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

This is what inews had to say about shareholders involvement.

‘Last year, the owners of Thames Water agreed to invest £500m in the company, marking the first equity injection since privatisation, and pledged to invest a further £1bn.

Against this backdrop, Thames Water made the shock announcement on Tuesday that its CEO Sarah Bentley has resigned and reports soon emerged that the Government was making contingency plans to place the company into a special administration regime.

While the exact circumstances around the latest developments remain unclear. Experts suggested that this could be because Thames Water’s shareholders are unwilling to pump more money into the business.

Chris Goodall, an author and researcher who has written about the impact of private equity on the water industry, speculated that Thames Water may be struggling to meet its interest commitments to shareholders due to soaring interest rates, and that shareholders might be unwilling to put more money into the company until it becomes clear Thames Water is not “fundamentally unviable”.’

Casdon

Trurider1

Lots of comments BUT all totally forget why Industries were de-nationalised in the first place. The Railways etc were de-nationalised as the UNIONS were holding the populous to RANSOM. The Leaders of he Unions were Running the Country for Their benefit. They told the Government what to do. The Water Companies wer de-nationilised as considerable Investment was needed. The shareholders shold be called upon first and they need to ensure that Thames Water Management are doing the jobs they are paid to do.

The shareholders have already been called upon Trurider1, that’s why we are where we are?

If you have shares in a limited company then if you have paid for your shares in full you cannot be called upon to invest more money. You might be invited to buy more shares and you may or may not take up the offer, but you cannot be made to contribute towards the company’s debts unless you have also assumed the role of director or shadow director and the company has been trading whilst insolvent.

Germanshepherdsmum

I’m not sure any were initially sold to foreign investors but I may be wrong. Certainly foreign investors became involved.

Actually, yes, I think the shares were offered to the British public because I had friends who bought some in several utilities.

I find it most shocking that so many of our privatised utilities have been run so badly that some are honestly no longer fit for purpose. And such profit as there is has been used for dividends and excessive management payments rather than ploughed back to maintain the systems.
The government have taken some train services back but they work on fixed term contracts I believe. No such safeguards were put in place for Gas, Electricity and Water companies.

Trurider1

Lots of comments BUT all totally forget why Industries were de-nationalised in the first place. The Railways etc were de-nationalised as the UNIONS were holding the populous to RANSOM. The Leaders of he Unions were Running the Country for Their benefit. They told the Government what to do. The Water Companies wer de-nationilised as considerable Investment was needed. The shareholders shold be called upon first and they need to ensure that Thames Water Management are doing the jobs they are paid to do.

The shareholders have already been called upon Trurider1, that’s why we are where we are?

Germanshepherdsmum

I’m not sure any were initially sold to foreign investors but I may be wrong. Certainly foreign investors became involved.

You're right, the shares were issued to UK shareholders first. However some of the shares (and indeed the some utility companies such as EDF (French) are totally foreign owned).

Trurider1

Lots of comments BUT all totally forget why Industries were de-nationalised in the first place. The Railways etc were de-nationalised as the UNIONS were holding the populous to RANSOM. The Leaders of he Unions were Running the Country for Their benefit. They told the Government what to do. The Water Companies wer de-nationilised as considerable Investment was needed. The shareholders shold be called upon first and they need to ensure that Thames Water Management are doing the jobs they are paid to do.

I'm guessing that the major shareholders of Thames Water are the institions (pension funds and the like) at home and abroad. As long as they are getting good dividends they won't take on the management - and the management remuneration and dividends have probably been too good to leave enough for the investment in infrastructure which has always been required.

I’m not sure any were initially sold to foreign investors but I may be wrong. Certainly foreign investors became involved.

The railways were nationalised for the same reason.

De-nationalised!
Sorry, listening out for a grocery delivery.

The Water Companies wer de-nationilised as considerable Investment was needed.

That didnt work out very well, though!

The railways were nationalised for the same reason.

It really is a matter of shame that our nationalised industries were sold off to foreign countries because they had been let go to rack and ruin and needed upgrading.

I thought Blair would reverse water privatisation at least. ☹

Trurider1

Lots of comments BUT all totally forget why Industries were de-nationalised in the first place. The Railways etc were de-nationalised as the UNIONS were holding the populous to RANSOM. The Leaders of he Unions were Running the Country for Their benefit. They told the Government what to do. The Water Companies wer de-nationilised as considerable Investment was needed. The shareholders shold be called upon first and they need to ensure that Thames Water Management are doing the jobs they are paid to do.

Well, that's a point of view, but an alternative one is that people haven't forgotten at all, but instead see the situation as one where the government were trying to force the workers to accept low pay and conditions, and they fought back.

Lots of comments BUT all totally forget why Industries were de-nationalised in the first place. The Railways etc were de-nationalised as the UNIONS were holding the populous to RANSOM. The Leaders of he Unions were Running the Country for Their benefit. They told the Government what to do. The Water Companies wer de-nationilised as considerable Investment was needed. The shareholders shold be called upon first and they need to ensure that Thames Water Management are doing the jobs they are paid to do.

cc

OurKid1

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.

Surely it makes sense to provide it at cost to those who use it, so there is little or no funding from taxation. Providing anything free at the point of use is far more likely to lead to wastage. And it takes no account of heavy users such as those with pools, large gardens, agriculture or industry - they should be paying the same per unit as domestic users but I don't know if they get a lower rate now?
For those who are really hard up it makes sense to increase their benefits, rather than provide water free for everyone,

It’s impossible to provide water - and sewage treatment and disposal - free without vast increases in taxation, and as cc says, consumers of these services vary tremendously. I agree that if anything is provided free it will be wasted. We cannot afford that with water.

cc

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.

The unfortunate thing is that pension funds are major shareholders so pension pots here and abroad will take a hit. They and sovereign government shareholders will fight tooth and nail to preserve their investments. Currently shares are trading at just under 94p so there is considerable underlying value there. Liquidation is unlikely - administration more so.

OurKid1

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.

Surely it makes sense to provide it at cost to those who use it, so there is little or no funding from taxation. Providing anything free at the point of use is far more likely to lead to wastage. And it takes no account of heavy users such as those with pools, large gardens, agriculture or industry - they should be paying the same per unit as domestic users but I don't know if they get a lower rate now?
For those who are really hard up it makes sense to increase their benefits, rather than provide water free for everyone,

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.

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

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.

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…

Or rather Oft20/20Hindsight.

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?

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 ??

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 !!

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.

It sure does. Phenomenally bad management.