Draft Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013
The Committee consisted of the following Members:
† Benyon, Richard (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)
† Burns, Conor (Bournemouth West) (Con)
† Burrowes, Mr David (Enfield, Southgate) (Con)
† Cooper, Rosie (West Lancashire) (Lab)
† Dinenage, Caroline (Gosport) (Con)
† Evans, Chris (Islwyn) (Lab/Co-op)
† Evennett, Mr David (Lord Commissioner of Her Majesty's Treasury)
† Hamilton, Fabian (Leeds North East) (Lab)
† Irranca-Davies, Huw (Ogmore) (Lab)
† Jones, Susan Elan (Clwyd South) (Lab)
† Laing, Mrs Eleanor (Epping Forest) (Con)
† Lavery, Ian (Wansbeck) (Lab)
† Lefroy, Jeremy (Stafford) (Con)
Paisley, Ian (North Antrim) (DUP)
† Reevell, Simon (Dewsbury) (Con)
† Rogerson, Dan (North Cornwall) (LD)
Shuker, Gavin (Luton South) (Lab/Co-op)
† Williams, Mr Mark (Ceredigion) (LD)
Sarah Heath, Committee Clerk
† attended the Committee
Third Delegated Legislation Committee
Wednesday 19 June 2013
[Sandra Osborne in the Chair]
Draft Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013
8.55 am
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon): I beg to move,
That the Committee has considered the draft Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013.
Good morning, Mrs Osborne. It is a great pleasure to serve under your chairmanship on this sunny morning.
The draft regulations are aimed at helping the delivery of necessary, large or complex water or sewerage infrastructure projects. They should help to contain and minimise the risks associated with the delivery of such projects by water or sewerage companies—known as undertakers—to customers and UK taxpayers. Containing and minimising such risks should, correspondingly, provide the better value for money associated with delivering such projects. It should also help to ensure that undertakers’ customers continue to receive the required or desired level of existing water or sewerage services.
The regulations will enable the Secretary of State or Ofwat to specify by notice an infrastructure project where either is satisfied that two conditions have been met: first, that the infrastructure project is of a size or complexity that threatens an undertaker’s ability to provide services to its customers; and secondly, that specifying the project would be likely to result in better value for money, taking into account charges to customers and any Government financial assistance, than if the project was not so specified. Once the project is specified, an undertaker would be required to put the specified infrastructure out to tender, and a separate Ofwat-regulated infrastructure provider would be designated to finance and deliver the project.
Large, complex infrastructure projects raise issues about determining the cost of their financing, coupled with a construction risk that is far greater than that associated with an undertaker’s typical capital investment. Enabling an undertaker to tender competitively for an infrastructure provider for a large or complex project provides an objective means of testing whether the financing costs of such a project are appropriate or reasonable. Without that tendering process, competitively determining the cost of capital for such projects would not be possible. The ability to create ring-fenced, Ofwat-regulated infrastructure providers between undertakers and large or complex projects would also help to ring-fence the projects’ associated higher risks and should result in more effective risk management.
Enabling the creation of infrastructure providers would prevent the threat of a large or complex infrastructure project affecting an undertaker’s ability to provide day-
to-day services for its customers, avoiding extra costs that would ultimately be borne, to some extent, by the undertaker’s customers.There have been two public consultations on the regulations. An initial 12-week public consultation was carried out between February and May 2011, seeking views on proposals for new regulations. Thirteen replies were received, and a summary was published on the Department for Environment, Food and Rural Affairs website in September 2011.
The second consultation ran for four weeks, between 5 November and 4 December 2012. Its purpose was to inform stakeholders representing interests likely to be affected by the proposals. It included draft regulations and a corresponding impact assessment. It was issued by e-mail to 73 contact addresses previously contacted for the 2011 consultation, including those of the Mayor of London; London MPs with a known interest; Environment, Food and Rural Affairs Committee members; water and sewerage companies; Ofwat; and the Consumer Council for Water. Seven responses were received, and a summary was published on DEFRA’s website in March 2013.
