WATER companies that have handed out tens of billions of pounds in dividends to shareholders are polluting seas and rivers with untreated sewage, despite warnings from the industry’s watchdog.

Ofwat says it has “serious concerns” about the performance of five of the nine water companies serving England and Wales: Anglian Water, Northumbrian Water, Thames Water, Wessex Water and Yorkshire Water.

Referring to information submitted to Ofwat late in 2021, the regulator said in a report published today: “The data that emerged at the end of last year suggested widespread shortcomings in how water companies were running sewage treatment works.”

Ofwat interim chief executive David Black added: “We have identified shortcomings in most water and wastewater companies and are continuing to investigate.

“But we have already seen enough in five companies to cause serious concern and warrant us taking further action.”

The reports from the companies revealed “a large number” of sewage treatment works not meeting environmental standards.

“We will now dig deeper into what these five companies have been doing, with the prospect of formal enforcement against them if we find they are failing on obligations Ofwat enforces,” Mr Black said.

“We will have further questions for all companies on this.

“In the meantime, we expect them to make quick progress in addressing any potential non-compliance they might have, while strengthening how they manage their environmental obligations as a whole.”

The Rivers Trust communications director Christine Colvin said: “We really welcome the renewed vigour from our regulators, although this is long overdue.

“This first investigation highlights the need for a changed relationship between the regulator and the water companies.”

Earlier this year, the Commons environmental audit committee said that England’s rivers had become a “chemical cocktail” of sewage, agricultural waste and plastics.

Southern Water was handed a record £90 million fine for 6,791 unpermitted sewage discharges last summer.

Some Southern Water customers have refused to pay their water bills and the company has offered discounts to compensate for pollution incidents.

The water industry was privatised by Margaret Thatcher’s government in 1989, having previously been in the hands of water boards made up of elected local councillors.

Water companies in England and Wales have collectively made an average £2 billion profits a year since privatisation.

In Scotland, where the water industry is publicy owned and controlled, investment in infrastructure is twice as high as south of the border.