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

Of course it could the government can create/borrow as much money as it needs, then it can directly control and implement the standards and costs needed. No question of third parties ripping off the consumers, who then pay what it costs or some other amount with subsidy from taxation.

There was no problem finding the cash for HS2 with very slim viability justification and now looks like costing double the estimate for half the distance

Private finance is only a short term fix because it spreads the cost over a longer period but ends up costing more

I'd like it to be nationalised but cant see how it could be done financially.

Katie59

Casdon

Katie59

It’s not the fault of the water companies it’s the polititians of successive governments allowing it to happen, even now they are passing the buck. They COULD make Thames bankrupt default on the loans, but then they have to find the extra investment themselves and take responsibility for the industry, plus nobody would lend money for all the other private finance utilities.
Thats why it’s not going to happen

That’s blinkered. How are you justifying the huge shareholder bonuses?

The polititians negotiated the contracts but failed to control the way they were implemented, most of them are clueless about commercial finance. There are unscrupulous investors who will take every opportunity to gain it you let them it happens all the time, give them the power they will use it.

Which is why I believe private finance is a bad idea, sometimes you might gain, often you won’t.

But as Germanshepherdsmum pointed out, companies belong to their shareholders, and normally when companies go bust, shareholders get nothing. Are you saying that these contracts were written in such a way that there was a guaranteed government bailout once the shareholders had maximised their profits and the company went bust?

Surely a monopoly is a different case? I have no choice as to where to " buy" my water and sewage. If I think that my grocer / energy company/ hairdresser is not acting responsibly or paying the chief executive too much I can ( and do) vote with my feet, or my cheque book.

private finance is a bad idea

What other sort do you have in mind? Or do you mean private equity investors, or public finance initiatives?

Casdon

Katie59

It’s not the fault of the water companies it’s the polititians of successive governments allowing it to happen, even now they are passing the buck. They COULD make Thames bankrupt default on the loans, but then they have to find the extra investment themselves and take responsibility for the industry, plus nobody would lend money for all the other private finance utilities.
Thats why it’s not going to happen

That’s blinkered. How are you justifying the huge shareholder bonuses?

The polititians negotiated the contracts but failed to control the way they were implemented, most of them are clueless about commercial finance. There are unscrupulous investors who will take every opportunity to gain it you let them it happens all the time, give them the power they will use it.

Which is why I believe private finance is a bad idea, sometimes you might gain, often you won’t.

Urmstongran

How does a company that values itself at around £2.75 billion rack up £14 billion of debts? Would any lender give me a 500% mortgage on my home?

They have creditors as well as fixed assets, and it’s normal business practice to include those in the assets. You don’t supply any supporting evidence for your figure and I’m not going to go looking for the latest accounts. Remember that any net value is excess of assets over liabilities.

Banks would not make loans which could never be repaid. They are not in the business of giving money away. Commercial finance is very sophisticated and it’s clear that you don’t understand it. I’m making a statement of fact, not being rude. The executives aren’t ‘ignorant’, nor are the banks ‘greedy’ - they lend at commercial rates taking into account known risks and specialist lawyers are used to negotiate and document the loans.

The money in question is not ‘ours’. Companies belong to their shareholders.

Exactly. Asset stripping isn’t only the disposal of tangible assets. It’s any means by which value is stripped out of a company.

Macquarie Bank aka the Vampire Kangaroo is known for buying up British companies, running down their capital base and loading the companies with large debts, while extracting dividends and engaging in large scale tax avoidance.

Which is exactly what they did with Thames Water. It’s what private equity firms have done to care homes over and over again so that a big chunk of what self-funders and local councils are paying in care fees isn’t going on care at all but to service massive leveraged debt.

Our basic rights, the right to clean water and the right to care when we are most vulnerable are seen as money-making vehicles for these vultures.