We have noted the range of views and comments received on the proposed legislation and on the proposed Thames tideway tunnel project in London. In particular, we note concerns that provision to enable separate infrastructure providers would allow undertakers to avoid obligations to provide necessary infrastructure themselves within their own financial structures and so enable the continuation of high levels of dividend payments to shareholders. It is important for hon. Members to note that the regulations would enable only the Secretary of State or Ofwat to require an undertaker in England to tender competitively for an infrastructure provider. That would be only for large or complex projects that they considered would threaten an undertaker’s ability to meet its statutory service provision obligations, and where it would provide better value for money for both customers and taxpayers. It would never be a decision for undertakers and so would not provide an incentive for them to avoid their obligations.
The current water industry regulatory framework is designed so that Ofwat can regulate undertakers so that they do not make excessive payments to shareholders. Customers’ bills are kept as low as possible while recognising that the companies must attract appropriate investment to meet future needs. Following due consideration of the public consultation, we have decided to proceed with the regulations for the reasons that I outlined earlier. The ability to enable undertakers to tender competitively for an infrastructure provider to finance and deliver a large or complex project will be a useful tool, even if rarely exercised. Enabling the ring-fencing of important infrastructure projects will help to attract necessary private capital at a transparent and competitive price, helping to protect the interests of both undertakers’ customers and UK taxpayers.
I know that many hon. Members have firmly held views on the merits or otherwise of the Thames tideway tunnel, and I look forward to our debate, during which I expect some of those views will be put forward. However, I ask the Committee to bear in mind that the regulations before it today could apply not only to
the Thames tideway tunnel but to any large or complex sewer or water infrastructure project in future. I commend the draft regulations to the Committee.9.1 am
Huw Irranca-Davies (Ogmore) (Lab): It is a great pleasure to serve under your stewardship today, Mrs Osborne, as it is to be opposite the Minister once again. I apologise on behalf of my hon. Friend the Member for Luton South for his absence—he is otherwise disposed through a happy event, or perhaps I should say a nappy event: he and Mrs Shuker have worked very hard and brought forth a beautiful, photogenic young baby with film-star looks into the world at the weekend. I am sure Committee members will want to send them our best wishes from this place.
I want to tease out some of the detail of the regulations, while making clear to the Minister in advance—as we did in the other place, where they were debated by Lord de Mauley and Lord Knight of Weymouth—that we support their being taken forward, both in principle and overall. However, they raise some interesting issues, as do the Minister’s opening remarks.
One of the fascinating and intriguing aspects of the slightly peculiar and unique measure in front of us is the question of to what project or projects it applies. Clearly, there is only one project in the offing, which is the Thames tideway project. Of course, we must discharge our ethical as well as legal imperatives towards waste water directives, water framework directives and clean water quality. We must get on with that. It is not right that we treat the Thames, which flows outside the windows of this Committee Room, as some form of public sewer.
However, in taking the measure forward, there seems to be a confusion in the language used not just by the Minister but by his noble Friend Lord de Mauley. Is it peculiar to one project, namely the Thames tideway project, or is it for other projects? I refer the Minister directly to the words he used just now; they mirror those of Lord de Mauley in the debate in the other place. Lord de Mauley said:
“This would be only for large or complex projects”—
I note that that word is plural—
“that they consider would threaten an undertaker’s ability to meet its statutory service provision”.
The Minister has also said that this morning. Later in the same debate we find—in the same words that the Minister has used today—the following:
“The ability to enable undertakers to tender competitively an infrastructure provider to finance and deliver a large or complex project will be a useful tool, even if rarely exercised.”
The word used is not uniquely, for one project, but “rarely”. To be clear, the Minister has said this morning what Lord de Mauley also said in the other place:
“I ask the Committee to bear in mind that the regulations before it today could apply not only to the Thames tideway tunnel but to any large or complex sewer or water infrastructure projects in future.”—[Official Report, House of Lords, 12 June 2013; Vol. 745, c. GC383.]
I am familiar with the peculiarity of the measure before the Committee. It was nascent while I had the position the Minister occupies now, and I must question him on that basis, and because of the sunset clause. The only project in the offing that we can identify is indeed
the Thames tideway project. However, it has repeatedly been implied that there could be other projects, which would be ring-fenced away from the shareholder liability and customer protection of the current regulatory regime and dealt with under the separate mechanism. Does the Minister have any idea what those other projects would be?To take the present case as an example, a company with only a £1.8 billion turnover potentially has a £4 billion project. I understand those are the latest figures for the Thames tideway; it could be more. We do not know. We can see the sense in trying to ring-fence and protect the statutory provision between that water company and its customers without putting it under undue risk or completely destroying its balance sheet, jeopardising the services it should provide to its customers. Ring-fencing protects them from that.
