The issue of Yorkshire Water paying no corporation tax is set to be debated by furious MPs led by Skipton and Ripon’s representative Julian Smith.
Conservative MPs from the region have told a Commons select committee that water firms are now engaged in “industrial tax avoidance” despite making huge profits and that it is time for Parliament to take action.
It was revealed earlier this year that Yorkshire Water paid no corporation tax last year, despite handing out dividends to shareholders worth more than £250m and hiking bills by an average of six per cent. The foreign-owned company stresses it has broken no rules.
Mr Smith, a Government aide who grilled executives from Yorkshire Water over the firm’s tax affairs in September, has now led a group of MPs to pitch for a major debate on the issue via the Commons backbench business committee.
“The challenges being faced by constituents because of the non-payment of tax by water companies and the rise in bills are huge,” Mr Smith told the committee.
“There will be lots of people wanting to say that the Government should do more.”
The committee has the power to grant parliamentary time to debate matters of major public concern and Mr Smith said he now expects the issue to be brought before the House of Commons within weeks.
“For my constituents who have seen their water bills rise, it is a real kick in the teeth to find out this big company has not paid any corporation tax,” he said.
“I think the excuse they are playing within the rules is something people find difficult to accept.”
Last week the Treasury sought to play down reports that George Osborne is considering an attack on the water industry in his Autumn Statement on December 4, including a clampdown on the tax affairs of the big firms.
Nonetheless, the Department for Environment, Food and Rural Affairs (Defra) hopes its forthcoming Water Bill will help households get a “fair deal”.
The Bill will end the industry’s regional monopolies for businesses and the public sector, though not households –but could also inject tougher competition rules to drive down bills for all.
At the heart of the Government’s new approach is Ofwat, the industry regulator, which has already indicated it is willing to use more of its existing muscle under the new chairmanship of Jonson Cox –a former boss of Yorkshire Water – who was appointed earlier this year.
Following a meeting between Yorkshire Water executives and MPs in September, a statement released by the company stressed it had always acted “in total compliance with HMRC (HM Revenue and Customs) rules” .
It added: “We make a massive contribution to the regional economy through our investment, spending more than £1m every day to improve drinking water quality, bathing water quality and to help ensure communities are better protected from flooding.”
“The tax rules were designed by Government to encourage such investment in infrastructure but if they wish to change these rules then we are happy to be part of any future debates.”