Labour ‘to end tax dodges by water firms’

LABOUR today promises voters it will take hard-hitting action against big water companies that “routinely” avoid tax while making huge profits and hiking bills, as anger mounts over Yorkshire Water’s financial affairs.

New shadow environment secretary Maria Eagle

The Opposition party’s new Shadow Environment Secretary, Maria Eagle, told the Yorkshire Post that Britain needs a “new deal” with water firms that will force them to cut bills for those who cannot pay while closing loopholes which allow them to avoid paying tax on their huge profits.

In the clearest sign yet that Labour is shifting its focus to water after weeks of political debate over energy prices, Ms Eagle warned of “market failure” within the water industry and called for “very, very tough regulation”. Firms such as Yorkshire Water, she said, are “getting away with murder”.

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And in her first interview since being moved from her previous role as Shadow Transport Secretary, Ms Eagle also delivered a veiled dig at Shadow Chancellor Ed Balls over his sceptical stance on HS2, dismissing his opposition to the high-speed rail project as “some leaves on the line” which leader Ed Miliband has now “cleared away”.

She also discussed her long battle for justice over the Hillsborough disaster, saying Sir John Major was “right” to apologise last month for his failure to act while Prime Minister in the 1990s, and adding pointedly: “It’s a shame he didn’t get it right the first time.”

Earlier this week Ms Eagle watched carefully as backbench MPs set out their concerns about the water industry during a hard-hitting Commons debate.

Yorkshire Water came under heavy fire from several Conservative MPs for its failure to pay any corporation tax last year despite posting profits of £186m, and handing out more than £250m in dividends to its shareholders – while hiking bills by 6.6 per cent.

The firm broke no rules – but Ms Eagle made clear she will be developing proposals to address the issue directly.

“(Water) is a complete monopoly, and these companies are spending more time engaging in financial engineering – to distribute the maximum amount they can to their shareholders – rather than worrying about the fact there really are people who can’t afford to pay for their water,” she said.

“I think we’ve got to look at having a new deal with the water companies. I will be developing this over the next period of time.”

Ms Eagle was handed the environment brief in the shadow cabinet reshuffle last month, her vocal backing for HS2 seen as the main reason she was moved away from transport as Mr Balls considered whether the party should abandon its support.

After a huge outcry from backbench Labour MPs and town halls across the North and Midlands, however, Mr Miliband confirmed last week that Labour is still backing HS2. Ms Eagle made clear she believes her tough stance on the project has won out. “It’s all back on track,” she said. “There’s been some leaves on the line, I think, that Ed Miliband has cleared away. Our position now is very clear.”

Ms Eagle said she sympathised with those Labour MPs who had voiced their anger.

“I understand the concerns and why they feel the need to express their views, and I think our position is now very clear,” she said. “Ed Miliband has made it very clear. And it’s pretty much what I was saying when I was doing the job. We’re going to deliver this North-South railway line.”

Eagle eye on issues: Page 8; Comment: Page 16.