Anger has flared over moves by water giant Severn Trent to increase bills by 47 per cent while at the same time promising higher dividends for shareholders.
In a move branded ‘daylight robbery’ by campaigners, the firm – which is the second biggest water company in the country – yesterday accepted a five-year funding deal which paves the way for the massive price rise.
It will be allowed by regulator Ofwat to put up bills by 47 per cent between now and spring 2030 to £538 from the current average of £398.
The increase is the second steepest rise in annual bills after the 53 per cent increase handed to Southern Water, where the bills will rise to £642.
Bosses say they expect to raise dividends to 126.02p to shareholders for the 2025/26 financial year, up from 121.71p.
The company said it had made that decision because of ‘the many retail shareholders who rely on dividend income in return for their investment’.
The increase comes amid significant scrutiny over the level of payouts in the sector, against a backdrop of rising customer bills and concerns over leaks.
Scandal-hit Severn Trent was forced to pay a fine of more than £2million for allowing 260million litres of sewage to leak into the river Severn in 2024.
Anger has flared over moves by water giant Severn Trent to increase bills by 47 per cent while at the same time promising higher dividends for shareholders
Under scutiny: The pay package of chief executive Liv Garfield, who was paid more than £3.2million, has also been the subject of criticism
The pay package of chief executive Liv Garfield, who was paid more than £3.2million, has also been the subject of criticism.
Dividend payments elsewhere have also attracted regulatory action.
Last month, regulator Ofwat fined troubled Thames Water £18.2million for paying £158.3million in dividends to shareholders which it said were not justified.
Severn Trent said it has proposed the increased dividend after considering the final determination which was revealed by the regulator last month.
The company said the bill rise will help its efforts to halve spills by 2030, reduce pollution by 30 per cent and reduce leakage by a further 16 per cent.
On Friday, Severn Trent also reported that it expects a £100million benefit from outcome delivery incentives (ODIs) for 2024, a regulatory framework which rewards firms which meet performance targets but compensates customers for firms who miss these targets.
Matthew Topham, Lead Campaigner at We Own It which calls for reform of privatised utilities said: ‘It’s utterly outrageous that after 35 years of bonus scandals and sewage spills, water firms are now being rewarded by Ofwat with huge inflation-busting bill hikes.
‘The management of Severn Trent, in their infinite wisdom, has taken this as a signal to increase dividends to shareholders. It’s little more than government-sanctioned daylight robbery.’
The company said the bill rise will help its efforts to halve spills by 2030, reduce pollution by 30 per cent and reduce leakage by a further 16 per cent