However, what about, for example, the crying need for reservoir provision in the Thames area, or other areas of the country? We know which areas are under water stress, and on what scale. How many millions or billions of pounds will it take to deal with that issue? Does the Minister foresee that that is another possible use for the measure, with the Secretary of State signing off on it? Are there others that he can envisage elsewhere, in places where there has for many years been insufficient investment in the basic water and sewerage infrastructure, and where investment is required on such a scale that it could destabilise a water and sewerage company’s balance sheet?
Alternatively, is the Thames tideway to be the only use of the regulations? If so, the Minister should take this final opportunity to consider why there is not simply a Thames tideway measure, as opposed to one that could, as he said, apply in a generic way to other projects. What kind of projects would those be? Who would pay for them, and in what areas would they happen?
We accept, as I have said, the need for such large, complex infrastructure projects to proceed outside the existing regulatory regime. The arrangements put a lot of power into Ministers’ hands, and that is why it is right to probe their possible use beyond the Thames tideway project. Although, as far as I can now tell, their use is envisaged only for that project, one of our problems is that today’s debate is a final opportunity for us, despite the urgings of colleagues in the other place. We should have liked the issue to be brought back to is. When the project is under way, we should like more opportunities for debate. However, we have pushed that idea in other debates and it has been rejected. That is a great pity. It would be more appropriate to use a statutory instrument when the powers are to be triggered, so that fellow parliamentarians can exercise their role in scrutiny. We tried to amend the measure to bring that about but were unsuccessful.
As to the Thames tideway tunnel project, there is controversy about the detail, but we support it. Yes, there is a debate to be had about responsibility in the water sector, but we must live up to our environmental, social and EU commitments to clean up the Thames.
We welcome the sunset clause in the regulations, but we want assurances from the Minister about the timetable for the Thames project going ahead. Will the Minister share more detail with the Committee today? When will the regulations allow Thames Water to put the infrastructure
provider out to tender? I remind the Committee again that we will not be afforded the opportunity to debate that when it is done, which is a cause for regret.I turn to an item that caused some debate in the other place. The debate was led by my noble Friend Lord Knight of Weymouth and concerned the issue of tax and debt arrangements. He referred to the words of the new chair of Ofwat, Jonson Cox. I will put the matter to the Minister again, because it was not adequately dealt with in the other place. Lord de Mauley is a great chap, but he gave a one-sentence response, which I do not think is adequate given the quite heavy criticisms by the new chair of Ofwat. Mr Cox, a former water industry insider, said that water companies
“use shareholder loans to avoid UK taxation”
“complex offshore holding structures”.
“A good number use high-coupon shareholder loans to improve their equity returns...It appears that this reduces tax liability for the benefit of shareholders.”
Up to this point, we could say that it is all within the rules, that we have had this discussion over many things and that companies are simply doing what they can to minimise the risk to their shareholders and maximise the returns. However, Mr Cox went on:
“Tax policy is not for an economic regulator”.
He is absolutely right. He stated that
“these structures may be legal and common in private equity.”
He acknowledged that. However, he stated that
“some aspects are morally questionable in a vital public service”.
The chair of Ofwat says that some of the mechanisms used by Thames Water and others are morally questionable in a public service. The Minister must respond to that in the light of what we are discussing today, because we are looking at a mechanism that allows large, complex infrastructure projects to proceed. It protects not only individual customers in the Thames area or other projects that may come forward, but the shareholders and their dividends. On that basis, the timing seems unfortunate when the chair of Ofwat says that some of the approaches may be morally questionable. Will the Minister respond in more detail?
Finally, one of the reasons why we are considering this measure today is the debt structure and shape of the industry. Many companies in the water and sewerage industry are highly leveraged, with a great deal of debt already on their balance sheets. In the medium to long term, what are the Government going to do about that structural problem?
