THATCHER PRIVATIZED UTILITY
Thames Water ordered to pay £18 million fine for breaking shareholder payout rules
Ofwat has told Thames Water to pay £18.2 million after finding it made £131 million in dividend payments that were “unjustified” due to its poor performance.
The regulator has also announced that Thames Water will be allowed to increase its bills by 35% by 2030.
The average annual bill will rise to £588 by 2030, Ofwat said, up from £436 this year, not taking into account inflation.
Thames Water, which has debts of £15.7 billion, had initially requested approval to increase its bills by 59% by the end of the decade, claiming that it would not survive otherwise.
Ofwat has stated that the average 36% increase in water bills across the sector will fund £104 billion in upgrades to supply infrastructure and efforts to reduce sewage spills.
On Thames Water’s “unjustified” dividends, in October 2023, the company paid £37.5 million in dividends to its parent company, Thames Water Utilities Holdings Limited.
In March 2024, it paid another £158.3 million in dividends. As part of the payment, Thames Water transferred £131.3 million in tax losses to its parent company.
Ofwat said it also wants Thames Water to “claw back the value” of the £131 million by adjusting price controls to ensure that customers don’t foot the bill for these dividend payments.
The regulator also noted that Thames Water’s credit rating is currently below investment grade: “it is now in cash lock up and no further dividend payments can be paid by the company without first obtaining approval from Ofwat”.
Ofwat’s Chief Executive David Black said: “Ofwat’s £18 million penalty and clawing back the value of £131 million in unjustified dividend payments is a clear warning to the whole sector: We will take action against companies who take money out of these businesses, where performance does not merit it.”
Commenting on the water bill increases, Matthew Topham, Lead Campaigner at We Own It, a group campaigning for public ownership of public services, said: “It’s utterly disgraceful that after 35 years of bonus scandals, sewage spills, and huge dividends, water firms are set to be rewarded by Ofwat with huge inflation-busting bill hikes. It’s little more than government-sanctioned daylight robbery.
“Why should Brits have to cut back on food and other essentials, as many fear these hikes will require, to pay a privatisation tax to wealthy overseas shareholders?
“The public desperately want a champion to step in and defend them. The government’s own papers suggest they could save enough through public ownership to keep bills steady while boosting investment — using an approach last deployed by Blair to protect rail passengers.”
On Tuesday, the High Court granted Thames Water approval to pursue the next phase in securing a £3bn emergency loan. Before the hearing, campaign groups including We Own It gathered outside the High Court to oppose the bailout plea and call for the company to be taken back into public ownership.
Photo of Chris Weston, CEO at Thames Water. Image Credit: Stewart Turkington / Thames Water
Olivia Barber is a reporter at Left Foot Forward
Yesterday
Left Foot Forward
The water company will still be able to hike its bills by 35% by 2030
The water company will still be able to hike its bills by 35% by 2030
Ofwat has told Thames Water to pay £18.2 million after finding it made £131 million in dividend payments that were “unjustified” due to its poor performance.
The regulator has also announced that Thames Water will be allowed to increase its bills by 35% by 2030.
The average annual bill will rise to £588 by 2030, Ofwat said, up from £436 this year, not taking into account inflation.
Thames Water, which has debts of £15.7 billion, had initially requested approval to increase its bills by 59% by the end of the decade, claiming that it would not survive otherwise.
Ofwat has stated that the average 36% increase in water bills across the sector will fund £104 billion in upgrades to supply infrastructure and efforts to reduce sewage spills.
On Thames Water’s “unjustified” dividends, in October 2023, the company paid £37.5 million in dividends to its parent company, Thames Water Utilities Holdings Limited.
In March 2024, it paid another £158.3 million in dividends. As part of the payment, Thames Water transferred £131.3 million in tax losses to its parent company.
Ofwat said it also wants Thames Water to “claw back the value” of the £131 million by adjusting price controls to ensure that customers don’t foot the bill for these dividend payments.
The regulator also noted that Thames Water’s credit rating is currently below investment grade: “it is now in cash lock up and no further dividend payments can be paid by the company without first obtaining approval from Ofwat”.
Ofwat’s Chief Executive David Black said: “Ofwat’s £18 million penalty and clawing back the value of £131 million in unjustified dividend payments is a clear warning to the whole sector: We will take action against companies who take money out of these businesses, where performance does not merit it.”
Commenting on the water bill increases, Matthew Topham, Lead Campaigner at We Own It, a group campaigning for public ownership of public services, said: “It’s utterly disgraceful that after 35 years of bonus scandals, sewage spills, and huge dividends, water firms are set to be rewarded by Ofwat with huge inflation-busting bill hikes. It’s little more than government-sanctioned daylight robbery.
“Why should Brits have to cut back on food and other essentials, as many fear these hikes will require, to pay a privatisation tax to wealthy overseas shareholders?
“The public desperately want a champion to step in and defend them. The government’s own papers suggest they could save enough through public ownership to keep bills steady while boosting investment — using an approach last deployed by Blair to protect rail passengers.”
On Tuesday, the High Court granted Thames Water approval to pursue the next phase in securing a £3bn emergency loan. Before the hearing, campaign groups including We Own It gathered outside the High Court to oppose the bailout plea and call for the company to be taken back into public ownership.
Photo of Chris Weston, CEO at Thames Water. Image Credit: Stewart Turkington / Thames Water
Olivia Barber is a reporter at Left Foot Forward
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