Starmer's vision quest

[icowden]

Well Thames Water, like all the privatisations would have had no debt at privatisation.
It doesn't mean that the water utility was in good shape at privatisation.
In fact, the sewers were crumbling, water leaks were common, and the rivers and beaches polluted.
There had been minimal maintenance and improvement of the infrastructure since the victorians built the network - so public ownership really wasn't a success by the time privatisation happened.

I think we can all agree on this. It's the pattern of Maquarie borrowing against its assets to pay bumper dividend payments to shareholders that's a bit questionable. In their first year they paid £656m in dividends against profits of £241m. Overall Thames water has paid out over 7bn of dividends but has a 14.3bn debt (as at 2023)

Guess who ultimately will pay the debt? (Clue - it isn't the shareholders)

 

[briantrumpet]

There was a lot of investment in the water infrastructure in the years post privatisation to reduce the leaks, fix the network etc.
Currently the issue with the water companies isn't privatisation per se, it's a useless weak regulator, that if it has any teeth, it has no idea how to use them.
Set targets and standards, and state how many need to be met at any one time.
Then if not being met, suspend payments of dividends and board level remuneration until such time as the standards are met.
It isn't difficult in principle.

So is the problem with capitalism itself, where private companies are incentivised to extract as much capital as possible for the shareholders unless they are told what they ought to be doing for the customers and the environment?

 

[briantrumpet]

I see Starmer has decisively deferred the fuel duty rise for a few months. This decisive action will surely stop all debate in the matter.

And obviously you wouldn't want higher prices reducing demand when there's a shortage of supply. Oh no, that'd be daft.

 

[BoldonLad]

There was a lot of investment in the water infrastructure in the years post privatisation to reduce the leaks, fix the network etc.
Currently the issue with the water companies isn't privatisation per se, it's a useless weak regulator, that if it has any teeth, it has no idea how to use them.
Set targets and standards, and state how many need to be met at any one time.
Then if not being met, suspend payments of dividends and board level remuneration until such time as the standards are met.
It isn't difficult in principle.

This has been the problem since the outset.

 

[BoldonLad]

IIRC, water bills sharply increased after privatisation "to pay for the necessary investment after decades of underinvestment"... that was part of the pretext of privatisation.

I don't know about bills in your area, but, my water bills (Northumbrian Water) did not increase after privatisation.

While I am not a fan of sewerage in our rivers, the River Tyne (and probably the Wear and Tees) were much more polluted in the past (ie during Public Ownership) than they are now. IMHO, they are still not clean enough, but, they are cleaner.

 

[BoldonLad]

I think we can all agree on this. It's the pattern of Maquarie borrowing against its assets to pay bumper dividend payments to shareholders that's a bit questionable. In their first year they paid £656m in dividends against profits of £241m. Overall Thames water has paid out over 7bn of dividends but has a 14.3bn debt (as at 2023)

Guess who ultimately will pay the debt? (Clue - it isn't the shareholders)

Should have bought some shares then, shouldn't you?

 

[Rusty Nails]

This has been the problem since the outset.

Ditto power and telecoms regulators over the years.

 

[Psamathe]

Comment recently that may easily be the case that the fastest way to stop the Water Companies from using our rivers as open sewers if if one Water Company CEO got sent to prison then the issues would be sorted with staggering speed.

(My understanding is max sentence for some Water Company offences is senior staff up to 2 years prison sentence, introduced in 2025)

 

[C R]

I don't know about bills in your area, but, my water bills (Northumbrian Water) did not increase after privatisation.

While I am not a fan of sewerage in our rivers, the River Tyne (and probably the Wear and Tees) were much more polluted in the past (ie during Public Ownership) than they are now. IMHO, they are still not clean enough, but, they are cleaner.

Is the reduced polution because of action by the water companies or because most of the polluting industry is no longer there?

 

[C R]

So is the problem with capitalism itself, where private companies are incentivised to extract as much capital as possible for the shareholders unless they are told what they ought to be doing for the customers and the environment?

Ahem

Capitalist success is not measured in benefit to the customer. Capitalist success is measured in accumulated capital by the investors

 

[briantrumpet]

I don't know about bills in your area, but, my water bills (Northumbrian Water) did not increase after privatisation.

While I am not a fan of sewerage in our rivers, the River Tyne (and probably the Wear and Tees) were much more polluted in the past (ie during Public Ownership) than they are now. IMHO, they are still not clean enough, but, they are cleaner.

Well, this graph seems to confirm my memory for 1989-2000, but then what happened after that? Bills went down, but did dividend payments carry on as before? It would rather explain why there was no money left for actually fixing anything.

 

[Psamathe]

One aspect to the bills is we've been paying the water companies to safely process and dispose of our sewage for years except they haven't been doing that. Surely that we've been paying for something they have not been delivering should mean we get that historic payment refunded.

 

[BoldonLad]

Is the reduced polution because of action by the water companies or because most of the polluting industry is no longer there?

The honest answer is "I don't know", but, de-industrialisation must have helped. However, the "human waste" situation was much worse in the past, I recall in the 1950s, and 1960s (when as children, we went fishing at the River Estuary) it was commonplace to see turds and used contraceptives floating down the river.

 

[Psamathe]

Currently the issue with the water companies isn't privatisation per se, it's a useless weak regulator, that if it has any teeth, it has no idea how to use them.

Is Starmer's rearranging the deck chairs actually going to make any difference? My impression is it is little more than same again under a different name.

 

[BoldonLad]

Well, this graph seems to confirm my memory for 1989-2000, but then what happened after that? Bills went down, but did dividend payments carry on as before? It would rather explain why there was no money left for actually fixing anything.

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I entered the world of paying bills (including water bills) in 1968. It is a long time ago. I think that predated Northumbrian Water, I believe at that time, there were several smaller and more local Water Companies. I think (but cannot be sure) that ours was called Sunderland and South Shields Water Company.

Come privatisation, I took the opportunity to buy shares (in Northumbrian Water). I received dividends etc over the years. Subsequently, Northumbrian Water were bought out (I don't recall by whom), and, I made a tidy gain on my original shares.

On balance, I believe I made a wise choice, everyone had the same opportunity.

Thames Water was a disaster, fortunately, I stayed well away from that.