MINISTER: I’LL FINE WATER INDUSTRY SHARKS

Put customers first and fix leaks, firms warned as we reveal foreign owners’ greed

THE Water Minister last night ordered supply firms to put their customers ahead of shareholders as he threatened companies with fines if they don’t fix leaks.

Steve Double told The Mail on Sunday that he expected better from the suppliers as he warned them they could face further action if progress isn’t made soon.

His comments came as an investigation by this newspaper revealed that water companies have paid £3billion in dividends this year to shareholders at a time when the money could have been used to repair leaks, build new infrastructure, stop sewage pollution and help peg household bills.

We also reveal how water firms have debts of more than £60 billion, with

interest bills alone ballooning by nearly £1 billion last year.

Water firms are already facing a huge backlash after imposing hosepipe bans and water restrictions on millions across the country – while failing to get a grip on leaks that waste billions of gallons of water a day.

As Britain sweltered in temperatures of up to 34C yesterday, and a Met Office amber heat alert covering most of England and Wales, continued into today, it was revealed that:

• Thousands of households in Surrey were left without water on one of the hottest days of the year because of a failure at a local water treatment centre;

• Labour called for a Cobra meeting to be held after drought was declared in swathes of the South, South West, and Central and Eastern England.

More than 30million people in England and Wales face or are currently already under restrictions dictating how much water they can use.

Three companies – Welsh Water, Southern Water and South East Water – have all imposed hosepipe bans, while Yorkshire Water has announced a ban will start on August 26.

Thames Water has also said it is planning one within weeks.

Despite this, water firms are still wasting up to two billion gallons of water a day because they have failed to fix leaks – 20 per cent of the country’s entire water use.

Last night, Mr Double insisted water firms needed to do more to ensure they can withstand future droughts.

‘Water companies must continue to invest more, including to prevent leakage and work faster to fix leaks,’ he told The Mail on Sunday.

‘We are losing somewhere between 15 to 20 per cent annually through leakage, which is not acceptable.

‘Progress has been made but my message to water companies is they need to prioritise customers, not shareholder returns. If we don’t see the progress we expect, we won’t hesitate to take further action.

‘The public and Government rightly expect more from our water companies.’

His comments came as a Mail on Sunday investigation revealed the biggest water firms have dished out nearly £3 billion in dividends this year – including colossal sums to foreign investors – which critics say have reduced their ability to invest properly in our creaking water system.

This year’s dividends form part of a £20billion flow of cash since 2010 that has gone into the coffers of the owners of UK water firms, including investment funds in China, Abu Dhabi and Malaysia. The UK’s largest supplier, foreign-owned Thames Water, has not paid dividends to external shareholders since 2017 but previously handed lavish sums to its owners, including China Investment Corporation, an arm of the Beijing government which has an 8.7 per cent stake.

In 2016, the China Investment Corporation and Abu Dhabi Investment Authority got a combined £100million.

The Chinese ownership of a part of Thames is deeply controversial considering that the Chinese firm Huawei has been banned from next-generation 5G wireless networks in Britain and China has been edged out of any involvement in plans to build a new nuclear power station in Suffolk.

There were also concerns raised last night after it was revealed half of the water firms’ £60 billion debt pile has interest rates that rise along with inflation.

As a consequence, firms paid out an extra £900million in interest last year, with this figure set to rise again as inflation continues to climb.

With prices increasing at more than nine per cent – and the Bank of England predicting inflation could peak at 13 per cent – analysts have warned that the firms face even bigger interest charges this year.

The water industry was privatised in 1989 by the Thatcher government with no debt. Several of the companies have since fallen into the hands of foreign owners who have adopted aggressive, private equity-style financial engineering, loading their balance sheets with borrowings in order to maximise returns.

Critics argue the system is broken and that towering debts may become a catastrophic problem as interest rates rise.

Firms also stand accused of years of under-investment in infrastructure, which campaigners believe is hampering their ability to cope with the current drought.

David Hall, visiting professor in international research at the University of Greenwich, said: ‘A real inflation risk is being carried entirely by consumers. ‘This country desperately needs investment in water resources to avoid drought, and investment to clean up the sewage pollution in our rivers, and reductions in water bills to help deal with the cost-of-living crisis.

‘But the decision is in the hands of private shareholders, who decide they would rather give themselves billions to spend on other things. And the regulators don’t stop them.’

The Mail on Sunday analysis found foreign-owned Thames Water owes the most, carrying net debts of £12.9billion.

Meanwhile, Southern Water, owned by Australian investment bank Macquarie, which has been nicknamed the Vampire Kangaroo for its rapacity, has debts of £6 billion, according to its annual report.

The company claims a fairer figure is £4billion, which takes into account complex financial instruments used to limit risk.

Others with huge borrowings include Anglian Water, whose biggest shareholders are Canadian, Australian and Middle Eastern investors.

Yorkshire Water, whose owners include Singaporean and Hong Kong investment funds, also has £5.6 billion of debt.

In some cases, foreign owners lend money to water companies here in the UK and charge them hefty interest and additional financing fees.

A trio of water firms are listed on the UK stock market: Severn Trent, United Utilities and Pennon, all of which have multi-billion-pound debts.

The remaining three are Scottish Water, Welsh Water and Northern Ireland, which are all publicly owned but still have billions of debt.

Regulator Ofwat said bills were not directly affected by increased borrowing costs.

A spokeswoman last night added: ‘Water bills are at similar levels to the mid 1990s in real terms.’

‘We lose 20% each year through leaks’