Ofwat has denied agreeing a £150 million dividend payment by Thames Water, according to a report on the BBC Radio 4 Today news programme this morning.

The regulator was responding to an interview by presenter Nick Robinson at 7.15am with Tim Farron from the Liberal Democrats.

Tim Farron said that in the first days of the new Parliament, the Liberal Democrats would as an urgent measure, whether it is in Government or in Opposition, seek to bring in a Clean Water Bill, the key cornerstone of which would be the creation of a Clean Water Authority to replace Ofwat.

He described Ofwat as “unfit for purpose” saying it had “signed off huge dividends paid out to Thames Water shareholders only yesterday” - £150 million pounds’worth”. He went on to say that a “lame and complicit regulator needs to be replaced” by a Clean Water Authority, suggesting that the first thing the Authority would do is “strip the water companies of their licences and turn the water companies into not-for-profit companies.”

Referring to the earlier discussion on the programme, presenter Nick Robinson said:

“Tim Farron told us that the regulator Ofwat had approved Thames Water paying its shareholders a dividend of £150 million pounds. He used it to make an argument against Ofwat to create a new regulator.”

The presenter said Ofwat had been in touch saying that

“they have not signed off on that dividend. They tell us that they wait to see what the company discloses to them and have new powers to act against paying dividends that don’t reflect how companies perform for their customers or, indeed, for the environment.”

This morning’s discussion on the Today programme comes after a report on 28 June in The Guardian newspaper saying " hours before its shareholders U-turned on plans to pump emergency funding" that on 27 March the Board of Thames Water board had approved the payment of a £150 million dividend to intermediate parent company Kemble Water Eurobond - 

On 28 March, Thames Water issued a statement saying that Ofwat’s regulatory arrangements made its AMP8 business plan “uninvestible” as shareholders were refusing to provide more funding:

“Based on the feedback provided by Ofwat to Thames Water to date, the regulatory arrangements that would be expected to apply to Thames Water in AMP8 make the PR24 plan uninvestible.

“As a result, the conditions of the support letter from July 2023 have not been satisfied and the first £500 million of the new equity that had been anticipated will not be provided by Thames Water’s shareholders by 31 March 2024.”

Ofwat had already confirmed in December 2023 that it was looking into the payment by Thames Water of a £37.5 million dividend payment to shareholders set out in Thames Water Utilities Ltd Interim results for the six months period to 30 September 2023 published on 5^th December 2023.

The Guardian quotes Thames Water as saying that the £150 million dividend payment was made to “settle a pension top-up payment” and “surrender relief” on tax losses and that it was “too early to know what the outcome of Ofwat’s inquiries into the dividend payment would be.”