South West Water increases dividend payouts amid Brixham parasite outbreak

Despite facing criticism for the recent parasite outbreak in Brixham, South West Water announced today (May 21) that it has increased dividend payouts for this year. 

Shareholders will receive 3.8% more in their payout this year after South West Water announced that their operating profits had increased by 8.6% to £166.3 million in the last financial year. 

This increase is also despite a record-breaking £2.2 million of fines being administered against South West Water by Ofwat for illegal sewage spills across Devon and Cornwall. 

The latest blow to the company came last week after dozens of Brixham residents began to fall ill from a water-borne parasite called cryptosporidium. 

Cryptosporidium is a tiny parasite and can lead to vomiting, stomach cramps and diarrhoea, lasting about two weeks.

The outbreak began last week after residents, predominantly in Hillhead and surrounding neighbourhoods, reported falling ill. While initially, South West Water maintained that there was nothing wrong with the water supply, the advice soon changed.

On Wednesday 15 May, South West Water stated that traces of cryptosporidium had been found, and issued a boil water notice to around 17,000 households and businesses in the Alston and Hillhead water supply areas. Bottled water collection points were also set up in car parks at Fresh Water Quarry, Broadsands and the Churston car boot sale field.

South West Water has now committed to giving millions in compensation and has hundreds of staff working to secure the water supply for the remaining 2,500 households still at risk of contaminated water. 

One big victim of the water crisis has been local businesses. Many of them were never actually affected by contaminated water but saw their trade drop dramatically in the wake of the outbreak. While SWW has offered compensation to residents of businesses of £115 and £215 for those in Hillhead, one business manager called this “one-size-fits-all offer” an “insult”. Read more about local businesses here. 

Conservative MP Anthony Mangnall, whose Totnes constituency includes Brixham, said he was “horrified” by the dividend payments. 

Mr Mangnall said: “I'm pretty horrified they've decided to announce a dividend payment, whilst in the midst of a crisis of confidence that the people of the southwest have in South West Water and in the midst of this catastrophe that's gone on in Brixham. I've been pretty clear that I think this has been handled poorly.”

Mr Mangnall said that he thought the company had two options, that South West Water should suspend the dividend or the CEO, Susan Davy should stand down. 

He continued: “We should expect a good quality of service and a rapid response for when things do go wrong. That's not what we've had in this instance. We've had outright denials, we've had misinformation and we've had wrongly leafleted properties with incorrect information. This is calamitous.

“Ofwat has the power to restrict a dividend, especially if it's linked to performance. I would say that this is a good example of poor performance.”

However, unlike some of his political opponents, Mr Mangnall did not support nationalisation or any radical restructuring of the water industry. 

He said: “If they want to change the structure, which some of my political opponents do, to a nationalised model, that will only put the cost onto the taxpayer. Why on earth should the taxpayer be paying to clear up the mess of water companies? 

“The cost should be landed on the water companies. They need to improve the way in which they upgrade their systems and they need to do it at a quicker speed. 

He added: “I'm not against dividends. What I am against is the idea of dividends being paid out when you're in the midst of a crisis, when businesses are worried about their future, when residents can't get access to drinking water. That’s what I’m against.”

South West Water boss 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.”