Question to the Department for Environment, Food and Rural Affairs:

To ask the Secretary of State for Environment, Food and Rural Affairs, if she will bring forward legislative proposals to prohibit dividend payments by water companies that do not meet Ofwat performance delivery targets.

On 20 March 2023, Ofwat announced new measures that will enable it to take enforcement action against water companies that do not link dividend payments to performance. The change will require water company boards to take account of their performance when deciding whether to make dividend payments.

These changes will improve the performance and financial health of water companies, as well as providing greater transparency with customers and stakeholders.

We support Ofwat’s new measures, which were made possible by new licence modification powers that the Government gave to Ofwat via the Environment Act 2021.

These changes build on Ofwat’s ‘Board leadership, transparency and governance principles’, published in 2019.

Further information on these new measures can be found here –

Decision_document_financial_resilience_proposals.pdf (ofwat.gov.uk)