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

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.

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,

@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

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.

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.

Well said.

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.

My post above is to GSM.

what

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?

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!

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.

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.

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

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.

I’m afraid I don’t go along with things belonging to ‘the people’.
Well I don't go along with things being taken from public ownership and sold, but what you or I think isn't really the point either .

Germanshepherdsmum

Unpicking the mess starts now Luckygirl, not after the next election.

Does this government have the motivation to pick up their mess?

The theory was fine and it worked for a while after privatisation in 1989.
I’m not putting forward an argument Casdon, merely stating the fact of what happened and why it happened. The taxpayer may pay more in the short term - time will tell.

Urmstongran are you going to say that British Rail didn't have wifi next?

Your argument is fatally flawed Germanshepherdsmum. The taxpayer will pay more ultimately to rectify the lack of investment over the past 20+ years. Short termism is not the answer.

The theory was that private companies would invest in the infrastructure and improve the service. The reality is that they didn't.

I’m afraid I don’t go along with things belonging to ‘the people’.

When Margaret Thatcher privatised the water industry the infrastructure was not in a good state and there was plenty of raw sewage in the sea. As I said above, successive governments had failed to properly fund the industry and serious cash was needed. Privatisation saved the taxpayer from having to support the necessary investment.

If shareholders invest the company has the benefit of their money and of course shareholders expect dividends - interest on the money loaned - and they hope for capital growth, which is always a gamble.

Funding dividends by loans is not a company exactly in the best of health.

Shareholders have won big time when in fact they had no right to such payouts.

The U.K. taxpayer owns them nothing.

Germanshepherdsmum

The taxpayer was relieved of the burden of making good the results of underfunding by successive governments. I’ve never heard of anyone receiving compensation for being given a benefit, as it then was.
If you were a shareholder would you be happy with having your shares taken with no compensation?

That argument doesn’t stack up in the event that a failed Water Company is returned to the government because the taxpayer will end up paying far, far more than they would have done if the company had stayed in public ownership and revenues had been reinvested. Shareholders take their chance, some you win, some you lose. They have won for many years, so it’s clearly payback time now if the company does go effectively bankrupt.

Germanshepherdsmum

The taxpayer was relieved of the burden of making good the results of underfunding by successive governments. I’ve never heard of anyone receiving compensation for being given a benefit, as it then was.
If you were a shareholder would you be happy with having your shares taken with no compensation?

Probably not, as I would have been allowed to buy shares with the expectation of profit. But again, that's not the point.

The point is that it wasn't the government of the day's to sell (ditto, BT, the Gas Board, Electricity Board etc). Nationalised industries were forcibly taken from the people and sold. We didn't get any money back, and our bills have risen because there are shareholders taking a cut of the profits that would previously have been reinvested to stop raw sewage from being dumped in the sea, and similar revolting practices.