Water firms cut infrastructure investment by a fifth as sewage dumping soared

Water firms cut their investment in wastewater and sewage networks by up to a fifth in the 30 years since they were privatised, according to analysis of official data.

Investment by the 10 biggest companies dropped from £2.9bn a year in the 1990s to £2.4bn now, according to Ofwat data obtained by the Windrush Against Sewage Pollution campaign group and first reported in the Financial Times.

The data will fuel criticism from campaigners who say water companies are under investing in critical infrastructure, leading to sewage being pumped into rivers and coasts, while continuing to pay out significant bonuses.

Ashley Smith, founder of Windrush Against Sewage Pollution, told the Financial Times that the data showed the water industry was “heavily reliant on being able to get away with illegal sewage dumping to prop up under-investment in its infrastructure”.

400,000 releases of raw sewage into rivers and the sea last year

There were 400,000 releases of raw sewage into rivers and the sea last year, despite rules saying it should happen only in “exceptional” situations.

England’s main nine water firms were cautioned or punished hundreds of times between 2010 and 2021 over sewage dumps, but were fined less than one per cent of their profits over the past decade.

Since 2010, water companies have paid out more than £13bn in dividends to shareholders.

Last month, the Environment Agency said it would investigate all of England’s combined water and sewage companies after they admitted pumping likely illegal levels of waste into rivers.

Ofwat said it would also ask the same water companies to justify their executive bonuses and dividends, and provide evidence that they have taken into account their environmental performance and compliance with their obligations.

‘This is a critical decade if we are to tackle the many challenges we face’

A spokesman for Ofwat said: “We continue to see huge investment going into the sector. The amount financed by investors has more than quadrupled since privatisation, while returns to investors have fallen over time, so more of the customer bill is going towards performance.”

A spokesman for Water UK, the industry representative, said: “Private investment has brought more than £160 billion into an industry that was previously starved of cash. Meanwhile, bills have in real terms remained around the same level for over a decade and have fallen in both the last two years. 

“The water industry is one of the most heavily regulated in the country with tight controls on company activity, including on the amount companies are permitted to invest each year.

“There is a widespread recognition that this is a critical decade if we are to tackle the many challenges we face. This is why we are pushing the Government to encourage the economic regulator, Ofwat, to authorise schemes that meet Government’s environment targets, including ending all ecological harm from overflows, ensuring resilient water supplies, and meeting our ambitious 2030 net-zero target while ensuring value for money, and great service, for customers.”

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