The Liberal Democrats are calling for the regulator to investigate South West Water's owner over its increases in dividends despite financial losses and sewage dumping fines.

Falmouth and Truro Local Liberal Democrat parliamentary candidate Ruth Gripper is asking the regulator to investigate Pennon Group, the company which owns South West Water after it announced a hike in the annual dividends paid out to shareholders.

The payout comes despite financial losses and being fined by the regulator for illegally dumping sewage.

Despite making a pre-tax loss of £8.5m in the year to April, the Lib Dems say the company has increased its annual dividend to shareholders by 10.9 per cent - meaning it will pay out a total of £112m.

In April South West Water was fined £2.15m for illegally dumping sewage into rivers and the sea. The company is currently subject to an investigation over whether it correctly reported water lost due to leaks in the network. Cornwall remains officially in drought, with a hosepipe ban in place since August last year.

Responding to the news, Liberal Democrat parliamentary candidate Ruth Gripper said: "This shareholder payout really beggars belief. It shows the water companies just don't get it. We've got a loss-making company, fined for illegally dumping sewage into rivers and the sea, under investigation by the regulator, dishing out £112m to shareholders. What planet are they on?

"Time and again we have seen these companies prioritising profit and private interest over customers and the environment. It really is time for the Government to take this issue seriously.

"The Liberal Democrats are calling for a sewage tax and a ban on water company executive bonuses, because it's increasingly clear that the water companies won't sort this problem out until they are made to. We need a regulator with teeth and most importantly we need the Government to start dealing with the issue properly.

"I will be writing to Ofwat to raise this issue and consider whether this is really appropriate given South West Water's performance." The regulator recently announced new powers allowing it to take action against water companies that don't link dividends to performance."