A report in yesterday’s Sunday Times newspaper says that six of the UK’s largest water companies have taken £11 billion in dividends during the past decade and paid only £1.7 billion in corporation tax. Average customers’ bills have increased by 55% over the period.

The highly critical article, headed up “ How water barons siphoned off profits”, comments:

“The cash gushed back to investors in the utilities as consumer bills soared and the taxman saw little.”

According to the newspaper’s analysis of their accounts, which dates back to 2004, last year Anglian Water, Severn Trent Water, Southern Water, Thames Water, United Utilities and Yorkshire Water between them generated £1.75 billion in profits.  In comparison the Treasury received only £45 million in tax from the six, with four of the firms paying no tax at all.

The newspaper attributes what it describes as “the huge discount” last year to significant levels of debt – including £9.6 billion at Thames Water and £7 billion at Anglian Water, the company formerly led by Jonson Cox, now Chairman of water industry regulator Ofwat - meaning interest bills "overwhelmed profits". The article says this pushed the two companies into the red, "allowing them to avoid payments to the Treasury entirely." 

The Sunday Times also says that Mr. Cox is “expected to unveil a new ruling to slash the rates” that the water companies can charge customers between 2015-2020, referring to his first speech last year which criticised structures designed “purely for shareholder gain without advantage to customers.”

It concludes by commenting that when the Ofwat chairman left Anglian Water in 2010, he left it “loaded with debt tied up in offshore vehicles...... just the type of structure he has vowed to rein in.”