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The privatised water industry has shelled out over £13bn in dividends since 2010

Analysis by Labour reveals that the privatised water companies have continued to pay out billions to their shareholders whilst hiking up prices for customers, and short-changing taxpayers by receiving more in tax breaks than they have paid in tax.

Just since 2010 these privatised water companies have paid out over £13.5 billion in dividend payments, almost the entire amount that these firms made in pre-tax profits. Annual dividend payments by these same firms during this period have jumped up by around 11%, while at roughly the same time average household water bills have risen by around 8%.

In 2017 alone water companies issued over £1.6 billion in dividend payments, an increase of 24% on the previous year, which was also over twice the amount they made in pre-tax profits.

In addition, in 2017 these same water companies received £253 million more in tax credits than they contributed in taxes, whilst increasing the amount they passed on in dividend payments by £324,800.

Annual average household water bill price rises since 2010:

 

Year

Price

% change on previous year

2009/10

367

-

2010/11

372

1.3%

2011/12

377

1.4%

2012/13

380

0.8%

2013/14

385

1.3%

2014/15

393

2.1%

2015/16

384

-2.3%

2016/17

390

1.6%

2017/18

396

1.5%

2018/19

405

2.3%

(Source: WaterUK; OFWAT data, privately provided to HoC Library)

The six water companies that paid out more in dividends in 2017 than pre-tax profits:

  • Thames Water issued dividends worth £157 million in 2017, compared to £71 million in pre-tax profits.
  • Anglian Water issued dividends worth £320 million in 2017 compared to £160 million in pre-tax profits.
  • Yorkshire Water issued dividends worth £139 million in 2017, despite making a pre-tax loss of £362 million.
  • Northumbrian Water issued dividends worth £108 million in 2017, compared to £82 million in pre-tax profits.
  • Southern Water issued dividends worth £169 million despite making a loss of £260 million in pre-tax profits.
  • South West issued dividends worth £213 million in 2017, compared to £172 million in pre-tax profits.

Collectively since 2010 these companies received almost £500 million more in tax credits than they paid in tax.

Three companies have, in the seven years from 2010, paid more out in dividends than they made in pre-tax profits over that period.

John McDonnell MP, Labour’s Shadow Chancellor, said:

“The water industry is quick to waste customer’s money on funding reports by right-wing think tanks to attack Labour, while running from their shameful record.

“But these figures reveal that our water system is broken. It is a national scandal that since 2010 these companies have paid out billions to their shareholders, almost all their profits, whilst receiving more in tax credits than they paid in tax.

“These companies operate regional monopolies which have profited at the expense of consumers who have no choice in who supplies their water. Yet at the same time they hike up prices and load up on debt while shelling out billions in dividend payments to shareholders.

“Rather than the scandal of rip off prices and huge dividend payments, we will bring them back into public hands, so we see more investment and lower prices.

“The next Labour government will call an end to the privatisation of our public sector, and call time on the freeloading water companies that have a stranglehold over many working households. Instead, Labour will replace this dysfunctional system with a network of regional, publicly-owned water companies.”

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