Auditor Stanley Root says water companies are under great pressure to pay substantial dividends and the Trimpley scheme helps Severn Trent Water deliver.

“It makes the company’s balance sheet look more stable than it really is. It gives them the appearance of financial resilience. It helps to support the dividend payments they’re making.”

Severn Trent denies that Trimpley has supported shareholder payouts: “All dividends paid by Severn Trent are justified by earnings and any assertion otherwise is unjustified and wrong.”

However, it is clear that Trimpley is having a dramatic effect on the pot of money from which shareholders can be paid.

Severn Trent Water’s 2023/24 accounts – which include the £1.68bn investment – report the company has very healthy retained earnings of £1.84bn.

But the accounts for the wider Severn Trent Group, where all the creative accounting is cancelled out, show retained earnings of just £7.9m.

Severn Trent says: “Trimpley is an entirely legitimate, legal and transparent structure.”

Its accounts are independently audited and “any suggestion that we have misled our investors, regulators and customers on the company’s finances is false”.

It says the IOU is “very much a real asset” as it is backed up by other group companies.

Severn Trent also says it is in good financial health, it raised an additional billion pounds from shareholders last year and will continue to invest record amounts into infrastructure.