regulation from UK governments.

How much do water companies pay to shareholders? 

When private companies – which water suppliers have been since 1989 – make a profit they can pay out a share of this to their shareholders, the owners of the business. 

The amount of money paid out to shareholders of nine major water companies in England alone between 2010 and 2021 has added on an annual average of £68.80 to household bills, according to the University of Greenwich research.

Over the 11-year period, total payouts came to £18.9 billion, an average of £1.6 billion per year, the research found. Separate analysis from the Financial Times shows eye-wateringly high payouts continued to be made in 2022 with shareholders reportedly pocketing £1.4 billion in dividends – despite issues with sewage pollution making headline news.

In total, £530 million worth of dividend payments were paid out to water company shareholders in 2021 – although this was provisional at the time the report was published, with researchers warning the final total “can be expected to be significantly higher”.  That year there were 373,000 sewage dumping incidents into rivers and seas, the equivalent of 1,021 a day, according to the EA. 

Per household, South West Water was found to have had the greatest amount added to water bills between 2010 and 2021 with £137.50 per year according to the research. This was  followed by Anglian with £131.70 and Northumbrian with £100.40. The chart below shows the average cost added onto customer bills, the University of Greenwich claims.

The academics found Anglian Water, which is responsible for 3.3 million households, paid out the greatest amount to shareholders with £5.2 billion. This was followed by United Utilities which has paid £3.1 billion to shareholders since 2010, research claimed.

Anglian Water declined to issue a formal response when NationalWorld approached it for comment, but did refute the accuracy of the figures. It claimed that the actual dividend payout was £880 million, and said the additional amount was made up of intercompany loans and debt repayments between Anglian Water Services and Anglian Water Group companies. Water UK has also previously criticised the findings. However, the author of the report said water companies and Water UK routinely fail to provide any evidence to counter their claims.  

The university's research involves trawling through official financial reports to find evidence of shareholder payouts that have been hidden in footnotes or otherwise concealed through inter-company loans and other financial manoeuvres. The methodology used has previously been peer reviewed. 

The latest paper incorporating 2021’s profit payouts updated previous versions of the same research, whose figures have been cited by Micheal Gove when he was Secretary of State at the Department for Environment, Food and Rural Affairs.

Sewage and leaks: the worst performing water and companies

Environment Agency (EA) data for 2022 gives an idea of the huge problem of water and sewerage companies spilling sewage. Last year raw sewage was dumped in rivers and seas 825 times a day on average by the 10 companies serving England. In total there were more than 300,000 incidents, totalling 1.8 million hours worth of sewage dumps. 

The figures measure spills at ‘storm overflows’, which allow suppliers to release excess water (and sewage with it) into rivers and seas during heavy rainfall or snowmelt. Only 91% of storm overflows are monitored so the true number of spills may be higher still.

Although data is only available for the last three years, it does show there has been some progress, with sewage spillages dropping by more than a quarter (25.3%) when compared to 2020’s figures, when more than 400,000 incidents were recorded. 

Based on last year’s figures, United Utilities was found to have had the greatest number of sewage dumping incidents with almost 70,000, the equivalent of 190 a day, while Yorkshire Water recorded the second greatest number with more than 54,000, or 149 per day. United Utilities was approached for comment. The chart below shows which water companies had the most sewage dumping incidents in 2022.

It is not just sewage spills that water companies are under pressure to fix –  leaking pipes also remain a major issue. Previous analysis by NationalWorld of Ofwat data found water companies lost over a trillion litres of water through leaking pipes in England and Wales in 2020/21 – the equivalent of almost half a million Olympic sized swimming pools. Thames Water was found to have lost the greatest volume of water to leaks with almost 232 billion litres worth of water – enough to fill nearly 93,000 Olympic sized swimming pools.

Thames Water recognised the figures were unacceptable. The company said it prioritises the biggest leaks first and those affecting service to customers.

Speaking to NationalWorld last October, a spokesperson said: “It’s not going to be quick, but we’re making progress and we’ve met our target for the last three years to reduce leaks by 10%. Our aim is to reduce our leakage by 20% between 2020 and 2025.”