As long as the shareholders don't suffer.

[Psamathe]

Your statement about borrowing rate is an implicit acceptance that public money would need to go into the company. See above about whether this is in the public interest.

I fully accept that public money would need to go in to the companies. But private money going in mean more that went in coming out to those lending so ultimately it's all coming from the public anyway so why not eliminate the investor profiting from higher interst that the Government could borrow at.

Also, you are using the worst example to try to justify a blanket approach for the whole sector.

Vast %age of our rivers are badly polluted (sewage being the major cause), across the entire country - which means the majority of water companies.

 

[CXRAndy]

I remember talking to a chap who was doing some foundations for me. I asked him his background, worked for the waterboard keeping the open land drainage clear.

He said soon as the his area was privatised, he was made redundant, dykes, rivers waterways would be cleaned and kept clear on a when there is a flood we will clean up then.

 

[pinkbikini]

Can anyone think of a privately-run monopoly where the product is an absolute necessity for every customer in the region within which that company operates?

Apart from water, I’m struggling. I understand all the arguments that others have put on here, but they’ve conveniently skirted this issue.

That’s why Thames Water, etc should be nationalised in my mind. Thames Water has no incentive to consider the customer (other than being overseen by a fairly toothless regulator).

 

[stowie]

Can anyone think of a privately-run monopoly where the product is an absolute necessity for every customer in the region within which that company operates?

Apart from water, I’m struggling. I understand all the arguments that others have put on here, but they’ve conveniently skirted this issue.

That’s why Thames Water, etc should be nationalised in my mind. Thames Water has no incentive to consider the customer (other than being overseen by a fairly toothless regulator).

From 2006 to 2017 Thames Water was owned by Macquarie Group - an Australian consortium. Previously it was owned by RWE - a German utilities consortium. The current major shareholders are a mix of overseas and domestic pensions companies and one (or two) middle east investment houses.

Whilst under the Macquarie Group shareholder dividends were paid (£2.8bn) from loans taken out against assets. This wasn't the only source of Thames Water's debt woes (which went from £4.4bn to £10.8bn under Macquarie) but it sure doesn't help.

Privatisation has been a disaster with water which should be considered a national security asset and treated as such. This might not mean it being a nationalised entity but it sure as hell means that regulatory authority should have been better than OFWAT.

 

[BoldonLad]

Knowing how many of you love. a graph.

I am not a Financial Expert, do we have any Financial Experts on the forum, who can explain this?

Graph below shows "Total return" for Thames Water, I guess this means Capital Growth (of share price), plus Dividends.

I goes steadily downhill

Doesn't this mean, unless you were sharp enough to buy in at the correct time, and exit at the correct time, Shareholders have no in fact "made a killing"?

I do understand that various senior staff may have "made a killing" via Salary, Bonus payments, and Pension Schemes.

 

[icowden]

Graph below shows "Total return" for Thames Water, I guess this means Capital Growth (of share price), plus Dividends.
I goes steadily downhill
Doesn't this mean, unless you were sharp enough to buy in at the correct time, and exit at the correct time, Shareholders have no in fact "made a killing"?

Yes, but you are looking at the wrong graph.

Thames water was owned by Macquarie from 2006 to 2017. Macquarie put Thames water into £10.5 billion debt in 11 years to increase dividends to Macquarie shareholders. Thames water paid £7 billion in dividends of which £2.8 billion went to shareholders and the other part went to Macquarie shareholders.

 

[pinkbikini]

I'm still waiting for someone to explain to me why a public monopoly is better than a private one.

Now been explained quite a few times. You’ve asked people to answer your questions - that’s happened.

So over to you - why is a private monopoly better? Given the way that business psychology affects outcomes, why would a private monopoly do anything but drain the company of financing for the benefit of owners and shareholders over customers? Any evidence to back up your argument also appreciated.

 

[Stevo 666]

Now been explained quite a few times. You’ve asked people to answer your questions - that’s happened.

So over to you - why is a private monopoly better? Given the way that business psychology affects outcomes, why would a private monopoly do anything but drain the company of financing for the benefit of owners and shareholders over customers? Any evidence to back up your argument also appreciated.

I haven't seen a convincing argument for nationalisation yet. It all seems to revolve around some vague notion of bing in the public interest which you could potentially apply to any industry

Simple fact of the matter is that a government owned industry is a pure monopoly with nobody but themselves to punish them if they go wrong and has no real incentive to be more efficient. Look at previous instances of government owned industries in this country and tell me which ones were roaring successes. As I already mentioned, if it necessary then improved regulation could stop or limit the sort of issues that we have seen with this particular company.

 

[BoldonLad]

Yes, but you are looking at the wrong graph.

Thames water was owned by Macquarie from 2006 to 2017. Macquarie put Thames water into £10.5 billion debt in 11 years to increase dividends to Macquarie shareholders. Thames water paid £7 billion in dividends of which £2.8 billion went to shareholders and the other part went to Macquarie shareholders.

Yes, I realised the graph do not cover those years. Couldn’t find one for those years, could you?

 

[Stevo 666]

I fully accept that public money would need to go in to the companies. But private money going in mean more that went in coming out to those lending so ultimately it's all coming from the public anyway so why not eliminate the investor profiting from higher interst that the Government could borrow at.


Vast %age of our rivers are badly polluted (sewage being the major cause), across the entire country - which means the majority of water companies.

As mentioned above, its the net of the ins and outs. I suspect that this would be a long term liability for the public purse.

There is no doubt that the pollution issues need dealing with, but again I don't see why changing the ownership of the company to the Government will necessarily make it better. As mentioned in my last post above, it could be dealt with via legislation to bind the companies to certain standards and/or take specific actions.

 

[Ian H]

Simple fact of the matter is that a government owned industry is a pure monopoly...

Like the current privately-owned Thames Water then.

I suspect that this would be a long term liability for the public purse.

Whereas now it's a long-term liability for public health.

The public purse is there for infrastructure and public utilities.

 

[C R]

Like the current privately-owned Thames Water then.



Whereas now it's a long-term liability for public health.

The public purse is there for infrastructure and public utilities.

The poster you are replying to likes watersports, so probably that's a win for them.

 

[Psamathe]

As mentioned above, its the net of the ins and outs. I suspect that this would be a long term liability for the public purse.

It's already a long term liability on the public, just that liability is on our personal bank balances rather than indirectly through Government taxation which spreads the load in a more equitable manner (incl. income from overseas companies, etc.). At the end of the day the Water Utilities are entirely paid for by us customers so it comes down to the liability being at levels to support high risk investment with high returns (private ownership) or lower risk investment with returns to the public purse (nationalised).

There is no doubt that the pollution issues need dealing with, but again I don't see why changing the ownership of the company to the Government will necessarily make it better. As mentioned in my last post above, it could be dealt with via legislation to bind the companies to certain standards and/or take specific actions.

The companies are already declaring they are "un-investable" with the weak current regulatory regime and are seeking to lessen regulatory burdens to attract investors. Investors will be balancing risk against returns to fit their particular aims. So for eg Thames Water risk too high vs returns too low. Nationalised the risk in that balance changes dramatically

 

[icowden]

Yes, I realised the graph do not cover those years. Couldn’t find one for those years, could you?

This is the Macquarie share price from 2006 to 2018. Thames Water has never been publicly listed.