As I have said, we will support the measure. However, we regret that when it is enacted we will have no opportunity as parliamentarians to scrutinise it further, which shames our democratic processes. There are questions about protecting not simply customers but shareholders, because we want shareholders to have a fair return and we want companies to be profitable. Nevertheless, it is right that the Minister responds to the words of the new chair of Ofwat, who spoke of “morally questionable practices”. Does the Minister agree? Is the new chair of
Ofwat right? Has he spoken beyond his remit, or should we be doing something not just to protect shareholders, but to better protect taxpayers and customers?9.15 am
Richard Benyon: I am delighted to congratulate the hon. Member for Luton South on his happy event. I also congratulate the hon. Member for Ogmore on stepping in and asking some pertinent questions. I am grateful for the Opposition’s support for the regulations, and I will respond to his questions thoroughly.
The hon. Gentleman is right that the only project we envisage the regulations being used for in perhaps the next decade is the Thames tideway tunnel. As I said earlier, however, the regulations are an important tool, not just to make life easier for Government—I am sure he would not support them if that was all they did—but to protect the customer and ensure that utility companies, water and sewerage providers, can continue to provide the level of service that is required of them as well as doing major infrastructure projects.
As I have said, the regulations can be used for any large or complex project that threatens an incumbent undertaker’s ability to provide services for its customers, if their use would provide better value for money for both customers and taxpayers. We can all envisage other large infrastructure projects similar to the Thames tideway tunnel that may not be carried out by such a large company. The impact would be relative to the company’s ability to finance the project. The hon. Gentleman made a good point about the relative cost of the scheme’s capital expenditure and the turnover of Thames Water. It is important to think in relative terms when we look at other companies. The regulations are generic and could apply to any large or complex infrastructure project.
The hon. Gentleman asked whether Parliament will have further discussion on the matter and suggested that this is the last opportunity we will have to debate it. Should Parliament approve the draft regulations, we expect a public consultation later this year on a specification notice, which would specify the Thames tideway tunnel as a project to be financed and delivered by an infrastructure provider. That would include a preparatory works notice for the undertaker, Thames Water. After consultation, we will notify Parliament on any making of a specification notice or a preparatory works notice in relation to the tunnel. That will provide an opportunity for further discussion, if required.
Huw Irranca-Davies: I thank the Minister for that explanation, but it does not meet our requirement, which was for statutory consultation with Parliament. Yes, we can have a debate, and yes, the matter can be brought up by Back-Bench Members where it relates to a particular interest in their area, but there will not be a statutory instrument to debate the detail. That is the measure of the difference between what we would see as appropriate scrutiny and what the Minister is offering—a public consultation and a possible debate in Parliament.
Richard Benyon: I think I would part company with the hon. Gentleman here. The issue has been discussed frequently in Parliament and we have had debates on the various detailed processes that have been gone through
so far. The matter is there to be scrutinised by a Select Committee, and I stand willing to discuss it with London Members. I am a Member of Parliament for a Thames Water constituency that is about as far from London as one can get, so hon. Members can imagine that I am being held to account by my constituents for something that may increase their bills. There is plenty of opportunity for discussion.Huw Irranca-Davies: The Minister is aware that the regulations, which we do not oppose, will pass a lot of responsibility to the Secretary of State and the Minister. Why would he not welcome the opportunity for a final parliamentary sign-off—a formal approval by Parliament—once we know the full detail of the scheme? He cannot deny that we will not have that opportunity. There will be plenty of consultation and plenty of opportunities for debate on the Floor of the House, but no opportunity to say to the Minister, “We are fully in agreement with you. Well done, that’s a good decision. Take it forward.”
Richard Benyon: If the hon. Gentleman thinks that we will do something wrong at the time of the specification notice, there is opportunity for a supply day debate, and there are other mechanisms. The matter was debated in Parliament in March 2012. The debate set out the national need for the Thames tideway tunnel. The tunnel is now a nationally significant infrastructure project that was subject to parliamentary discussion. Thames Water made a planning application on 28 February to the Planning Inspectorate, which is considering it. Ministers will take account of the Planning Inspectorate’s recommendation, expected in autumn 2014—to answer the hon. Gentleman’s other question about the timing—and will make a final decision on issuing a development consent order in early 2015.
We are conscious of the impact on local communities of constructing a large, complex project such as the Thames tideway tunnel. The Secretary of State for Communities and Local Government issued new directions on 15 March 2013 to protect key construction sites, and the matter is being debated in a variety of other tiers of Government. If the hon. Gentleman wants to take it further, there are endless opportunities for Opposition time. If he wishes to discuss it with me or he has some cunning plan, I am always happy to meet him.
