UK water companies: Ofwat lists the worst-performing firms as £1.4bn paid to shareholders - which ones are named?

The four worst performing water companies have been named by the regulator Ofwat as needing to turnaround their financial performance - while some £1.4 billion was paid out to shareholders in the latest year. Feargal Sharkey, former Undertones singer and sewage campaigner, said Ofwat has “admitted its own shocking failures”.

The regulator said Thames Water, Southern Water, SES Water and South East Water are raising concerns over their finances. Affinity Water, Northumbrian Water, Portsmouth Water and Yorkshire Water are also categorised as “elevated concern”, where they will be subject to greater regulatory scrutiny.

The water companies are in financial difficulties despite them paying around £1.4 billion in dividends to shareholders over the last year. United Utilities dished out £452 million to shareholders and Severn Trent paid out £426 million during the year.

The watchdog said Thames Water in particular has “significant issues to address”. It comes after the firm announced earlier in the year that it had a £14 billion debt pile but it managed to secure an emergency funding package from shareholders which staved off the immediate threat of nationalisation.

South East Water was moved into its “action required” category, with the firm being hit by inflation and a weaker operational performance. Analysis by the University of Greenwich showed that the water company spent £232 million on distributing dividends and paying interest on its debts in the two years to March 2022 instead of investing in infrastructure.

Meanwhile, Ofwat revealed that the water sector has attracted £4.6 billion in extra cash from shareholders since 2020 to help boost firms’ financial resilience. Southern Water was also red-flagged by the watchdog. It was named as the most complained-about company in a report by the Consumer Council for Water revealed earlier this month. Complaints received by the supplier were almost three times higher than the overall average for water and sewerage companies.

David Black, Ofwat’s chief executive, said: “We expect companies to maintain a level of financial headroom so they can manage periods of volatility and meet their obligations to customers and the environment. We’ve been calling for the water sector to be strengthened by further investment – that is why we welcome the £4.6 billion of additional equity. Where we have seen cause for concern, we have also seen some companies responding to the challenge and we expect them to continue to work on improving their financial resilience.”