United Utilities is to pay out nearly £181m in dividends just two days before the water company implements a hosepipe ban across the north-west of England.

The payout on 3 August will be the company’s single biggest in a decade and will mean shareholders have received close to £271m for the last financial year, 2.2% more than for the previous 12 months.

The FTSE 100-listed company is under fire as it prepares to limit water usage for 7m homes and seeks a permit to draw water from Ullswater and Windermere in the Lake District. The company cited “exceptional shortage of rainfall” and a surge in usage during the prolonged hot weather.

United is not alone in making big payouts to shareholders. Severn Trent, which faced criticism from farmers over shortages in Derbyshire last month, paid £122.2m in dividends on 20 July, taking its total for the year to £204.5m, up from £191.6m a year before despite a near 8% fall in pre-tax profits.

Pennon Group, the owner of South West Water, is to pay out £111.8m on 4 September, bringing its total dividends for the year to £162m, up from £149m last year. The company said it had not imposed water restrictions since 1996 and had reduced leakages by 40% over that time.

A spokesperson for United Utilities said: “We deliver a range of benefits and long-term value for customers, the environment, and shareholders ... Between 2015 and 2020 , we are investing over £3.5bn in essential infrastructure.”

Cat Hobbs, the director of the campaign group We Own It, which campaigns for public ownership of utilities including water companies, said: “This shows exactly what’s wrong with the water industry. Dividends to shareholders have been prioritised over investment in infrastructure we all need.”

Jim McMahon, the Labour MP for Oldham West and Royton, said: “This isn’t just about water leaking out but money which should be used to maintain the water network leaking out as quickly. The first and last responsibility of the water company should be about maintaining the supply, and it has failed.”

Thames Water suspended dividend payments to investors last year, saying the money would instead be spent on long-term investment plans such as getting its leakage target back on track and on its water and waste treatment plants.



The change in policy came after 10 years in which about £1.2bn was taken out of the company in the form of dividends. Its owner over that period, the Australian investment bank Macquarie, sold its final stake in 2017, landing Thames with more than £10bn of debt financing.

Last month, the water industry regulator demanded Severn Trent, Southern Water, South East Water and Thames Water submit detailed plans by 28 September that outlined how they would improve service for customers during difficult weather conditions.

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Ofwat set the deadline after a review found tens of thousands of customers had water supplies cut for days during the “beast from the east” weather events earlier this year. The report criticised poor advance planning, inadequate communication with customers and a lack of basic support during the cold snap. The regulator said it would take further action against any water company that provided an unsatisfactory response.

Responding to the imminent payout to United Utilities shareholders, a spokesperson for Ofwat said: “The decisions some water companies have made on dividends, financial structures and top executive pay have damaged customer trust. We have looked in detail at the incentives we give water companies. Through measures we announced earlier this month, we are strengthening the incentive on companies to improve their performance for customers and cutting the rewards that come from financial engineering.”



It said it had asked the companies to cut down on leakage by 170bn litres a year, enough to meet the yearly needs of everyone in the cities of Birmingham, Leeds, Manchester, Liverpool and Cardiff combined. According to the Consumer Council for Water, United lost just over 133 litres per property a day in 2017, a fall from 138 litres the previous year but still making the company the second biggest offender in the UK behind Thames Water.