Time to admit that privatisation of national utilities isn’t working?

Germanshepherdsmum

Nationalisation without compensation to shareholders would be theft if the shares have a value,

You might define it as theft but Parliament can do as it pleases. An Act to requisition a water company without compensation would be enforced by the courts.

Parliament cannot do as it pleases Grantanow. I’m sure you know the procedure for passing a Bill into law. This isn’t France.

Here's a link to an FT article (written in 2017) explaining the history of the company since privatisation. Rather long but very interesting.

www.ft.com/content/5413ebf8-24f1-11e7-8691-d5f7e0cd0a16

If the company is heading for bankruptcy then the shares have no value so therefore no question of theft.

The govt could issue bonds in return for the existing shares in order to take over the operation

Redress could be sought from the current shareholders who are ultimately responsible for allowing the company to borrow so heavily.

I've always thought that water, as a minimum, should be in public ownership and also should be provided free at the point of use, being essential to life. I think it should be funded, as the NHS is, from taxes. I'm aware that increasing taxes is opening a whole can of worms, but I've never understood why it is not part of that system.

Wow Dinahmo
Redress could be sought from the current shareholders who are ultimately responsible for allowing the company to borrow so heavily.
That wouldn’t go down well at all!

Germanshepherdsmum

By all accounts TW is or will shortly be insolvent (unable to pay debts - in this case loan repayments - as they fall due) and the government are taking steps to intervene as this is a company that has to keep going, rather like the banks which were saved. . Whether directors will face penalties depends on exactly what has been going on. We only get to hear part of the story. They would certainly be facing action if they allowed the company to trade whilst insolvent.

Is "as this is a company that has to keep going, rather like the banks which were saved." a legal opinion?

By that I mean that I can see that what the work these companies are doing has to be supported but could you explain why/if that has to be as the entity that currently exists or could they be supported by the government while decisions were made how to run them?

I know we may be stretching your particular area of law but do you know what can be done if the calculations Richard Murphy has made (with the appropriate caveats) are shown by others to be a possible truth?

what

My post above is to GSM.

What I mean is that the services the company supplies have to be kept going. That does not necessarily mean that the current model has to be retained.

Dinahmo I don’t agree that redress could be sought from shareholders without knowing more about who they are. Financial institutions possibly, Joe Public no. Liability for trading whilst insolvent lies with directors - some very large investors may have taken equity and a seat on the board.

Well said.

In many countries water is not a monopoly.

In Denmark we have muncipal waterworks, or privately owned ones that supply drinking water to households, firms and institutions.

We pay for what we use, and pay the sewage works ( a different company) for removal.

Each company calculates its charges so that they are able to maintain pipelines and sewers.

The system works here, probably because we have nearly 300 years' experience of small co-operatives running diaries, heating plants, waterworks and sewage farms.

Doing away with nationalisation is unlikely to solve problems or lower prices unless the companies involved really know how to run them as private companies.

varian

Privitisation has been an unmitigated disaster.

Selling off council houses at a knockdown price while forbidding councils to build new homes with the process may have bought a few votes for Margaret Thatcher but has caused a dire housing shortage.

Privitisation of the railways by separating the railway lines from the trains and breaking up any co-ordinated timetabling has meant that we now have the most expensive and least reliable railway service in Europe.

The privitised energy companies pay out dividends whilst imposing huge price hikes on consumers.

Privitised water companies have used the umpteen billions they have borrowed to pay shareholders and give huge bonuses to directors instead of investing in clean water and modern sewage treatment plants, hence we see sewage polluting our rivers and beaches

Privitised prisons and probation services have caused chaos in the penal system seeing more and more repeat offenders.

Of course, the chances of any Tory politician admitting that privitisation has damaged our country are about as high as the chances of them admitting that brexit was a very serious mistake.

If only we lived in a democracy, where a government could only be elected by the majority of voters, neither of these disasters might never have happened.

Totally agree. These policies are now coming home to roost, it is like owning a house and not painting it, clearing the drains, fixing the roof, eventually the whole place is a stinking mess which will cost the next owner a fortune to fix. I am outraged that more people are not outraged.
Water should never have been privatised, it is a necessity of life, and even on the Conservative policy of 'consumer choice' it doesn't work. I can change my energy supplier, but I cannot change my water supplier. I do understand the Labour policy though; these water companies are private and cannot be 'seized' back into public ownership.

@Callistemon21

Welsh Water may purport to be not for profit, but they pretty much own the company they pay millions to , to upkeep the netwrok, do the maintenance etc. That company is all about profit

Welsh Water has no shareholders Mibs. Profits are made from charges to customers but they are ploughed back into the company. Obviously employees and contractors have to be paid. They are not-for-profit, they don’t ‘purport’ to be,

Germanshepherdsmum

What I mean is that the services the company supplies have to be kept going. That does not necessarily mean that the current model has to be retained.

Dinahmo I don’t agree that redress could be sought from shareholders without knowing more about who they are. Financial institutions possibly, Joe Public no. Liability for trading whilst insolvent lies with directors - some very large investors may have taken equity and a seat on the board.

Thank you GSM. It seems like a very tangled web but it does need untangling as soon as possible.

It sure does. Phenomenally bad management.

Mollygo

Wow Dinahmo
Redress could be sought from the current shareholders who are ultimately responsible for allowing the company to borrow so heavily.
That wouldn’t go down well at all!

Actually, I think it would, at least with the general public. Have a look at the list of shareholders mentioned above in an earlier post.

Sadly if any govt now chooses to re-nationalise any of our public services or utilities it will cost billions as all shareholders will need to be financially compensated - I’m not against privatising some areas nor shareholders making profits BUT, big huge but, I cannot even imagine what any govt thought would happen in the long term with having utilities such as gas/electric/water privatised and even worse allowing any companies owned and based outside of the UK to be major shareholders. It was a disaster waiting to happen !!

PS in terms of water, no new reservoirs have been built/created in England since 1991 !! Given how much our population has increased since then how ridiculous is this ??

Interesting how much of Thames Water shares are held by UK & Canadian pensions schemes.

Collectively far more than the global banking/investors.

So the outlook for Thames Water will be largely set by UK & Canadian Govts looking to protect large public sector pension providers.

Overall what is clear is that the fiscal governance of Thames Water is not as it should have been - OftWat?

Or rather Oft20/20Hindsight.

IIRC, Jeremy Hunt as CofE has recently mentioned loosening the fiscal restraints & cautions imposed upon the UK pension funds sector to invest in the rip-roaring UK tech sectors.

I’ll leave that there…

Germanshepherdsmum

Nationalisation without compensation to shareholders would be theft if the shares have a value,

Fortunately they may be going into liquidation so the value would be reduced.

Cossy

PS in terms of water, no new reservoirs have been built/created in England since 1991 !! Given how much our population has increased since then how ridiculous is this ??

It's actually worse than that. Thames Water used to have reservoirs in Barnes, south west London but sold them because they were surplus to requirements.

Germanshepherdsmum

Welsh Water has no shareholders Mibs. Profits are made from charges to customers but they are ploughed back into the company. Obviously employees and contractors have to be paid. They are not-for-profit, they don’t ‘purport’ to be,

Welsh Water took over various private consultancies from different parts of the country so that they could bid to undertake overseas design and construction work. They got rid of most of the experienced consultants who came with the firms and then proceeded to lose money on overseas work, wasting such profit. That is where at least some of their charges have gone.