Water profits 'among world's highest'

The UK water industry enjoys some of the highest profit margins in the world, according to new research.

The UK water industry enjoys some of the highest profit margins in the world, according to new research.

A report from the trades union-supported Public Services International Research Unit says Britain's water companies typically make profits many times higher than those of similar concerns in Europe, the US and other parts of the world.

One the authors, David Hall, cited as evidence an internal review conducted by Vivendi, the world's largest water multinational, which concluded that its profit margin in the UK was 36.9%, while in Spain it was 6.3%, in the rest of Europe 3.2%, and in the USA 1.1%.

Further evidence emerged from comparing the annual accounts of the UK water companies, and the operating profit margin in water services, with companies in France and Spain. A similar profits pattern emerged, said Mr Hall.

"What we need is to expect the regulator to be a bit harder on company profit margins," said Mr Hall.

But Robert Wheedon, of Water UK, which represents the water companies, insisted that the comparisons were not like for like.

"There's a very big difference between what happens in England and Wales on the one hand and what happens in continental Europe on the other hand," he said.

"In continental Europe, the private company is operating a concession contract, it is delivering services using assets that are owned by local municipalities, or local authorities.

"In England and Wales the water companies own all the assets, so the profit rate is related to the totality of assets.

"This is a hugely capital intensive industry," he told BBC Radio 4's Today programme.