MP Ian Liddell-Grainger has called for the entire board of the owners of South West Water (SWW) to resign after they approved an ‘obscene’ dividend to shareholders.

Mr Liddell-Grainger said for Pennon Group to line shareholders’ pockets while presiding over long-term water shortages in Devon and Cornwall was totally unacceptable, and consumers were rightly infuriated.

He said: “There may have been worse examples of companies putting two fingers up to their customers, but I cannot recall one.”

Pennon Group, which also owns Bristol Water, posted a pre-tax loss of £8.5 million in the year to April, compared with a profit of £127.7 million in the previous 12 months.

Yet, it raised its shareholder dividend by more than 10 per cent to £112 million.

In April, SWW was fined £2.15 million after being prosecuted by the Environment Agency for illegally dumping sewage into the sea.

It is currently the subject of two Ofwat investigations - one for its management of waste water treatment plants, the other into the accuracy of statements the company made last November about its performance in reducing leaks and on customer consumption rates.

It is one of only two water companies to have drought restrictions in force.

These were imposed last year, extended in the spring, and are likely to remain in place until December, unless there is exceptional rainfall.

Also in April, Pennon Group chief executive Susan Davy announced she would not be taking her £450,000 bonus because of public anger over sewage pollution in rivers and seas.

Mr Liddell-Grainger, who represents West Somerset and will be the Conservative candidate for the new Tiverton and Minehead constituency taking in much of the area around Wellington, said it had been a tacit admission of failure.

He said: “But one highly-paid official declining a fat bonus looks like a token gesture when within weeks millions were being poured into the shareholders’ trough.

“Those shareholders are being rewarded with money that should rightly have been invested in improving and extending water supplies to the region and the fact that there are now long-term drought orders in force is manifest proof that South West Water has failed to do its job.

“Consumers in Devon and Cornwall are being asked to restrict water use so there is enough to go round when the main tourism season arrives, a highly precarious state of affairs by any measure.

“I lived in Devon for 25 years and even back then all the official agencies were aware that tourist numbers were going to grow year by year and infrastructure improvements would be necessary to cope with all the extra demands that would ensue.

“But South West Water has appeared more concerned about rewarding shareholders than building new storage capacity and the fact that it has been systematically fouling the finest beaches in the UK merely underlines the fact that it has prioritised profit, salaries, bonuses, and obscene dividends before everything else.

“This is failure on a colossal scale and the chief executive and the entire board should pack their bags and go.”

If the Ofwat inquiry uncovers discrepancies in SWW’s reporting on leaks and consumption it could face a penalty equivalent to 10 per cent of its turnover.

If it is found to be in breach of wastewater regulations it will be ordered to implement improvements and could also be fined, the cost in both cases falling on shareholders.

SWW has been asked if it wants to respond to Mr Liddell-Grainger’s comments.