Michael5482 wrote: ↑Thu Jun 29, 2023 5:21 pm
Archery1969 wrote: ↑Thu Jun 29, 2023 4:42 pm
Michael5482 wrote: ↑Thu Jun 29, 2023 3:38 pm
I'd prefer Nationalisation and ran as a not for profit organisation with money re-invested for continuous improvement, development, repairs, staff etc with competent people running it of course (living in hope here with that one)
As ever we should be looking to country's who have the best water infrastructures, learning and implementing from them.
I just don't think our political system no longer works to allow the country to function efficiently in the 21st century, you need innovators, specialists, scientists, data and people who know how to use it in the digital age but we get what seems like legislation from a by-gone empire and politicians who quite frankly wouldn't know shit from clay.
The problem is the moment you hand something over to the private sector then its all about making money for share holders and quickly. Thats how you get investment, otherwise, no investor would be interested, might just as well stick your money in a bank or buy gold long term. But its upto share holders how much money should be invested. Its no where near enough.
The UK sewage infrastructure system is 130 years old, the whole lot needs replacing. Thats an enormous task to undertake and would cost £ trillions to do correctly, plus on-going maintenance. No investor would be interested in that type of very long term investment as they not going to wait 50 years to get their capital back.
Ok, so, nationalise everything, but hold on, you need huge funds to take all these companies back into public ownership plus court cases plus appeals etc.
It sounds good to just say fix all these systems and take them back into the public domain but you would need to borrow £ billions or not trillions to do so.
The country just doesnt have the funds, have a look at the national income/expenditure. If that was a houshold budget then you would probably jump of a cliff as there is no way out and no hope before 2050 at the very least. Yes we found £400 nillion during Covid but that was through borrowing and now the interest payments are choking everything any government will try and do.
A labour straegist suggested it would take a minimum of 3 parliaments before most people saw any benefits. As we all know, the public are generally fickle, give them a tax break or handout and all is suddenly forgiven and you can then no longer rely on their support next time around.
The national debt is somewhere in the region of £2.8 trillion, so, borrow some more, who cares but you need to be able to service the interest debt. Obviously after WW2 we borrow mega sums in comparison but the debt interest was 0% and not 1, 2, 3, 4, 5 or 6%.
That's why we need a long-term plan 20 years/30 years whatever it takes.
We don't need to nationalise everything in one go nor should we be aiming to it should be a slow structured, well planned cross party approach no matter who's in charge it gets delivered. Politicians need to be held accountable via KPI's and parties fined for not delivering on it.
Let Thames Water go bankrupt, government step in and buy the assets at a knockdown price.
Get it up and running, do what needs doing make Thames Water the best nationalised water company on the world, use it as a model then go for Northumbrian Water. Use the Environment Agency, start hammering these private water companies with whopping fines to the point they have no option but to give us the keys back.
Need to be looking at how it can be achieved instead of excuses.
Lets look at Thames Water:
- Thames Water stands out because of the high level of debt at 80% of its value, close to regulatory limits and well above other water companies. It is joint bottom of the standards league tables for leaks, sewage pollution and water treatment.
- The debt is structured in a convoluted way, but what we do know is that most of it is linked to the Retail Prices Index, which is currently rising by over 11%.
- Inflation should also help with the value of the assets. Thames has made great play of not paying its shareholders any dividends, but there are other methods through which they can gain returns.
- The previous owners, Australian financiers Macquarie, left the company £10bn in debt (up £9bn) having extracted healthy dividends. All of this was perfectly allowed in the system, but were partly a product of that era of ultra-low interest rates.
- Water companies excelled at gaming the regulations that existed to extract the most short-term profits. In 2010 the coalition government also commissioned a report that channelled water companies' complaints about Ofwat's regulatory touch being onerous.
- In the short term, it worked out. Bills were kept relatively low. Shareholders made huge profits, aided by cheap refinancing at ultra-low interest rates.
- Governments outsourced the blame to the private sector, and got debts off their books. Substantial investment did occur. In retrospect, it was not enough.
- The biggest single investment - the Thames super sewer - was only finally pushed through, not because of British politicians, regulators or the initiative of industry, but because of the threat of repeated fines from the EU, before Brexit.
- But while the water industry is a natural monopoly, it has no monopoly on nature and the environment. Vivid images of sewage pollution on beaches and in waterways are now seared into the public consciousness. This is especially politically salient among areas up for grabs in the next election. It never needed to be a hot political topic. It is now.
- The potential spending on bringing the sewage and water systems up to scratch is a "how long is a piece of string?" situation. It is definitely many billions, probably tens of billions, and cases could be made for hundreds of billions.
- The expectations of the public, politicians and regulators are now high. They are perhaps higher than originally envisaged by the shareholders in these companies. And yet at this moment ultra-low interest rates are gone.
- The temptation for the government to act aggressively with shareholders may exist. Some tightening of the rules on dividends, with a link to environmental performance, occurred in the recent Environment Act.
- But this government, or even a possible Labour government, are not just relying on the pension funds and international sovereign wealth investors to fund water infrastructure, but also energy, net zero, and housing.
- It is exactly the same investors who raised eyebrows in the aftermath of the mini-budget, and three prime ministers and four chancellors in one year. This may explain some of the tiptoeing. The Labour leadership too is resisting pressure from unions on water industry nationalisation.
- The alternative is public ownership which would bring all of the debts on to the exchequer, and mean the Environment Agency fining Defra for unacceptable sewage outflows. One suggestion, which could prove unpopular with the public, is to show some forgiveness to the water companies over fines. Privately, officials dismiss the idea.
- For now we wait for the shareholders to decide whether to commit new funds. There is a £2bn gap between expected revenues and spending in the coming years. Shareholders may need some reassurance from regulators that prices will rise enough to justify new investments.
But what should be a simple, clean business is in need of its own cleansing treatment.
