James Ashton: Utility digs down 75m to keep liquid

Thames Water has descended a long way to avoid paying corporation tax - precisely 75 metres below the capital.

A few months ago, I met boss Martin Baggs at Beckton in east London, for a tour of the £650 million Lee Tunnel which is designed to reduce sewage overflows. More building works are planned, which means corporation tax will be kept close to zero — though much of the cost of the flagship £4.2 billion super-sewer will be met by increased customer bills.

Thames hasn’t been great at explaining its finances but it is getting better. One problem it suffers from is its monopoly position.

The reason its bills are among the cheapest in the country is because peers have invested more in their smaller pipe networks, and sooner. But could it be better priced if it were subject to real competition? It’s a trust issue.

The suspicion is that regulator Ofwat hasn’t done a good policing job. Last week’s £86 million penalty for Thames after mis-reporting sewer flooding data helps the regulator’s reputation, but not that of the firm.