Water company shareholders make £6.5 billion in five years

Water company shareholders made £6.5 billion in the five year period between 2013 and 2017, an investigation by Corporate Watch has shown.

Taken from an analysis of company accounts, the figures reveal the huge profits the owners of England’s nine water and sewerage companies are making. Meanwhile, bills remain unaffordable to many, millions of litres of water are leaked every day and the companies don’t do enough to stop sewage spills and other pollution.

Done in collaboration with the GMB union, the research follows last month’s revelations about the huge salaries and bonuses enjoyed by the companies’ CEOs.

The shareholders are a diverse range of investment funds, banks, pension funds and companies.

England’s water & sewerage companiesDividends paid Interest paid out on shareholder loansInterest accrued on shareholder loansTotal (£ millions)
Severn Trent Water1091.61,092
United Utilities1232.61,233
Anglian Water372.055.8428
Northumbrian Water537.1461.9999
South West Water788.8789
Southern Water190.4432622
Thames Water205.5186.5392
Wessex Water533.2533
Yorkshire Water18.8393.4412
Total 4970648.4 881.2 6,500

Click here to download the full figures, broken down by individual companies.

A note on shareholder loans and tax havens

The vast majority (close to £5 billion) of the payouts were made as dividends. The rest came as interest on so-called ‘shareholder loans’ – money certain companies have borrowed from their owners. Some companies pay the interest annually, while others rack up (or ‘accrue’) a pot to be paid out in future years.

When we first exposed it in 2013, this financing scheme, run through the Channel Islands, was giving these shareholders a nice return on their investment, while cutting the water companies’ UK tax bills (as interest is taken off the companies’ profit before tax). We have not analysed the impact on the companies’ tax bills as part of this research but for a full explanation of how this worked the last time we did, click here.

There’s been much talk since of the complex offshore structures used by some water companies – even Michael Gove piled in earlier this year.

But the shareholders and bosses of all the companies are enriching themselves at people’s expense, not just those avoiding tax. These new figures show the biggest payouts came from Severn Trent and United Utilities, which ‘publicly’ list their shares on the stock market, have simple corporate structures and no offshore subsidiaries. Tax haven shenanigans may reflect the ruthless financial approaches some ‘private equity’ investors bring but the main problem with the system is plain old profiteering.