Thames Tideway Tunnel

Lord Deben Excerpts

Wednesday 24th July 2013 Lords Chamber

[Lord De Mauley]

My Lords, I thought I had addressed that question when I answered the noble Lord, Lord Berkeley. Thames Water does not avoid paying tax. HMRC’s capital allowance regime allows companies to delay—not to avoid—paying corporation tax, based on how much they invest. Capital allowances are simply the allowed amortisation of an asset for tax purposes and they exist to encourage companies to carry out crucial investment. The mechanism enables tax to be paid over the lifetime of the asset. If capital allowances did not exist, that would mean either less investment or higher bills for customers.

[Lord Deben]

Does my noble friend accept that this is an old-fashioned and unacceptable answer to the problem? It is like the Three Gorges dam: it is not the way to do it. Will he please undertake that before any public money is put into this scheme he makes sure that better schemes, which may not be so convenient for the water company concerned—I declare an interest in the water industry—but are more environmentally sensible than this wholly out-of-date proposal, are thought of by the Government?

[Lord De Mauley]

My Lords, while I agree with my noble friend on many things, I do not agree with him on that. After years of work by Governments of both hues, we do not consider that there is a viable, cheaper solution that would simultaneously address the current sewer overflow problems relatively swiftly for the foreseeable future and deliver value for money.