£1.68bn accounts trick inflated water firm's books

One of England's top-rated water companies is using an accounting trick to artificially inflate its balance sheet by more than a billion pounds, BBC Panorama has discovered.

Severn Trent Water claims that an investment is worth £1.68bn in its accounts, when in reality it has no value to the overall business.

It serves more than eight million people across central England and mid-Wales and has been awarded the Environment Agency's top four-star rating for environmental performance for a record five consecutive years. Its ultimate parent company, Severn Trent plc, is popular with investors, as it has consistently paid large dividends to shareholders.

But some of Severn Trent's customers are unhappy. The Shrewsbury-based campaign group Up Sewage Creek wants more of the company's earnings to be used to combat pollution in local rivers. "They've not updated the infrastructure, they've used our money to enrich themselves and enrich their shareholders," one of the campaigners told us.

The complex accounting trick started in March 2017 when a shell company, with no money or assets, called Severn Trent Trimpley was set up as part of the group. Another Severn Trent company called Severn Trent Draycote - which owns the water company - agreed to buy Trimpley for £2.

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