Public service firms’ dividend payouts increase as profits fall

COMPANIES running public services are handing out increasing amounts of cash to shareholders despite falling profits, a new survey shows.

The TUC said its research found that reforms were needed to protect public services in the wake of the collapse of engineering giant Carillion.

Dividends for the biggest public limited companies with significant business running outsourced public services have risen in most years since 2010, reaching a combined total of £642m in 2016, an increase of 67%, said the report.

Pre-tax profits fell by almost a third over the same period, undermining claims that higher dividends reward investors for improved business performance, said the TUC. Some companies had years between 2010-16 when they continued to pay dividends despite making a pre-tax loss, which the TUC said was evidence of a “fundamentally flawed model”.

TUC general secretary Frances O’Grady said: “Carillion was a wake-up call. It put the spotlight on private firms Hoovering up public services contracts with little public scrutiny.

“It showed how these contracts line shareholders’ pockets instead of serving the community, and when Carillion failed, the Government had to clean up the wreckage.

“We need to get back to running public services for the common good.”