On the hon. Gentleman’s points about the comments by the chairman of Ofwat, I agree with Jonson Cox that there must be full transparency in the finances of all water or sewerage companies, so that Ofwat can do its job on behalf of customers and taxpayers and regulate them effectively, ensuring that customers get a fair deal with good service at a fair price. The specified infrastructure project regulations would enhance such transparency. They enable water or sewerage companies to tender competitively as Ofwat-regulated infrastructure providers that finance and deliver large or complex infrastructure projects. The tendering process for infrastructure providers allows an objective means of testing whether the financing costs of such projects are appropriate or reasonable. Without the tendering process provided by the regulations, competitively determining the costs of capital for a project is not possible.
The hon. Gentleman questioned me about issues relating to the inter-company loans, particularly those involving Thames Water and its parent company, Kemble,
which enable Thames Water to give shareholders higher dividends by minimising their tax. Before answering that point, I must say that much public comment has been made about capital allowances. We must sometimes remind ourselves that capital allowances have been around for about a century. They are vital to encouraging companies to invest in infrastructure.Comments are made about capital allowances, not just about Thames Water but generically, and not by the hon. Gentleman, whom of course I am not criticising. It is more that some people outside the House seem to lack economic understanding about the value of capital allowances. I would be cross if water companies were not using them, because it would mean that our constituents would be paying more for their water or that there would be less investment in repairing and improving our infrastructure. Capital allowances are there for a purpose: they defer tax. If a company stops investing, it pays that tax.
Huw Irranca-Davies: I am not disagreeing with the Minister about that. It is a tried and tested way of properly ensuring the balance sheet of companies for a long time, while maximising not only return to shareholders, but service to their customers. It is, however, the balance that is appropriate; we have the chair of Ofwat publicly stating without any reservations that some of the practices are “morally questionable” while we are debating a measure that will ring-fence the larger projects away from the companies’ current liabilities and balance sheet. He questions whether the companies have got the balance right, and that is what I am asking the Minister. When he says that he agrees with the chair of Ofwat, does he agree with the statement that some of the practices are “morally questionable”?
Richard Benyon: I will move on to that point, but may I return to the point about inter-company loans? Her Majesty’s Revenue and Customs remains vigilant about ensuring that companies operating in the UK pay the tax that they are legally obliged to pay. The finances of all water or sewerage companies must be fully transparent, so that Ofwat can do its job and regulate the companies effectively, ensuring that customers get a fair deal, with good service and at a fair price. Companies having inter-company loans with their holding companies is a matter of tax policy for them and HMRC.
Ofwat, however, seeks to ensure that customers receive the benefits of undertakers’ tax efficiency and use of capital allowances during its five-yearly price reviews—the next one takes place next year. Importantly, investors should receive an adequate and acceptable return on their investment in water and sewerage undertakers, so that Thames Water, for example, can continue to attract investors and ensure that its annual £1 billion of water and sewer improvements incur an acceptable cost to its customers.
I come from a small business background, and I confess that when I came into my job and looked at the water sector, some of the levels of gearing of some of the companies were eye-watering. I am reassured by Ofwat, however, that that is necessary to ensure the level of investment and continuing service provision, as long as the water companies stay within the required bandwidth of credit rating. We must be assured that that is being properly monitored. Obviously, the economic regulator
looks carefully at the value of the companies, their abilities and the security that they can give us—there are strict provisions for when a company gets itself into difficulty.There is undoubtedly concern among our constituents about the practices of some companies in the past. I will not stand in Committee and be the voice of any particular company, although I recognise that there are two sides to every story. Over the past three years, through the development of our water White Paper and the preparations for our water Bill, which will shortly be seen in the House, I have spent a lot of time giving assurances that we have two key groups of people in mind: first, customers, so that we are protecting them and their bills; and, secondly, large multinational investment entities, so that we can still encourage them to invest in our utilities sector—sovereign wealth funds and large international investment companies. We are getting that balance right. It is right for Parliament every now and again to question whether the structure or the processes to govern such companies are right, but I am reassured that the level of debt can be sustained. When it is questioned, no one can be more eager than me to get to the bottom of the situation.
Ian Lavery (Wansbeck) (Lab): There has been discussion of the morality of the deals by Jonson Cox, the new head of Ofwat. He said that the tax mechanisms for the larger, more complex projects are “morally questionable”. Does the Minister agree with Jonson Cox? If so, why?
