Some of Britain’s largest water companies have given away hundreds of millions of pounds to shareholders in recent years, despite promises to stop paying dividends.
Southern Water, Thames Water and Yorkshire Water all promised to stop paying dividends to shareholders, after watchdog Ofwat told them to invest in more infrastructure and cut bills.
Read more: Ofwat orders water companies to cut bills
However, the Sunday Times reported today that the trio had continued to give out hundreds of millions of pounds in dividends in order to service debt obligations.
Thames has paid out £115m over the past two years, while Southern handed out £152.1m in the same time period.
Yorkshire paid out £168.4m, with £107m of it to service inter-company debts.
The other two companies similarly have inter company debt between the parent company and the service provider.
Southern Water said: “We will only pay dividends to external shareholders if we meet stringent criteria on delivering value to customers, protecting the environment and financial management.”
Yorkshire Water said: “Our shareholders have received no cash dividends for the past three years and none is forecast for the next five years.
“Inter-company payments shown in the accounts are purely accounting charges to cover inter-group debt and office costs.”
Thames Water declined the opportunity to comment.
It comes after an Ofwat ruling, which decreased the maximum permitted return on capital by private water companies from 3.19 per cent to 2.96 per cent.
The watchdog also imposed several other demands in December for companies to pay their debts faster, become more efficient and treat customers better over the next five years.
It’s expected that the companies will launch complaints to the Competition and Markets Authority in response.