While the companies have invested between them a little under £5bn a year on average over the last two decades, the study found that this investment had been with borrowed money and suggested that of the £25bn in profits generated since 2003, all of that sum had been extracted in dividends by shareholders.
But Prof Murphy said his analysis showed a profound financial malaise was affecting the viability of the privatised water sector. Prof Murphy said a far higher figure was realistically required to put in place the extra sewage storage capacity to endand pointed to a House of Lords study based on industry expertise which last year put the cost of such a project at up to £260bn.
Prof Murphy said it appeared that ministers had decided not to hold water companies to the much higher £260bn spending commitment required to eradicate the problem because to do so would make them “go bust”. As a result, he said England’s water industry should be regarded as “environmentally insolvent” – meaning it cannot its environmental goals while remaining profitable.