Severn Trent increases payout to shareholders despite its 60,000 sewage spills last year

Severn Trent has increased its payout to shareholders despite being responsible for 60,000 sewage spills last year.

Severn hiked its final dividend by 9% to 70.1p a share after pre-tax profits swelled almost 20% to £201.3m in the year to the end of March.

Related: Water companies in England face outrage over record sewage discharges

The dividend increase risks angering MPs, campaigners and the public amid an outcry over English water firms handing large payouts to investors while polluting waterways, hiking bills and awarding large pay packets to executives.

Severn, which serves 4.6m households and businesses from the Bristol Channel to the Humber, and mid-Wales to the east Midlands, was responsible for more than 60,000 sewage spills last year – a one-third increase from almost 45,000 in 2022 – with those spills lasting for more than 440,000 hours.

Earlier this year, Severn Trent was fined more than £2m for polluting the River Trent near Stoke between November 2019 and February 2020.

Its boss, Liv Garfield, was forced last week to defend her £3.2m pay packet for 2023 and the nearly £13m she had received over the past four years. She told the BBC that the 60,000 sewage spills “doesn’t make me feel good”.

Severn Trent raised £1bn last year, in a sign that investors are still prepared to pump money into the sector despite the financial troubles at Thames Water, Britain’s biggest water company.

On Wednesday, Garfield said: “The extra £1bn we raised from our investors will help us continue to transform the network, reducing spills, improving river health and providing our customers with the best and most reliable service. We are planning record levels of investment in the coming years, while also keeping bills the second lowest in the country.

“Our customers and the communities in which they live are at the heart of our business and we’re doing more than ever to ensure we have a positive economic, environmental and social impact across our region.”

Water companies are awaiting a draft view from the industry regulator, Ofwat, on their business plans for the five years to 2030, which will be delivered on 12 June.

Severn Trent has proposed to invest £12.9bn and increase customer bills to £518 a year over the period.

The company is in the process of spending £450m to improve 900 storm overflow points, about a third of the total across its network, as part of a push to halve its average spill rate by 2030.

Neil Shah, the director of research at the investment firm Edison Group, said Severn Trent had made progress in “reductions in supply interruptions, blockages and low-pressure incidents”.

Meanwhile, a cross-party group of MPs has said that water bills should be frozen until performance on sewage discharges into waterways had improved.

Thirty-seven MPs from Labour and the Green party have written to David Black, the CEO of Ofwat, urging him to deny the water companies’ requests in the price review process. The MPs argue in their letter that, on top of illness, worry and inconvenience caused to their constituents by repeated sewage spills, “the excessive price rises proposed will cause them further harm and cannot be justified”.

They are asking him to block any proposals for above-inflation price rises until 2030, and to ban the payment of dividends until agreed infrastructure improvements have been funded by shareholders. The letter was signed by MPs including Labour’s Clive Lewis, Barry Gardiner, who sits on the environment audit committee, the former shadow chancellor John McDonnell, the former shadow environment minister Alex Sobel, and the Green party’s Caroline Lucas.

On Wednesday, the environment, food and rural affairs committee announced it would be hauling in United Utilities and South West Water for questioning after sewage spills into Windermere in the Lake District and a period of unsafe drinking water in Brixham, Devon, to ask for assurances such incidents will not happen again.

Water UK, which represents the water companies, has been contacted for comment.