MP calls on South West Water to scrap shareholder dividends following Brixham parasite outbreak

  • Watch Anthony Mangnall MP call for SWW's CEO to go if dividends are paid out

South West Water has increased how much shareholders have received this year, despite the company facing criticism for a parasite outbreak in Devon.

More than 16,000 households and businesses in Brixham were told to boil their drinking water from 15 May, after a parasite was found in the supply.

The dividends hike comes as the company has announced it will offer £215 in compensation for those who have been impacted by the outbreak.

Cryptosporidium is a waterborne disease that causes unpleasant symptoms such as vomiting and diarrhoea.

It has led to two people being taken to hospital while hundreds of others have fallen ill as a result of the outbreak.

Credit: PA Images

But on 21 May, it was announced that shareholders in the water company will receive 3.8% more in their dividend payout than last year.

South West Water (SWW) also revealed that their underlying operating profits increased by 8.6% to £166.3 million in the year to 31 March 2024.

It's despite the company being fined a record £2.2 million in April last year for illegal sewage spills across Devon and Cornwall spanning four years.

Anthony Mangnall MP: 'Suspend the dividend offer or the CEO should go'

The announcement of the dividend payment has angered the local MP whose constituents have been most affected by the issues in Brixham.

Conservative politician Anthony Mangnall MP has said Pennon, SWW's parent company, should suspend the dividend payments this year, or the company's CEO should resign.

“Obviously it’s hugely disappointing at a moment where the public’s confidence in South West Water is at an all-time low they’ve decided to go ahead and pay out dividends,” he said.

“I have called for Pennon to suspend their dividend offering, which they can do, which they are able to do.

“I have also suggested that if they fail to do so, the chief executive should take the rap for this.

“I’m not against dividend payments in general, I’m just saying that at this point in time, where the public have been so badly let down, that we really consider how these dividends are paid.”

Mr Mangnall added that if Pennon does not act, then the water regulator Ofwat should intervene.

“I think Ofwat is well within its powers under the measures that have been passed already which are linked to poor performance,” he said.

“I think we should be clear. They reduced their dividend payments from 44p per share to 30p per share on the basis that they were fined £2.2 million.

“I don’t think that’s an acceptable way of approaching it actually. I think they need to take stock of why they are paying that dividend and when.

“They should be paying out dividends when people have confidence in their ability to deliver for the consumer and deliver good value for money.”

'We are 100% focused'

Speaking before the calls for her to go, group chief executive Susan Davy said: “Whilst the results we are announcing today are based on our performance for the last financial year, we are 100% focused on returning a safe water supply to the people and businesses in and around Brixham.

“Normal service has returned for 85% of customers but we won’t stop until the local drinking water is returned to the quality all our customers expect and deserve.

“Our absolute priority continues to be the health and safety of our customers, and our operational teams are working tirelessly around the clock to deliver this.”

SWW said they have reduced the total dividend payout to investors to reflect the fine, decreasing these from 0.84p a share to 44.37p to show “we are listening, clearing the way for long-term shareholder value”.

But this is still higher than the payout to investors in 2023.

'A crisis of confidence in South West Water'

South West Water has faced heavy criticism in the last two weeks for it's handling of the situation in Brixham.

SWW's parent company, Pennon, has increased customer compensation to £215 for those affected, adding that normal service has now been restored for 85% of customers. But this followed criticism of their initial offering of £15, which was quickly raised to £115.

MPs from both Labour and the Conservatives have also warned the company will need to rebuild trust with customers.

"There is a crisis of confidence in South West Water," said Luke Pollard, the Labour MP for Plymouth Sutton and Devonport.

He added: "Their response has been frankly hopeless, they've had poor communications, poor initial compensation - in that every pound seems to have to be dragged out of them - and they have a record of failure on sewage."

Around 2,500 households in Brixham, Devon, have been told to continue to boil their tap water. Credit: PA

Simon Jupp, the Conservative MP for East Devon, called for compensation for those who had fallen ill, as well as for hospitality and tourism businesses across the county who "have seen their takings slashed and bookings cancelled."

Mr Jupp added that SWW's response "left a lot to be desired".

Pennon’s figures showed on a statutory basis, pre-tax losses widened to £9.1 million for the year to March 31, against losses of £8.5 million the previous year, as it faced a jump in debt costs.

The group – which also owns Bristol Water and recently bought SES Water – saw its debt pile swell to £3.5 billion as of the end of March, up from £3 billion a year earlier.