United Utilities is preparing to issue a substantial dividend to its shareholders, a move that has drawn sharp criticism from UK politicians, including the new Prime Minister. The company, which supplies water to seven million households in north-west England, is on a collision course with political leaders who have condemned the payout as an example of "profiteering" by privatized utility firms.
The former Manchester mayor and current MP for Makerfield, Andy Burnham, had urged United Utilities to cancel its planned £288 million dividend payment. Instead, he proposed the funds be used to reduce customer bills. This call comes amid broader concerns about the performance of privatized water companies since their privatization in 1989. Critics point to industrial-scale sewage dumping in waterways, substantial debts, and generous payouts to shareholders and executives.
Burnham stated that there is "simply no justification for profiteering on this scale when people are struggling with the cost-of-living crisis." He argued that such actions "confirm why people feel the system is rigged against them" and bolster the case for bringing essential public services back under public control.
The proposed dividend follows a period of increased profitability for United Utilities, which reported a 44 percent surge in underlying profits to £738 million last year. During the same period, household bills rose by an average of £86 annually.
The controversy coincides with the precarious financial situation of Thames Water, another major UK water company drowning in nearly £20 billion of debt. Thames Water is reportedly at risk of running out of cash by the end of the year unless a rescue deal is secured or it enters special administration. Creditors, including US hedge funds Elliott Capital and Silver Point, have recently sweetened their recapitalization plan in an effort to prevent the company from falling back into public ownership. Shareholders in Thames Water have already written down their stakes to zero, while creditors are expected to seek maximum repayment of their debts, potentially through legal action.
Public sentiment, as indicated by a recent YouGov poll showing over 80 percent support for state ownership of water utilities, appears to align with calls for increased public control. The government has faced pressure to outline funding strategies for a potential return to state control of water services.