Katie59

It’s not the fault of the water companies it’s the polititians of successive governments allowing it to happen, even now they are passing the buck. They COULD make Thames bankrupt default on the loans, but then they have to find the extra investment themselves and take responsibility for the industry, plus nobody would lend money for all the other private finance utilities.
Thats why it’s not going to happen

That’s blinkered. How are you justifying the huge shareholder bonuses?

I think the BANKS have been complicit. Greedy vultures. So not just politicians. Would Labour be any better?

There are certain "Investment Banks" who have spent the last 25 years selling complicated and extremely expensive (for the utilities) debt to the UK's utility companies. In exchange for some up front cash they have given away much of their future revenue.

The debt can never be repaid without extraordinary profits. To achieve these profits the companies have to charge insane amounts or cut back on their sensible and necessary sustaining capital expenditure. Even with such drastic measures they are stuffed. The debt isn't going away. It is disingenuous to suggest that the money is needed for upkeep and improvements...they have already had the money and spent it on bonuses.

The villains are ignorant executives who allowed themselves to be blinded by the rapacious banks and the law for allowing such companies (and councils etc) to behave so foolishly with what is ultimately our money!

How does a company that values itself at around £2.75 billion rack up £14 billion of debts? Would any lender give me a 500% mortgage on my home?

It’s not the fault of the water companies it’s the polititians of successive governments allowing it to happen, even now they are passing the buck. They COULD make Thames bankrupt default on the loans, but then they have to find the extra investment themselves and take responsibility for the industry, plus nobody would lend money for all the other private finance utilities.
Thats why it’s not going to happen

it does need to be privatised but after its bankrupt so its cheaper. Similar could be said for most privatised services, a friend worked for a youth autism service run by Virgin & they were forever trying to cut costs by insisting visits were done via zoom, this doesn't work for people, you need to be in the room with them to see non-verbal clues, a glance aside at a difficult topic perhaps, a slight tremor in a voice, trembling when asked something they don't know how to answer.
It will come as no surprise to hear I loathe this gov't and can't wait to vote Labour to get proper public service back, they are going to keep using private companies but will check each contract for value for money, so no huge payouts for executives again

They have just let it go to rack and ruin.

The original shareholders were always going to sell to make a quick profit to pay for that little trip to Benidorm or that nice new kitchen
I cannot imagine my friend going on a little trip to Benidorm. Ever. Perhaps she'd have had a new kitchen if she hadn't died.

What asset stripping has taken place in the water industry Urms? A company needs assets against which to borrow money.

“Are we terminally stupid? I fear we are! Or rather successive governments have been. On what planet does having your essential services privatised and especially in foreign hands make good sense? I don't agree with privatisation at all but at the very least I disagree with foreign ownership of our basic utilities. They have no interest in how decisions affect the British public.”

Agreed Rosie51 👏👏👏

When Margaret thatcher privatised utilities, they were all debt free . Since then a succession of foreign companies have been allowed to invest, with no limit to their securitisation.

The original shareholders were always going to sell to make a quick profit to pay for that little trip to Benidorm or that nice new kitchen.

Now the big boys move in . And they all do the same thing - asset strip until there’s nothing left . Politicians smooth things over and then walk into directorships. a few paltry donations to the party in control ensure the continued gravy train.

A comparable analogy is the ownership of Manchester United by the Glazer family and yet in the media nothing but opprobrium was heaped on these crooks . The difference being that their assets contained to rise as the mania for football rose over their tenure.

This is just plain wrong . The greed of these companies is insatiable. We need to break the system because the only losers in this inevitable cycle are the customers who get to hold the parcel when the music stops. And that’s you and me.

I thought Tony Blair would at least halt the privatisation of the water industry.

Are we terminally stupid? I fear we are! Or rather successive governments have been. On what planet does having your essential services privatised and especially in foreign hands make good sense? I don't agree with privatisation at all but at the very least I disagree with foreign ownership of our basic utilities. They have no interest in how decisions affect the British public.

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

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.

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.

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?

Rosie51 👏👏👏