Pressure builds on water company over parasite

South West Water's owner Pennon said normal water supply had returned for 85% of customers

The owner of South West Water (SWW) has said it could pay out up to £3.5m in compensation to customers affected by a parasite outbreak in Devon.

On Tuesday, the Pennon Group also announced its financial results, including dividends payable to shareholders.

Calling the dividends announcement "tin-eared", Anthony Mangnall MP called for the group to suspend such payouts, or for boss Susan Davy to step down.

Devon's MPs and environmental campaigner Feargal Sharkey have levelled criticism at SWW, while Health Secretary Steve Barclay said there would be a "full investigation" into the cases of cryptosporidium identified in Brixham's network on Wednesday.

The South West Water situation is to be raised with the prime minister

The government said 16,000 properties in Brixham had been issued boil water notices.

Two people have been taken to hospital as a result of the outbreak.

Mr Sharkey said: "The water industry never ceases to surprise me with the level of utter incompetence, the shambles and the out of control industry it has become."

"South West Water has now asked Ofwat to be allowed to increase your water bill by 45% over the next five years," he added.

MP Anthony Mangnall has called Pennon's decision to pay dividends to its shareholders "tin-eared"

SWW upped compensation to £215 for domestic customers on Saturday as many were still subjected to boil water advice.

If all eligible customers claimed compensation, the bill to Pennon would be £3.44m.

On Tuesday, Pennon reported a profit of £166.3m last year and a dividend of 44.37 pence to shareholders.

Conservative MP Anthony Mangnall, whose Totnes constituency covers Brixham, said it was "absolutely appalling" that Pennon announced dividends.

He said: "I think it's tin-eared. At a time when confidence in South West Water is at an all-time low, they really should be thinking about making sure their consumers are on-side, rather than shareholders.

"I've called for them to either suspend the dividend offering, which can be done, or that CEO Susan Davy steps down."

He said he would raise the issue with Prime Minister Rishi Sunak on Wednesday.

'Poor communications'

Plymouth MP Luke Pollard said there was a "crisis of confidence" in South West Water.

He said: "They have had poor communications, poor initial compensation that every extra £1 seems to be dragged out of them."

Simon Jupp, MP for east Devon, said: "Many people have fallen seriously ill in Brixham, while hospitality and tourism businesses in Devon have seen their takings slashed and bookings cancelled.

"They all deserve compensation."

'Focused on normal service'

Ms Davy, group chief executive of Pennon, said: "We are 100% focused on returning a safe water supply to the people and businesses in and around Brixham.

"Normal service has returned for 85% of customers, but we won't stop until the local drinking water is returned to the quality all our customers expect and deserve.

"Our absolute priority continues to be the health and safety of our customers, and our operational teams are working tirelessly around the clock to deliver this."

A spokesperson for Pennon added: "Dividend payments are assessed based on performance across the business and in reaching the decision.

"The board determined that the cost of [any potential] fine should be met by shareholders and not customers."

The comments came as Pennon's results showed pre-tax losses of £9.1m for the year to 31 March, against losses of £8.5m the previous year.

On an underlying basis, pre-tax profits remained flat at £16.8m.

The group announced a full-year dividend of 44.37 pence.

On Tuesday morning, shares in the FTSE 250 firm had fallen 10% since Pennon issued the warning about water contamination in Brixham.