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UtILItY WeeK | 12th - 18th December 2014 2014 | 17 Policy & Regulation Q&A After formal presentations, attendees at Utility Week's 25 Years of Water Privatisation anniversary reception were able to put questions to our speakers. Below are some of the highlights from the session. Q) Is it fair that some private equity-owned water companies are paying derisory level of tax and should Ofwat's price review introduce adjustments which would negate this? A) Jonson Cox: Tax is not an issue for the regulator. It is an issue for the government. Q) Is 2.5 per cent enough of a retail margin to really encourage competition? A) Robert Miller-Bakewell: Given that there will be very little, if any, capital employed in the businesses, 2.5 per cent may prove to be perfectly satisfactory. It will depend on how well these new businesses are run. If you don't collect from your trade debtors, that is your own fault. Q) I suspect next year that the [water] companies are going to get beaten up by the Public Accounts Committee over financial structures. But the regulator has allowed these high gearing structures, allowed people to get paid special dividends that put us in the place we are now… Shouldn't this have been tackled by the regulator? A) Sir Ian Byatt: You are quite right and I wish I had done something about it. I did think about writing back excess dividends into the balance sheets. I didn't because it was quite hard working getting the 12 per cent reduction in prices we achieved in 1999. The industry talked about that like it was the end of the world. It turned out it wasn't. What I tried to do was to talk to the companies and after the price review I phoned every managing director and said 'think hard about dividends'. It fell completely on deaf ears. Sir Ian Byatt, former director general of Ofwat "I believe the ringfence around water companies should be strength- ened by restrictions on dividends and improvements in gov- ernance, especially in private equity." Jonso n Cox, chairman, Ofwat "If bigger was better it would be easy to predict the ranking of company efficiency in the price reviews. In fact, I see no cor- relation between size and efficiency." Robert Miller-Bakewell, equity analyst "Early AGMs were like regional motor shows, or a gathering of the politburo." Three decades of waTeraid The formal part of the reception was rounded off with a moving presentation and video from Barbara Frost, chief executive of WaterAid. UK Water companies came together to support the establishment of WaterAid 33 years ago – even before privatisation. It was an act driven by a feeling of moral outrage about lack of access to clean water and sanitation around the world following attendance at the first Thirsty World conference run by the UN. The charity set a target to halve the number of people living without clean water by 2015 – a challenge it met early last year, in part thanks to the ongoing support of the water sector, acknowledged Frost. "Despite all the changes that have been going on and the changes that are arising in the future, you have continued to support our work – at all levels," she said. Looking forward, Frost wants to continue that momentum, but is also looking to up the game on improving sanitation. To this end, WaterAid has launched its Big History Project, to raise awareness in the UK of the transformations that toilets have brought to local communities. Brought to you in association with The Speakers