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

Time to re post the Marsh family on waste discharge by Thames Water (its one for their best)
www.youtube.com/watch?v=j4F88MerzZc

warning - its pretty direct.

What I cannot get over is the fact that water companies appear to be taking on massive debt in order to pay dividends to shareholders!

How have they managed to declare profits when they are deeply in debt? Creative accounting?

Because they can.
Who's stopping them? Not the current government.

MaizieD

What I cannot get over is the fact that water companies appear to be taking on massive debt in order to pay dividends to shareholders!

How have they managed to declare profits when they are deeply in debt? Creative accounting?

And no one is denying it MaizieD. They just seem to be shrugging and passively accepting that is how it is.

In Ireland water is free, in that it is paid for out of taxation, people don’t have meters.

Maizie Profits come from excess of income over expenditure. Borrowing is like having a mortgage. A big loan that (in theory) will need to be paid off some time , but, for now, you just pay interest.

I also think there is a tax advantage to investing money in a company because you then get paid interest on the money you have lent and that is treated more advantageously for tax than dividends are.

I do think that legislation should be enacted that stops corporate entities, buying control of companies and then loading them up with debt in order to maximise the investor's returns.

vegansrock I think it rains far more in Ireland and presumably its geology makes it easier to access.

Setting aside those with a need for a lot of water, because their families are large, disabled or incontinent and they are on UC. At the other end of the spectrum there are those with swimming pools, or large paddling pools, emptied and refilled every day, or who spent hours everyday watering their gardens with sprinklers to keep the grass perfect.

When water is a scarce commodity that needs to be used carefully. The best way to do this is to make some charge for water. Even before water meters, many water companies put a supplement on your bill if you used a hose or sprinkler.

In the UK, where water is scarce, we are always being encouraged to economise on water, shower don't bath, only use washing machines and dishwashers when full etc etc and it is noticeable these days, when water is on meters, there are far fewer people using sprinklers every day to keep their front lawns immaculate.

Small point, but I think you mean in England Monica? We already pipe a lot of water from Wales to England, and I doubt there’s a shortfall in Scotland either.
The water companies need to invest in building additional reservoirs. The first new large-scale new water storage reservoir to be built in the UK since 1991 is happening at last now though. Portsmouth Water handed a £167m contract to Future Water MJJV Limited to build the Havant Thicket reservoir in southern Hampshire. It’s all possible if there’s a will and sustained investment.

M0nica

Maizie Profits come from excess of income over expenditure. Borrowing is like having a mortgage. A big loan that (in theory) will need to be paid off some time , but, for now, you just pay interest.

I also think there is a tax advantage to investing money in a company because you then get paid interest on the money you have lent and that is treated more advantageously for tax than dividends are.

I do think that legislation should be enacted that stops corporate entities, buying control of companies and then loading them up with debt in order to maximise the investor's returns.

That is the difference between the business juggernauts and our admirable SMEs. No thought, from these cumbersome beasts, of the profit being invested back into the company. It is there to borrow from the improperly named 'market'.

The SMEs almost always have people at the top who are invested in the business both financially and personally. On the other hand, these huge and often toxic companies (literally, in the case of the water companies) are run by financiers, who know little about the method and the product but a great deal about playing financial bingo to feed an inappropriate greed.

A corporate behemoth can’t be run like a SME. They have to be run by people who understand capital markets because they have to attract investment.

But they obviously haven’t been doing that GSM. This debate is not just about the dogma that privatisation is always more efficient. It’s whether a vital resource such as water which everyone has to use should be making profits for foreign investors who have no interest in the customers or their environment, which is evidenced by the current parlours state of the service they attempt to offer.

I wasn’t referring to TW but large companies in general in response to DAR.

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Germanshepherdsmum

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

Parliament is sovereign. If it passes a Bill as an Act (with the formality of Royal Assent) it becomes law. Of course there is a process to be gone through but a determined government with an adequate majority can force any Bill through and use the Parliament Act to overcome Lord's opposition. Not even the Supreme Court can strike down an Act. The scope for a court to interpret the meaning if an Act is limited by the considered statements made by Ministers introducing the Bill as to its intentions.

High Fearnley-Whittingstall made exactly the same point on QT last night when Fiona Bruce pointed out the academics' pension scheme was a Thames Water shareholder.

I don’t need a lecture on the British constitution Grantanow. You know full well how difficult it is to get a controversial Bill passed. The Parliament Act has been used only four times - its use is the British equivalent of ‘doing a Macron’. That didn’t end well, did it?

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,

Yes, that's a fair point. I wonder if there's a way of providing an essential amount of water from taxation, then charging for any usage on top of that. I appreciate that would be difficult (maybe even impossible) to administer though. I guess the main problems are the massive wastage through lack of maintenance and the massive bonuses given to shareholders. Someone said above that they actually had to take out a loan to pay those bonuses!! Words fail me on that one.

Shareholders receive dividends, not bonuses, and loans were not taken out in order to pay dividends. Dividends can only be paid out of profits after tax.

This is the problem with so many companies....profits for the share holders takes priority over efficiency. If private businesses were willing to pay decent wages instead of looking for the cheapest labour, British companies would employ British workers and keep their factories in this country.

And the higher the wages paid, the more expensive the goods produced. That isn’t necessarily a brilliant idea.

Germanshepherdsmum

And the higher the wages paid, the more expensive the goods produced. That isn’t necessarily a brilliant idea.

But it's not a bad idea. At some point we are going to have to come to terms with goods costing more than we are used to paying.

Germanshepherdsmum, if dividends can only be paid out of profits, and Thames Water was paying out large dividends, how come it is in such debt and trouble now?

I know. We have for instance had cheap food for far too long. But you just know what GN posters will say.

What "we" say is, (well, this gransnetter) as long as benefits and others at the bottom of the pile can't afford other than cheap food, then we won't get change until they are paid enough to buy food at realistic prices.

You can make profits whilst having large debts Nandalot. Many profitable companies are highly geared.