Richard Benyon: Jonson Cox has a job to do: to make sure water companies that have a monopoly in their area protect customers and deliver the investment we require. On whether or not the mechanisms are morally questionable, I cannot say that I question the morality of a company that spends £1 billion a year on my constituents and many others by investing in infrastructure.
I am not entirely certain precisely what mechanisms Jonson Cox was referring to when he said something was morally questionable. I can take the moral high ground as much as any other Member of the House, and I will question any company I feel is pulling a fast one on the taxpayer or my constituents. In my soon-to-be-held meeting with Jonson Cox, I will try to probe his thinking and precisely what he means by “morally questionable”.
The complex structure of some of these companies does make us sit back and think, “Is this right?”, but when we delve into the subject, we see that the customer is being protected, bills are being kept as low as possible—I know there are conflicting views on that in some parts of the country—and we are still getting the investment. There is a price to pay if we regulate too hard and adopt a different structure that perhaps turns investors away.
It is absolutely right for the House to quiz Ministers frequently about whether we are getting the balance right. I think we are, and price review 2014 will give us a clear view of whether we continue to protect customers while getting the balance right with regard to investment, and whether we are allowing the structure of companies somehow to creep away from what we, as a Parliament, are comfortable with in terms of the regulatory world we apply to the industry.
Jeremy Lefroy (Stafford) (Con): I apologise for my late arrival. I welcome the regulations, and I very much see the common sense in them. Water is supposed to be part of the single market for services, and lots of overseas companies are investing in the UK, while UK companies are conspicuous by their absence in terms of investing in water in the European Union. Is my hon. Friend aware of vital legislation being prepared by, for instance, the French legislature both to protect the interests of UK companies wishing to invest in the water infrastructure in Paris and to ensure a level playing field across the EU?
Richard Benyon: I can assure my hon. Friend that other Departments with responsibility for such matters are working hard with the Commission to ensure there is a level playing field. I can assure him that we are not sitting back in the global race the Prime Minister keeps referring to and letting our water industry miss out on opportunities abroad. I plan to take trade missions to south America and the far east later this year, and I am working closely with British Water to ensure that all the supply chain companies that are contributing to the revolution in the improvement of the infrastructure in this country get a slice of the action in some of the lucrative markets abroad, particularly as countries start to tackle the problems of climate change, growing populations and, in certain areas, growing wealth. We are absolutely determined not only to get a fair, level playing field in the European Union, but to look to our global trading abilities far beyond that.
Huw Irranca-Davies: The Minister is being very generous in giving way. I have a specific question for him, but, first, I want to say that a very good UK company, Dwr Cymru, pursues a not-for-profit model and has high levels of customer satisfaction and profitability. However, perhaps I can ask the Minister a question to help him. One of the things the chair of Ofwat was referring to was the balance between the protection of complex parent company mechanisms and returns to shareholders on the one hand and the public interest on the other hand. May I ask him specifically whether he thinks there is scope that the £5 million cost of setting up those major infrastructure projects, as stated in the impact assessment, will need to be borne by the regulator? Will he explore with the regulator whether that could be laid against the myriad complex financial mechanisms and shareholder dividends that are being paid by Thames Water and its parent companies? It seems that Thames Water might have enough slack to pick up the regulatory costs. Those costs do not fall on the regulator or the Government; they fall on the taxpayer.
Richard Benyon: Nice idea, but I suspect it would open a Pandora’s box—whenever the regulator was asked to comment on any single water company’s infrastructure activities, it might encourage similar claims. I fully accept that we are talking about a rare and, at the moment, exclusive use of the provision, and I will certainly consider what the hon. Gentleman says.
Whatever the structure of this particular company or others, it is important that it pays the tax that is due. The inter-company loans structure should not, and could
not, be a vehicle whereby companies offshore some of their tax requirements and therefore avoid them. The inter-company loans have to be between companies that can be controlled by HMRC so that due tax is paid.I have received inspiration on the hon. Gentleman’s previous point. Ofwat’s costs would also apply if Thames Water were to finance and deliver the tunnel. Extra costs apply to it for regulating the project. An eye-watering figure has already been spent by Thames Water on the
preparation for the project thus far, which is preying on my mind as a Thames Water charge payer myself, but I must not be selfish about such matters.That the Committee has considered the draft Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013.