Thames Water, Britain’s biggest water supplier, is facing scrutiny and criticism after it was revealed that the company’s board approved a £150m dividend payment just hours before shareholders backed out of providing £500m in emergency funding. The company did not mention the dividend payment when the funding fell through, sparking concerns about transparency and financial management.
Ofwat, the water industry regulator, has announced plans to investigate the circumstances surrounding the dividend payment. Thames Water had previously come under investigation for a separate dividend payment of £37.5m. The company claimed that the £150m payment was made to settle a pension top-up and tax losses, but critics argue that the money should have been used for essential operations like preventing spills and paying employee wages.
Calls for greater oversight and reform of the water industry have grown, with Liberal Democrat Treasury spokesperson, Sarah Olney, calling for Thames Water to be put into special administration and reformed as a public benefit company. The company’s actions have been described as “scandalous” at a time when environmental concerns and financial mismanagement are prevalent.
Campaigner Feargal Sharkey criticized the water industry for its lack of accountability and disrespect towards regulators and customers. Ofwat has been working to restrict the flow of funds from water companies to holding companies to protect the financial stability of regulated water companies. The regulator is set to release its draft response to water firms’ business plans in July, with Thames Water required to publish its annual results by mid-July. Thames Water has been called upon to address the concerns surrounding its financial decisions.
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