OFWAT has raised financial concerns over the performance of water companies after shareholders pocketed £1.4 billion in dividends.

The water regulator for England and Wales named Thames Water, Southern Water, SES Water and South East Water as the firms doing worst.

It said that they all needed to deliver a turnaround in their financial performance, with Thames Water, Britain’s largest supplier, having “significant issues to address.”

GMB national secretary Andy Prendergast, whose union has members in the sector, said: “Privatising the UK’s water network has been a disastrous failed experiment.

“Shareholders are trousering fortunes with money that should be used to restore infrastructure and tackle sewage spills and leakage. 

“Ofwat and ministers have been asleep at the wheel. Naming and shaming companies is not enough — we need a regulator with sharper teeth.”

The watchdog’s latest yearly report came as some £1.4bn was paid out in dividends to shareholders in the latest year across all the firms monitored.

United Utilities gave £452 million to shareholders and Severn Trent paid out £426m during the year.

“There are some companies that did not fully meet our expectation in explaining dividend decisions and payments,” the regulator said.

Ofwat chief executive David Black added: “We expect companies to maintain a level of financial headroom so they can manage periods of volatility and meet their obligations to customers and the environment.”

He welcomed a £4.6bn injection of shareholders’ cash into the sector since 2020.

South East Water has been moved into Ofwat’s “action required” category, after the firm was hit by inflation and its operational performance declined.

Affinity Water, Northumbrian Water, Portsmouth Water and Yorkshire Water were all categorised as of “elevated concern.”

Earlier this year, Thames Water secured an emergency funding package from shareholders after accruing a £14bn debt pile.