Water UK says study calling for water's return to public sector is "flawed"

Water UK has dismissed as “flawed” academic research findings that said England’s water consumers’ bills have been £2.3 bn a year higher than they would have been had the industry not been privatised.

The researchers’ report, published in May, included a proposal to return the water sector to public ownership as regional, local authority-owned entities and could have influenced Labour Party’s late inclusion of water nationalisation in its manifesto.

Researchers at the University of Greenwich found that the nine water companies in England had paid out £18.1bn in dividends over the 10 years to 2016, from post-tax profits of £18.8bn. Interest payments on debt ran at £500m a year to make up the £2.3bn extra cost assigned by the researchers to privatisation which "equates to about £75 per household per year. This is an expensive way to finance infrastructure.”

In their report the the researchers said: “The cost of maintaining and improving the infrastructure for the last 28 years has not been financed by investors – it has been met by borrowing. With most of the profit, allocated to dividends, the companies have been borrowing ever-increasing amounts in order to pay for the

actual physical investment. The companies which were debt-free at privatisation in 1989 have now

accumulated over £40billion in debt which now finances over three-quarters of the companies’ assets.

The researchers said dividend payments at Anglian Water Group, Severn Trent Water and Yorkshire Water Services were “economically sustainable” having in each case outstripped their pre-tax profits over the past ten years.

In a statement, chief executive of Water UK, Michael Roberts (pictured), said “The flawed report does not do justice to the achievements of the water industry since privatisation.

"Since 1990, the water industry has invested over £130 billion in better services. The quality of bathing and drinking water is up, and customer satisfaction with water and sewerage services is over 90%. Access to private capital and other sources of funding, repaid through dividends and interest payments, has been key to that record of success.

"Working closely with their customers and overseen by independent regulators, water companies are currently delivering a five-year programme which by 2020 will see a further £44 billion invested in improvements and a 5% real-terms average drop in prices."