Thames Tideway Tunnel

Lord Stoneham of Droxford Excerpts

Tuesday 15th January 2013 Lords Chamber

[Lord De Mauley]

What an interesting suggestion, my Lords. The standard model in the water sector is for customers to pay the financing costs of the company’s capital expenditure on underground assets together with a charge to reflect expenditure required to keep them in a serviceable state. I do not think that we would find investors if we were not able to finance it in this way.

[Lord Stoneham of Droxford]

My Lords, over the past two years Thames Water has paid out £650 million in dividends and £100 million in management fees. Can the Minister assure the House that Thames Water is not simply a private equity vehicle designed to save tax for its overseas investors at the expense of London customers and UK taxpayers, who are supposed to stump up for its infrastructure investment?

[Lord De Mauley]

Yes, my Lords; Thames Water pays its tax. All UK companies are allowed to claim capital allowances when they spend on capital investment programmes. Tax relief is allowable against the capital expenditure incurred with the aim of encouraging investment by companies. Water and sewerage companies have significant capital programmes in comparison with their revenues. They therefore benefit from tax allowances proportionately more than others. HMRC remains vigilant in ensuring that companies operating within the UK pay the tax they are legally obliged to pay.