Water Pollution -“ A National Disgrace”? A case for renationalisation?

The whole problem is that OFWAT is obsessed with keeping water prices down, you can argue that the private water companies are inefficient but I will guarantee a nationalized industry would be worse and at least £50 billion would have to be found for reinvestment.

The whole problem is that old storm water drains are connected with sewage drains, it doesn’t happen in newer developments storm water separated and runs onto balancing ponds to prevent surges. It probably cheaper to build larger sewage works than separate existing systems.

I don’t believe that any government will renationalize the water industry the cost will be too high, so more investment needs to be allowed, wether that cost is paid by customers or from general taxation it needs to be made.

That’s not the problem though Katie59. The problem is that the money that householders are paying for their water supply is being creamed off and paid to shareholders rather being invested in improving the infrastructure.

Casdon

England and Chile are apparently the only countries in the world with fully privatised water supply systems. As privatisation has been an unmitigated disaster, re nationalisation will have to happen, it’s just the when and how that’s in question.

It should never have been privatised.

How they ever expected to improve antiquated systems and satisfy shareholders who wanted a good return on their investments is a mystery.

However, Welsh Water has no shareholders and is a not-for-profit organisation yet seems little better even though water bills are high.

Let Thames water go bankrupt and the shares will be worthless. Then nationalise.

Agreed! The company (along with others) has clearly been mismanaged for years and should be allowed to go bankrupt, rendering the shares worthless. That’s what happens to private companies that don’t perform effectively. No bail out by the taxpayer. When the shares are worthless the government can take back management of the company!

That’s not how commercial contracts work is it, loans are made against assets, physical assets or long term contracts, and investors expect a return on those investments, successive governments have used private finance to reduce government borrowing, hoping that efficiency gains will offset interest paid.

Make no mistake the government COULD take over and not pay compensation but they WONT because every private finance contract that we have would then be under threat. The reason that Utility contracts are so popular with investors is because the UK is highly unlikely to default on a debt

We have the situation now that Thames water cannot raise money for new work because the contract terms are not good enough, Ofwat still has not approved the finance needed to do the work, they are a government agency and are being directed by polititians who want to spend money elsewhere.

The politicians have got to step up. Privatisation has not worked. Nationalisation won’t wave a magic wand but at least it means our water is not owned by foreign investors who don’t give a stuff about water quality or customers in England. Why should these companies expect huge payouts and then be bailed out by the taxpayers when the shit literally hits the fan?

It's the impact on people that concerns me. I live close by the sewage works mentioned on BBC News during the week. It is a small unmanned works and floods regularly. It is on a flood plain from the River Mole which runs through our area and consequently the residents of the large housing estate, built there recently find themselves ankle deep in sewage water every time there is steady, prolonged rain. The e-coli readings are off the scale resulting in people and dogs, in particular, being ill as the ramblers and dog walkers paths are left covered in raw sewage once the water drains away. This is the 3rd time it has happened this year and we're still in March. People come and have a look and say they will sort things out but nothing ever happens. Bottom line, nobody who could help, cares.

If a company is failing in its statutory duties as Thames Water is, then no dividends should be paid, the bosses should be forensically examined to dig out corruption, profiteering and incompetence. The state has a duty to intervene in the interests of the public they are supposed to serve.

We had a talk about the water system in the UK. The infrastructure is very, very old and dates back centuries and that is one of the issues. The talk focussed on the Thames at the time of Dickens but apparently there are still issues with raw sewage after heavy rain . The man who spoke to us was a prof from a uni and his job was to analyse ‘poo’ to see what diseases , including Covid, could be traced. It was fascinating. At least we no longer get cholera and typhus. Being a younger country as regards waste disposal it is not so bad here though I well remember that 50 years ago they used to collect sewage and/ or have septic tanks in the garden. Most places are now connected and we don’t seem to get the pollution in our seas and waterways these days.

Katie59

That’s not how commercial contracts work is it, loans are made against assets, physical assets or long term contracts, and investors expect a return on those investments, successive governments have used private finance to reduce government borrowing, hoping that efficiency gains will offset interest paid.

Make no mistake the government COULD take over and not pay compensation but they WONT because every private finance contract that we have would then be under threat. The reason that Utility contracts are so popular with investors is because the UK is highly unlikely to default on a debt

We have the situation now that Thames water cannot raise money for new work because the contract terms are not good enough, Ofwat still has not approved the finance needed to do the work, they are a government agency and are being directed by polititians who want to spend money elsewhere.

The government are right not to pay more though, why should they - the investors who have hugely benefited from Thames Water should be financing the debt, not the government being seen as the default bail out. I wonder if anybody has done the equation comparing the shareholder payouts over the years to the debt level now?

the government could take over and not pay compensation

I think not.

OFWAT regulate the water industry by 5 yr reviews, prior to 2010 the aim was to improve water infrastructure, at the 2010 review that was changed to “make better use of existing infrastructure” so its hardly surprising that aging facilities have not been adequate.

You cannot expect investors to put money into our water industry without paying them a worthwhile return, they will simply say no.
Thames Water is in that situation now their liabilities nearly equal assets, the government could take over that debt but then would also have to find the cash for further investment.
Personally I think that government should take over the water industry but it wont happen, more likely a temporary bail out will be agreed.
Nationalizing the industry would mean politician's taking responsibility for pollution directly, politician's are not good at taking responsibility, they would rather pass the buck and blame others .

