Policy & regulation

MPs have argued that checks need to be put in place to ensure the water industry pays a sufficient amount of tax and gives consumers a “better deal”.

During a backbench commons debate yesterday, ministers laid out details of possible reforms to the water industry, with Charlie Elphicke, Tory MP for Dover, claiming the previous government had permitted a culture of “industrial-scale tax avoidance”

“The unacceptable, even antisocial, tax avoidance culture in the water industry has meant that many companies have not paid tax for years. It is wrong that this situation has arisen. Everyone should pay their fair share. We need sustainable debt, not 100 per cent mortgages. Under the previous settlement, these water companies have been allowed to become casinos,” he said.

Elphicke added: “For many years nothing was done to keep on top of the water industry, particularly before this government was elected. Now we have an opportunity to make further changes and look more closely at what the issues are and what might be done.”

According to Elphick, since the last Price Review key financial assumptions have changed, resulting in excess profits for the industry.

He said that investment had also fallen since 2007, while customer bills had risen by more than inflation.

Conservative MP Rehman Chishti, said it was “completely and utterly unacceptable” that bills have risen by 60 per cent over the past 10 years, arguing that the consumers were losing out.

Elphicke said that under the previous Labour government the water industry had been allowed to shirk its tax responsibility.

“There have been excessive pay rises in the boardroom at a time when hard-working families have not seen substantial pay rises. That has been very hard to justify and people look askance at that,” he said.

Commenting on water companies’ lower financing costs, brought about by the economic downturn Elphicke also said the government should “beef up Ofwat and give it greater powers in the Water Bill.”

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