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Water companies avoiding taxes

February 20, 2013 at 2:54 pm

With water bills set to rise by 3.5%, UK customers who are increasingly struggling to pay for basic utilities won’t fail to notice the recent news surrounding six major water companies.

A new controversy has just erupted following the damning conclusions of a report by the not-for-profit group Corporate Watch; it has revealed that Northumbrian, Yorkshire, Anglian, Thames, South Staffs and Sutton and East Surrey water companies have been avoiding paying tax by using elaborate financial arrangements, in a similar fashion to Google, Starbucks and Amazon. These companies borrow money intra-group at favourable rates from tax haven based companies and pay the interest without deduction of tax.

The report reveals other controversial facts, such as the excessive profits and bonuses earned by the CEOs of water companies and the leakage each day of more than three billion litres from pipes badly in need of modernisation (most of the infrastructure dates from the Victorian period).

Since water companies were privatised in 1989, their efficiency and ethics have been questioned numerous times. This new scandal has led David Hall, director of the Public Services International Research Unit, a group that researches the effects of privatisation on utilities and healthcare companies, to urge for a campaign to re-nationalise water companies. Publicly owned companies would be able to borrow money at much cheaper rates than is the case at the moment – as the State is considered a safer investment – and bills would be cut by about £80 per year.

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Water bills to increase by 3.5%

February 10, 2013 at 2:53 pm

There has been yet more bad news this week for cash-strapped householders who have seen the cost of everything from energy bills to a pint of milk rise recently. Now it is the turn of the water companies to announce an increase in bills. The rise of 3.5%, which will take effect from 1 April and apply for twelve months, is above the rate of inflation.

Ofwat’s chief executive, Regina Finn, accepts that households are under huge pressure but pointed out in a recent radio interview that in order for a safe and secure water supply to be delivered massive investment was needed.

The current increase will result in an investment of £1,000 for each household in England and Wales, all part of a five-year plan which will see £25 billion invested over the next five years.

The average water and sewerage bill in England and Wales will now be £388, although there are of course large regional differences. The largest increase will be borne by those in the South East (£23) whilst those in the South West will actually see their bills drop by £40. This apparent anomaly is a result of a government subsidy of £50 a year for each South West Water customer. The subsidy is aimed at countering the injustice of 3% of the population paying for the maintenance of 33% of the country’s bathing waters.

Unlike energy bills, there is no way for a householder to shop around in order to minimise their water bills. However, if there are more bedrooms in your house than occupants you are likely to make savings if you have a water meter installed.

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