The state of water in the uk

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Interesting and informative article in Guardian 17/05/2024

I can't think of another solution . Can anyone else?

One of the owners of Thames Water (the teacher's pension fund in Canada, I think) has already written off its investment in Thames Water. I assume it has taken out so much in dividends, writing off the origninal investment in the company is neither here nor there.

Thames Water currently has plans to flood most of our parish under a huge reservoir bigger than Kielder Water. It is on flat ground and will have 85 foot high banks, and its purpose is not to provide water to meet new housing demand. but to store water in the winter, to release into the Thames in Summer when levels are lower to make it easier to take water from the river there.

Apart from anything else, with the promise of future summers being wetter (like this year), I wonder whether it is needed. The reservoir will also occupy most of the flood plain of our village, which has flooded twice this year and will raise the water table by over a metre, which will put all the part of the village not now at risk from flooding in the flood danger zone.

There has already been one major Public Enquiry thaat rejected the plan, our big worry is that with control of the company in government hands they will over ride them and ;et it go ahead.

We are not being nimbys. There are better and cheaper ways of providing the water needed and the Public Enquiry validated these, but, from Thames Water's point of view, a big new reservoir, despite the borrowing needed to build it, added more value to the company than the simpler cheaper alternative. Once again a classic case of them riding over customers and the environement for the gain of the companies foreign owners.

In England. Water in Scotland and Norrhern Ireland is essentially nationalised, and much Wales is covered by a not for profit company.

But yes, it’s madness to privatise natural monopolies, especially something as essential as water and sewerage.

Nationalising TW would be hugely expensive. The government would have to take on the debt burden, and it’s unarguable that expensive upgrades to facilities are needed. Share price is currently 88p. The shares would have to be acquired, they can’t be confiscated! I know many posters think the company could be acquired for virtually nothing because it carries so much debt, but it doesn’t work like that.

I am not sure I agree GSM. The company is virtually bankrupt, as I said one owner has already completely written off their investment and many a company days from bankruptcy has had a positive share price, and then been sold for £1.

If TW goes into bankruptcy, and it might choose that as a way out of its problems, it could be taken back into state ownership quite cheaply.

There is still a huge amount of debt which anyone acquiring the company would have to take on. Shares will need to be acquired. Debts don’t simply disappear if a company goes into administration.

so if it went bankrupt and the government didn't acquire it, what would happen to the debt? and what would happen to the company/water?

GSM I understand completely ypur comments about the debt, but I do not see any alternative. The people who live in the Thames Water region cannot be expected to pay down what is owed, surely, so who else can or will?

It would add £15bn to gross national debt, which is a fraction of the current £2,720.8 billion.

For comparison, when student loans were moved from being classified as assets to deficits in 2019, it added £12bn to UK debt, and barely anyone even noticed.

Cat - among - the - pigeon question: are the shareholders not responsible for losses? Lloyd " names" were in the 1990's.
Is this different? If so, how?
I would welcome some explanation of this, as I am mindful of my ignorance of corporate finance.

Lloyd Names are a totally different thing. They underwrite insurance. Shareholders in a limited company, public are private, are not liable for the company’s debts unless, as is very rarely the case, the company is limited by guarantee.

Ok GSM, I understand.

Shareholders in a company limited by guarantee have ( the clue is in the name) their liability limited to a guaranteed sum - normally £1 - and that includes the board unless it can be proved that they were negligent and fraudulent.

Debts can and do disappear when a company goe into liquidation. If there is no money they do not get paid.

Corporate bankruptcy's have brought down many a small successful company when debts have not been paid.

It has just been reported that Thames Water can keep going for another 11 months, unless it can get more financing in that time. they ahve been trying to get new finance for some time. Currently even the entities that own the company are refusing to put more money into it. A sure sign of rats exiting the sinking ship!

Limited companies issue shares and share holders liability is limited to the number of shares they own. If the company goes down the shares are worthless. This is what the term 'limited' in the name means. That you can invest money in the company but cannot lose more than you invested

On the otherhand, when a company is successful lots of people compete to buy the shares when a shareholder decides to sell them and that drives the price of the shares up and the shareholder will make a profit.

