Page last updated at 16:49 GMT, Tuesday, 15 January 2013

Peers calls on Thames Water not to pay shareholders

A peer has called on Thames Water not to pay any dividends to shareholders over the next 10 years in order to pay for the Thames Tideway Tunnel.

Independent Labour peer Lord Stoddart of Swindon said the costs of the tunnel should not fall on customers in London.

Lord Stoddart, speaking during oral questions on 15 January 2013, told peers Thames Water had paid out £3.5bn to shareholders over the last 10 years.

He said: "They [Thames Water] should have known that sort of money should have been saved to provide this essential system in London.

"Would it not be better if Thames Water did not pay dividends for the next 10 years at the rate they paid in 2012, and that would cover the cost of the whole project?"

Environment Minister Lord de Mauley told peers the tideway project would add an extra £70 to £80 a year, at 2011 prices, to the average water bill in London.

Lord de Mauley added that, spread over several decades, bills could gradually be affected from 2014-15, with the maximum impact estimated from around 2019.

Labour peer Lord Berkeley, who had tabled the original question, also argued that Thames Water should have paid a "reasonable dividend appropriate to a utility" over the last 12 years.

He said: "This project could have been funded out of assets without any extra charge on the customers."

Liberal Democrat peer Lord Bradshaw called on the regulator Ofwat to get "much tougher on these people who are making absolute fools of customers".

Replying on behalf of the government, Lord de Mauley said Lord Bradshaw had made a "fair point" but insisted that the government believed in "free capital markets".

Later, Thames Water issued a statement, regarding the debate.

A spokesman for Thames Water said: "The management fee paid by Thames Water to Macquarie is around £3.5m a year, not £48m as Lord Berkeley claims.

"A total of £2.6bn has been paid to shareholders over the past 10 years (since April 2002) not £3.5bn as claimed by Lord Stoddart."

He added: "Since acquisition by the Macquarie-led consortium in December 2006 Thames Water has paid £1.4bn of dividends.

"It is important to note that many of Thames Water's shareholders are pension funds in Britain and elsewhere, which rely on dividends to pay people's pensions.

"Ofwat sets price limits at a level which should allow a well-managed, efficient company to deliver its statutory commitments, meet its targets and finance itself effectively.

"That includes paying dividends to shareholders at a level that provides an appropriate return on investment, subject of course to delivering on commitments and meeting targets."

Peers also put questions to the government on the NHS inquiry into the Liverpool Care Pathway, a cross-departmental HIV Strategy for England and the future re-configuration of NHS service.

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