When people buy shares they know they can go down as well as up. Shareholders in a failed company that has to be bailed out by the taxpayer are not owed compensation.

Katie59

OFWAT regulate the water industry by 5 yr reviews, prior to 2010 the aim was to improve water infrastructure, at the 2010 review that was changed to “make better use of existing infrastructure” so its hardly surprising that aging facilities have not been adequate.

You cannot expect investors to put money into our water industry without paying them a worthwhile return, they will simply say no.
Thames Water is in that situation now their liabilities nearly equal assets, the government could take over that debt but then would also have to find the cash for further investment.
Personally I think that government should take over the water industry but it wont happen, more likely a temporary bail out will be agreed.
Nationalizing the industry would mean politician's taking responsibility for pollution directly, politician's are not good at taking responsibility, they would rather pass the buck and blame others .

Thanes Water is in trouble because it borrowed heavily in order to pay shareholder dividends. Shareholders have refused to stump up any money to recapitalise.

Without a government bail out it seems to me that the company has no alternative but to declare bankruptcy. It would then be in the hands of the Receiver who will sort out which creditors get what and how to dispose of its assets. If the government bought it from the Receiver at a knockdown price it would be under no obligation to pay off any of the company's creditors, dealing with them is the Receiver's job, not the purchaser's.

I don't see any reason why it shouldn't be treated as any other failed private sector company. 'Investment' in a private sector company is always a risk. If it goes bust you lose out. That's what a market economy is about. There's no absolute safety in it. I can't see why Thames should be any different.

Totally agree MaizieD. Any other company that borrowed money to pay hefty dividends to its shareholders wouldn't be bailed out by the government, Thames Water shouldn't be treated any differently. Joe Bloggs who got his company into a similar dreadful mess wouldn't get a government bail out would he? It seems these investors now want a golden safety net provided by the British taxpayer and that's not fair and shouldn't happen.

the population has become far too large for our uk infrastructure and yes the utilities should all be privatised but that will not be possible

While I agree with most of the above comments and would like to see nationalisation of vital services, I would like to add the point to the debate that we the consumer must take some responsibility.
The systems would cope better if we did not dispose of nappies, wet wipes, sanitary towels and so much more in to overworked drains via our toilets.
We could also help by using our grey water for gardening purposes, invest in more water butts for our garden, turning off our cold taps during the teeth cleaning process and much more.

I don't see any reason why it shouldn't be treated as any other failed private sector company.

Totally agree MaizieD. Any private company that was incompetent, badly managed and unable to provide what customers have paid for, wouldn’t expect the government to bail them out - they would declare bankruptcy. Why are the PRIVATE water companies any different? They want to have their cake and eat it. Business doesn’t work like that - and they know it!

vegansrock

The politicians have got to step up. Privatisation has not worked. Nationalisation won’t wave a magic wand but at least it means our water is not owned by foreign investors who don’t give a stuff about water quality or customers in England. Why should these companies expect huge payouts and then be bailed out by the taxpayers when the shit literally hits the fan?

Quite.

Sarnia I saw that report. This, in a supposedly wealthy country.

The whole of the UK is in a sad state of neglect.

Very interesting MaizieD. It would be good if that happened. Asset stripping on steroids seems to be the M.O. at present.

Rosie51 👏👏👏

Urmstongran

Very interesting MaizieD. It would be good if that happened. Asset stripping on steroids seems to be the M.O. at present.

For everything!
Even our care homes.

Are we terminally stupid?

When we look back at the history of our water industry, we see the same destructive pattern typical of modern-day Conservative politics. Underfund to make a public service appear inefficent then sell it off. It’s exactly what Thatcher did.

Regional Water Authorities had consolidated what had been a very fragmented sector and made efficiency gains. Then along came Thatcher who refused to let the RWA borrow money for capital projects and then criticised them for not building. She wanted to privatise in 1984 but met public opposition. Her landslide re-election in 1987 gave her the mandate to go ahead - and that’s where we are now.

Just as we can draw a straight line from Thatcher to the crises in public housing and adult social care, her policy to privatise water has lead us to where we are now.

One of these days the blue electorate will wake up to the fact that it’s nigh impossible to combine the rights of a citizen to have efficient and affordable public services to the interests of private enterprise. The objective of the latter is always to make the most money for shareholders, all too often achieved by under investment.

The problems at Thames Water largely stem from Australian bank Macquarie’s eleven year stint until 2017 of asset stripping (and tax avoidance) leaving TW with an extra £2.2 billion in loans and £2.7 billion taken out in dividends. Debts rose from £3.4 billion to £10.8 billion under its ownership.

The UK water industry now is all about foreign investors making a fortune from our most precious resource while we are left with polluted rivers and seas.

I can remember when utilities were privatised and friends of ours bought shares in most of them. They thought they were investing for their retirement and, perhaps naïvely, also investing in the country's future.

We couldn't have afforded to, thankfully.

However, foreign investors will not care a jot about our country, its future and the welfare of its people. They just want as much return as they can squeeze out of their investments.

Australian bank Macquarie
Mention that bank to some Australians I know and their response is 🤬