Table of Contents
- An average of 35 pence in the pound goes towards interest and payments to shareholders
- The worst offender among the ten water and sewer providers is Wessex Water
- The news comes after Ofwat’s decision to increase customers’ bills
More than a third of water bills are spent servicing debt and paying dividends rather than fixing leaks and ending the sewage scandal, figures seen by The Mail on Sunday show.
In what campaigners say amounts to “a £5bn privatization tax”, an average of 35p in every £1 paid by customers for their water goes towards interest payments and payments to shareholders, according to a research from the University of Greenwich.
The worst offender among the ten water and sewage providers is Wessex Water, which has almost 3 million customers across the south west of England.
Nearly half of their household bills are drowning in debt and dividend costs.
The news comes after customers were left reeling by industry regulator Ofwat’s decision to impose bill rises of up to 53 per cent on them over the next five years. This means the average household will see their bills rise by £86 next year, before the impact of inflation, which stands at 2.6 per cent.
Ofwat says the extra money will be used to fund investment and prevent wastewater from polluting waterways. But the latest analysis of water companies’ income suggests that a large chunk of it will be used to pay interest on their huge debts and dividends to investors, many of whom are abroad.
Water waste: More than a third of water bills are spent paying off debts and paying dividends instead of fixing leaks and ending the sewage scandal.
The water companies were privatized debt-free in 1989.
Since then, bills have almost doubled in real terms (see chart), while utilities – which are monopolies without competition – are now drowning in £60bn of debt, having drawn down £85bn in dividends. “This is daylight robbery,” said Cat Hobbs, director of campaign group We Own it.
‘Why should we waste this huge chunk of our hard-earned money on dividends and debt payments?’ Our bills should be paid to fix leaks and stop sewage.
“We have been scammed for 35 years, this has to stop.”
Analysis from the University of Greenwich shows that in 2023-2024 the ten water companies had revenues of almost £14 billion, but spent £3.7 billion in financial costs and another £1 billion in dividends.
Investment in the network – known as capital expenditure – is usually funded by the surplus on customer bills after covering other costs, such as salaries and business rates.
“That whole 35 percent can be considered unnecessary compared to public ownership,” said visiting professor David Hall, who led the research.
“Another way of putting it is that we are all paying a 35 per cent privatization tax, which adds up to £5bn.”

Customers of Thames Water, which is on the brink of collapse and could be renationalised, paid 41 per cent of their bills in debt costs and dividends. The utility was fined £18.2m last week for paying “unjustified” dividends which Ofwat said breached shareholder payout rules.
Thames is one of four companies that could appeal Ofwat’s invoice cap.
Another is Southern, where tens of thousands of customers went without water for days last week.
Ofwat has awarded it a 53 per cent rise in its bill over the next five years – the largest of any supplier – but Southern wants more.
According to Hall’s analysis, a third of Southern’s customer bills are still paying interest on its £6bn debt.
“It’s a scam,” said Matt Staniek, who campaigns to save Windermere in the Lake District from pollution, calling utility giants “parasitic monopolies”.
A spokesman for Water UK, which represents utilities, said £236 billion had been invested since privatization, double the annual levels seen before 1989.
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