Disastrous dominance of privae equity in England

My wish is that Starmer would announce that the LP will nationalise water. No doubt it would cost a lot to put right everything that is currently. However, it would provide employment for many people and make our rivers and beaches safe for future generations.

It's sad that, in this day and age, France has to complain about English effluent reaching it's northern coast.

“One minute you're saying that the private companies are constrained by OFWAT, now you're saying (and, incidentally, agreeing with me) that the regulators aren't strong enough. Make up your mind.”

It’s the same thing, moving from public financing to private, they both use private money instead of government finance to invest in the industry. In some cases the private company gets it wrong (Carillion) on the other side they allegedly make vast profits. Using private companies is always going to cause controversy, it’s clear that that Ofwat has been very weak controlling the water industry.

I say again companies exist to make profit for their owners, if the regulators are weak then customers suffer. If you are saying that Ofwat has no responsibility then fine - we disagree.

Gove is an opportunist little weasel who will say anything that may benefit him.

You've changed your tune, Katie59.

One minute you're saying that the private companies are constrained by OFWAT, now you're saying (and, incidentally, agreeing with me) that the regulators aren't strong enough. Make up your mind.

Privatisation of water was not a PFI exercise, it was a straightforward sale of a publicly owned utility to the private sector. Governments were warned not to do it but ideology trumped expert opinion. Which is the subject of this thread.

I don't like Gove, either, but he's not stupid.

I’m on holiday so not concentrating at the moment except to note that Brighton has lost its blue flag status after years .

Southern Water one of the worse polluters.

Private companies do not exist to give social benefits, they exist to make money for the shareholders, all the private finance initiatives suffer from that. It has been proved time and again that the regulators are not strong enough to control them, they are themselves inefficient and beauroctatic as well a being subject to political interference.
The flaw with the system of PFI is that companies are not going to bid for a contract unless they can make a profit, only a limited number of companies are willing to take the risk.

The solution is to appoint not for profit companies to run the utilities and let them borrow at commercial rates to finance investment. We still have the same problem the customers will have to pay for cost of borrowing and the same issues remain how much should be spent where and when.

PS Maisie if you believe anything that comes out of Gove’s mouth there is no hope for you

P.S Read Michael Gove's speech. He didn't believe the b*llocks, either...

You may be able to make sense of what you have written, KAtie59. I can't.

The water companies are deeply in debt and not operating efficiently. They are only providing 'value for money' to their shareholders (who just happen, in many cases, to be the ultimate owners of the water companies). Like most of the the 'regulators', OFWAT has no teeth.

Do not try to sell a story of the poor water companies being starved of opportunities to invest by OFWAT.

Ofwat knows all this and it’s them that regulates the industry, the water companies do what they approve, if Ofwat allow them to accumulate excessive profits they are not doing their job.

This is a regulated industry, the government through Ofwat is failing to regulate.

Oh, apologies for repetition of the same paragraph towards the end. Editing skills fail...

Well, I'm not reading the OFWAT information with the same eyes as you, Katie59

Ofwat encourages investment that will deliver value for customers and the environment. When companies submit their investment plans to us, we challenge them, but that challenge is to deliver their improvements as efficiently as possible, helping customers’ money to work harder and go further.

Nothing there about setting investment targets or setting a limit on investment. They are saying that they scrutinise and challenge investment proposals to ensure value for money.

This Guardian article from last year tells a rather different story;

Water companies have accumulated some £54 billion of debt since privatisation, but as they have also paid out some £65billion to shareholders (often of the parent company) one wonders how much of this debt has gone straight into shareholders' pockets.

David Hall, visiting professor at the Public Services International Research Unit at Greenwich University, who has updated groundbreaking research by Karol Yearwood, said the evidence suggested the high level of gearing was being taken on in order for the companies to pay dividends, rather than to fund investment.

“It is very different from a more traditional company structure, where the operating expenditure comes out of the flows of revenue from customers but the investment in plant, machinery etc is paid for by investing capital from shareholders and creditors. Dividends are then paid out of the company’s profit, as a return on their capital investment

“With the water companies, since day one there has been hardly any shareholder capital put into the companies. Customers pay for everything, and the companies are borrowing to pay the dividends often to themselves, because their shareholders are parent companies.”

www.theguardian.com/environment/2022/dec/01/water-companies-debts-since-privatisation-ofwat-refuses-impose-limits

There is some rather disingenuous stuff on the OFWAT site, such as:

^ In the 1990s beaches were cleaned and a great number are now considered to be in excellent condition,^

Which was the result of EU regulation, not the goodness of the water companies' hearts... Now that we're no longer in the EU they're not showing a great deal of concern for the cleanliness of our rivers and beaches...it's not taken long for them to revert to their previous state of muckiness.

It's nonsense to say that a nationalised water industry would have to compete for government investment, this is merely justification for 'small state' ideology. State investment in water infrastructure and quality would be a stimulus to economic growth with no need to pay out inflated sums to 'investors'.

And , wow. This speech by Michael Gove in 2018 is very interesting.

www.gov.uk/government/speeches/a-water-industry-that-works-for-everyone

It's nonsense to say that a nationalised water industry would have to compete for government investment, this is merely justification for 'small state' ideology. State investment in water infrastructure and quality would be a stimulus to economic growth with no need to pay out inflated sums to 'investors'.

www.ofwat.gov.uk/investment-in-the-water-industry/

You will notice that it’s not the water companies that set the investments targets its Ofwat the government regulator, they have been limiting investment in recent years to save money.

I agreed that all utilities should be privately owned but the cash has to come from somewhere, the consumer will pay either through water bills or taxation.

It might be useful when Labour start making promises …

Though when they've had 13 years in which to change anything they didn't like I do think the tories would be skating on thin ice there...

I'd suggest that the tories were perfectly aware of the report and ignored it because it didn't fit their ideology.

Perhaps they are awaiting the right moment - nearer the election.

You would have thought that the tories would like it to be released before the next GE as it's something they could legitimately pin on Labour

Timed perfectly then? After the next election.

So that makes it two year late.

A bit of determined feet dragging seems to be going on...

The last paragraph suggests that the report will be published in about one year?

I think water should be taken into public ownership, preferably without compensating the shareholders who have received enormous benefits already at the expense of the consumers. The consumers should not have to foot the bill for sewage improvements which the companies have neglected.

Well, there you have it. Time this report was made public. Maybe people could bombard them with requests under the FIA? I know they have said that it's exempt but perhaps with pressure? What are they are so afraid of?

Disastrous is certainly a very apt word to describe what is going on. It’s very worrying.

Apologies for the typo in the heading. Cold fingers whilst typing is my excuse.