With Lloyds, groups of people form syndicates. Lloyds rules now lay down that every member (name) of the syndicate must have a minimum net worth of £600-800,K capital. The heads of the syndicates then decide what insurance risks they are prepared to take.

Nowadays, when a big engineering project could be worth billions, lots of groups will take a small share in the risk being insured. The idea is that each syndicate chooses their risks carefully so that they never have to pay out more than the insurance premiums they collect and hopefully make a profit to pay to the names. The names, meanwhile can invest ther capital how they will and get interest on it - plus, all being well get an income from Lloyds (the nsurance market, not the bank)

What happened in the 1980s was that there was a concatination of major disasters, several hurricanes, major disasters,oil platform spillages and the pay outs exceeded income and the names had to cough up the rest of the money - and for many that cleaned them out because their capital included their house.

Tighter rules now mean that not only must names have substantial captial, it cannot include the house. A friend of mine was one of those 'hammered' in the 1980s and couldn't pay up. Lloyds devised a scheme to stop too many personal bankruptcys. My friend has his income and still lives in his (modest) house. But when he dies everything he owns will be sold to pay the amount he still owes Lloyds.

M0nica

Debts can and do disappear when a company goe into liquidation. If there is no money they do not get paid.

Corporate bankruptcy's have brought down many a small successful company when debts have not been paid.

It has just been reported that Thames Water can keep going for another 11 months, unless it can get more financing in that time. they ahve been trying to get new finance for some time. Currently even the entities that own the company are refusing to put more money into it. A sure sign of rats exiting the sinking ship!

If a company is in liquidation it is dissolved, not taken on by someone else.

But the assets can then b sold and you do get these sleight of hand arrangements that result in all the debts disappearing and the assets being sold for £1.

Sir Philip Green was/is veyr good at that kind of leger-de-main

The apparent ‘sleight of hand’ arrangements which are publicised are not as you suggest MOnica. If there are assets they are applied in a statutory order to satisfy debts. None are sold under the counter, believe me. If the assets have already been stripped that is a different matter entirely.

M0nica

But the assets can then b sold and you do get these sleight of hand arrangements that result in all the debts disappearing and the assets being sold for £1.

Sir Philip Green was/is veyr good at that kind of leger-de-main

In this case the assets are the water pipes, reservoirs and sewage works. probably rather difficult to strip these assets.

Most of the shares are held by the main shareholders who provide the directors and governance of the company. One has already valued their shares in TW at £0.

Siope

In England. Water in Scotland and Norrhern Ireland is essentially nationalised, and much Wales is covered by a not for profit company.

But yes, it’s madness to privatise natural monopolies, especially something as essential as water and sewerage.

Nationalisation is far from fool proof, as Scotland has found out.

inews.co.uk/news/sewage-dumped-scottish-rivers-50-times-day-2975955#:~:text=Scottish%20Water%20released%20sewage%20into,figure%20is%20more%20than%2019%2C000

Debts can be written off in bankcrupcies, certainly the creditors can be left out of pocket as many people know who have been creditors of failed companies. The directors can certainly be accused of mismanagement and incompetence. There may be no alternative to nationalisation . We are told our bills will go up over 50% this year, so I’d welcome renationalisation, so even if our bills do go up it won’t be to pay the directors big bonuses which they are still getting.

Siope

In England. Water in Scotland and Norrhern Ireland is essentially nationalised, and much Wales is covered by a not for profit company.

But yes, it’s madness to privatise natural monopolies, especially something as essential as water and sewerage.

Not-for-profit Welsh Water is not well run. D
Rivers in Wales ars amongst the most polluted with discharge of sewage. The beautiful Usk and Wye and others ard amongst the most polluted in the UK although Severn Trent Water is also to blame for the disgusting pollution of rivers on the border.

We have all been badly let down by the privatisation of the water companies.

Unlike other providers of essential services such as gas and electricity, there is no choice, no competition.
It is a complete failure