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

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?

Casdon

Doodledog

Germanshepherdsmum

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

Was it theft when a nationalised industries were sold off into private hands?

When companies go bust and are worthless because nobody wants to buy them, shareholders aren’t compensated, and I’m sure the government doesn’t actively want to buy Thames Water.

I'm sure they don't, but that's not what I was getting at.

The notion that it would be 'theft' to take back control of a failed private industry is a very one-sided view, given that it belonged to 'the people' in the first place and we weren't compensated when it was taken from us and sold off.

Yes the dogma that privatisation always leads to more efficiency and lower cost has been well and truly scuppered. Water is not something customers have a choice of providers or whether to use it or not.

I'm not surprised the director resigned. she was on BBC News at 10 last night. Talk about a poisoned chalice.

www.theguardian.com/environment/2023/jun/28/mounting-debts-and-public-anger-could-finally-sink-uk-water-companies
It seems that the water companies have racked up billions of pounds worth of debt in order to pay dividends. I guess that that this is what you get for light touch regulations.

Water and waste water should never have been privatised, that is quite evident now. Over the time since it has been privatised the dividends paid have likely offset much of the shareholder costs. Aside from Thames Water the other water co,panies are not far behind. The UK is unique in the world for trying to profit from the water industry, even the US has not put water into private ownership. The whole lot should be nationalised with little or zero compensation for shareholders. Once under public ownership it will be necessary to use tax payer funding to fix the problems.

DaisyAnneReturns

I agree with you to much of this has been an unmitigated disaster varian. However, I would not like the next government to swing to the other extreme of wholesale state ownership. Communities need to be much more involved.

Yes communities but water areas don't neatly fit into communities to take decision. So full nationalisation but with strong consultation.

Water and Railways leap out. How crazy in a. small country to split it up and make profit out of water, fgs. At the time I recall jokes about it being "air"next.

yes shareholders have to be paid off but if they have been getting high dividends at the cost of the community - which Thames water has - definitely lowest cost.

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

Thank you, GSM.

Since 2001, Welsh Water has been owned, financed and managed by Glas Cymru. Unique in the water and sewerage sector, Glas Cymru is a company limited by guarantee and as such has no shareholders.

The Glas Cymru business model aims to reduce Welsh Water’s asset financing cost, the water industry's single biggest cost.

Under Glas Cymru’s ownership, Welsh Water's assets and capital investment are financed by bonds and retained financial surpluses.
(From Welsh Water website).

I’m not sure if this is the sort of model you are thinking of Monica? As Callistemon21 said, Welsh Water is not without issues, although it does consistently perform as well as, or better than other water companies. The biggest issues seem to be that the infrastructure is outdated, and revenue is insufficient to invest to future-proof for the effect of climate change. Hence overspill into rivers and the sea when there is flooding, and burst pipe wastage. Obviously very rural places have high infrastructure costs, and mountains create lots of water, so it’s not all down to things under their control.

Privatisation was based on a political dogma - it had nothing to do with what was best for the country.

Whoever next gets into power will have the devil's own job unpicking this mess.

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.

Questions for GSM, please. Could the government allow TW to 'simply' go bankrupt and then take over albeit a huge mess? Could all the board members be prosecuted for malpractice or some sort of mismanagement or neglect?

The problem with Thames Water, some other water companies and other big utility suppliers is their attraction to large Sovereign Wealth funds and pension funds both UK and foreign. These groups of investors are all looking for safe investments and consistent dividends.. Utilities are ideal because they are less likely to go broke, because you cannot turn the water off and put a company into bankruptcy and have a steady and reliable income stream.

It is instructive to see who actually owns Thames Water. According to their website it is as follows:

Ontario Municipal Employees Retirement System 31.777%
Universities Superannuation Scheme 19.711%
Infinity Investments SA (subsidiary of the Abu Dhabi Investment Authority,one of the world’s largest sovereign wealth funds 9.900%
British Columbia Investment Management Corporation 8.706% An investment management services provider for British Columbia’s public sector
Hermes GPE 8.699% for BT Pension Scheme (BTPS)
China Investment Corporation 8.688%
Queensland Investment Corporation 5.352%
Aquila GP Inc. 4.995%
Stichting Pensioenfonds Zorg en Welzijn 2.172% A pension fund service provider

All the above are companies and entities looking for income and dividends, and safe investments before capital growth. Most are foreign so have no interest in the welfare of either the country it is invested in or its customers.

I am with those who believe that public utilities shuld never have been privatised. But we need to remember that under nationalistaion these companies were often badly run and starved of investment.

We need a new model of company organisation for utilities that keeps them in the public sector but at arms length from government interference in their running.

Germanshepherdsmum

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

Richard Murphy has done some work based on the accounts of some water & sewage companies. It looks more as though the companies have been stealing from its captive 'customers' inorder to pay its shareholders.

Also they appear to be in a very shaky financial position.
If a company were to go bust, as, e.g. Thames Water appears to be anout to, the shareholders would get very little. That's a risk anyone investing in shares has to take. Nationalisation of a failed industry is another, I think.

www.taxresearch.org.uk/Blog/2023/06/29/englands-water-industry-is-environmentally-insolvent/

Taxpayers shouldn’t be bailing out or compensating private water companies. We shouldn’t finance their debt. We are the only country who allows private companies to run water services. It’s a failed experiment. Renationalise now!

In the past year Thames Water company has transferred £37 million to its parent company -sat in China.

This is what happens when utilities should never have been privatised.

Germanshepherdsmum

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

If the company is in effect bankrupt. China and Abu Dhabi owners have overseen a company that has failed, I’m not sure why they should be compensated, when they have milked the monopoly year on year. The pension funds should be the ones to be protected.

Thames Water have borrowed money, not to invest in their business , but to pay shareholders huge dividends. They aren’t efficient. We recently had problems with water pressure in our area. They sent dozens of engineers to individual houses before they admitted they had caused the problem in the first place. A complete farce. The CEO should be in jail , not paid £ millions.

Water companies are local monopolies and should never have been privatised.None of us can shop around for another
supplier.

Urmstongran

* That was Manchester back in 1972.

We moved here in the 1980s and used to pick up the phone to make a call and hear some unknown neighbour (a couple of streets away, we found) chatting away.
They also allocated us an old number which had belonged to a local business. We received a lot of phone calls asking if they could book us for entertainment at weddings, parties and other functions!
"No, but I can come and tap dance and sing badly" 😁

I always thought that privatising water was wrong and in fact immoral.

Actually, I do think the shareholders in Thames Water have received quite enough in profits over the years.
Shares do bottom out and it's a risk you take when you invest.

Doodledog

Germanshepherdsmum

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

Was it theft when a nationalised industries were sold off into private hands?

When companies go bust and are worthless because nobody wants to buy them, shareholders aren’t compensated, and I’m sure the government doesn’t actively want to buy Thames Water.

* That was Manchester back in 1972.

Obscene amounts of money being made and a cavalier attitude regarding customer satisfaction. And yet, I bet most of us can recall the bad old days of the monopoly British Telecom had with some folk on a waiting list for a telephone line - several months sometimes! I remember my brother in law and his wife having to share a number with some neighbours - a so called ‘party line’. Lifting up the receiver to make a phone call, hearing the neighbours already using the line! Monopolies aren’t always perfect either.