The company which left thousands of households without running water last month spent more on dividends and servicing its debt pile over two years than investing in infrastructure, it has emerged. South East Water spent £232m on distributing dividends and paying interest on its debts in the two years to March 2022, according to a new analysis. The company, which serves customers in Kent, Sussex, Berkshire and Surrey, was in the crosshairs last month when 6,000 households were left without running water for up to a week. the company was forced to implement a hosepipe ban and blamed increased working from home for growing demand. Analysis by the University of Greenwich showed that, during the two-year period, South East Water paid out £156m in dividends, and paid £72.8m in interest while servicing its £1.4bn debt pile. The combined figured surpassed the £179.8m spent on upgrading infrastructure – from replacing pipes to improving water supplies – from 2020 to 2022, the Financial Times reported. David Hall, a visiting professor at Greenwich University, told the FT that the potential for shortages in south-east England had been “known about for a long time but had not been dealt with due to bad planning, a failure to cut leakage and a decision to divert money towards dividends rather than investing in infrastructure”. South East Water, which has 2.2 million customers, said it is “prioritising projects across its system to increase the amount of water that we can supply” and that it had invested nearly £500m in its network over the past five years. It said no dividends had reached its ultimate parent company, HDF (UK) Holdings and it does not expect to pay a dividend this year or next. Of the £156m in dividends, £136m was through a regulator-approved payout used to pay off an internal loan to its parent company in 2020 and the remainder was used to pay interest on debts within the group. South East Water is ultimately owned by a consortium comprising Australian and Canadian funds and NatWest’s pension fund. Water companies’ finances are under intense public and political scrutiny after it emerged that officials were drawing up contingency plans for the UK’s largest supplier, Thames Water, in case it needed to be temporarily nationalised. The company, which serves 15 million customers, is struggling under a £16bn debt mountain as rising interest rates have pushed up borrowing costs. Thames Water will release its much anticipated annual results on Monday, and hold a call for investors. Colm Gibson, a managing director at Berkeley Research Group, said: “Bondholders, employees and suppliers will be keen to understand the extent to which the company has been able to raise additional equity to improve its financial ratios.”