That isnt really the choice, the choice is the price hikes before investors will put more money in to the firm. They arent restarting dividends or anything like that.
plan for collapse of Thames Water
- Thread starter Mrwong
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From the Independent:
The biggest single shareholder is the Ontario Municipal Employees Retirement System, which holds around 32% of the shares. Another pension fund, the UK-based Universities Superannuation Scheme, holds another 20%.
Around 10% of the shares are owned by a subsidiary of the Abu Dhabi sovereign wealth fund, which is owned by the Abu Dhabi Government, and China’s sovereign wealth fund owns a little under 9%.
Other investors include the British Columbia Investment Management Corporation (8.7%), Hermes GPE (8.7%), Queensland Investment Corporation (5.4%), Aquila GP Inc (5%), and Stichting Pensioenfonds Zorg en Welzijn (2.2%).
Who in the UK even cares if all the above lose money.
Soldato
Dont know, maybe data availability of the metrics they were comparing?
Scotland isn't a gleaming example of successful nationalised running either
Sewage dumped in Scotland's rivers and lochs more than 600 hours a day in 2023
Scottish Water said the increased number of overflows is because of higher rainfall.news.stv.tv
That wasn't the avenue I was going down. The very fact that there was one nation missing made it stand out more.
True but it would be interesting to compare it to leakage per mile or km of pipe given the differences in population density and how far it is spread out. Leakage per km is possibly a good metric as well.
In either respect - its not as if Scotland is running dry any time soon, at least compared to the rest of the UK (lets see how well this comment ages
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This is the UK mate, people only riot here if a drug dealer gets shot.
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Think we need to hire some Frenches then, they seem rather good at it.
Soldato
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Collapse is the most likely scenario and entirely for political reasons shareholders want a 40% rise in bills which OFWAT says is unreasonable which results in a stalemate which means nationalisation is the inevitable result as that means everyone pays to bail out Thames via taxes instead of water bill payers as no govt based in london wants the heat from that.
Soldato
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You can't just take it. There are many costs involved, even under special administration. If Thames collapses, there won't be any money there to pay for it.
It'll come out of your taxes.
I don't know the full details, but there are some kind of legal requirements that mean those investors must be paid a certain level of return. This is part of the bind.
The other is a combination of regulator-imposed limits on what can be spent on repairs, maintenance and Capex.
The UK had already been prosecuted by the European court because our water quality had fallen so far below standard. We were going to get hit a second time if we didn't get get everything fixed up to minimum standard, but the cost of that was massive (something like £430 billion in today's money) and the only viable funding was private investment. There was an ideology spiel that came with it, about competition, innovation, etc and some of those improvements have indeed come about. But primarily it was about finding the money to get out of the doghouse.
Given how much of a **** show of incompetence and underfunding the industry was in the 60s and 70s, you'd soon have people very willing to pay for a better service.
All you'd do by renationalising is give people another reason to complain about government incompetence.
It isn't run like that.
It has, however, been asset-stripped and mortgaged by previous owners (RWE and Macquarrie), and shafted by a clueless and toothless regulator.
Soldato
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You don't think they'll both happen concurrently?
Soldato
I dont think anything will happen quite yet. I think Ofwat will publish the five year determinations at the end of the year, it won't meet the financing levels Thames wants, and Thames will then likely appeal to the CMA for a redetermination which takes another year or so. The outcome then is anyone's guess.
The Thames issue was mostly the result of a bad investor (Macquerie) and specific poor regulation 15 years ago which didn't stop what they were doing.
But as a wider point I think the problem at the regulator has been two fold. Firstly they've been so focussed on stopping bill rises that they have failed to allow the level of investment the industry wants, over quite a long time frame. Second, the service failures that have started to result from this action have led the regulator to tighten the belt on investors even more, rather than allowing more funding, and this is starting to squeeze the investors to a level where they aren't making comparable market returns. This has led to further underinvestment behaviour to make up the difference.
The regulator needs to allow more investment and higher but more stable returns, take away the ability to asset strip and force the sector into more improvement. This will need bills to go up. There is an argument already that water is too cheap, and that its low cost doesn't incentivise any customer side efficiency behaviours. This is compounded by a lack of metering so half teh country doesn't pay for what they use.
a lot of structural issues to fix here. But nevertheless, under a private ownership model, investors need to make a return to invest in this vision. Without that, no investment, no achieving of the long term goals of the sector which require billions in funding, and we have the stagnant too-ing and fro-ing we currently have between investors, regulators and the media.
So either way it's Government incompetence
If the only two options are
1. incompetent government overseeing us all getting shafted with higher bills and taxpayer money needed to be spent
2, incompetent government overseeing us all getting shafted with higher bills and taxpayer money needed to be spent while a few private companies cream off a profit.
I'll go with number one.
Soldato
It's hard not to think of corruption based on how dividends were calculated and paid off the back of loans, especially during the Macquarie years.
Soldato
It should be illegal to do this, loading up a company with debt like that. There should be no way out of being held accountable for these sort of practices, nothing not even bankruptcy.
Its ******* despicable.
Soldato
Because that nob will get a huge payout if we nationalise.Well this story is progressing at a rate of knots as the day goes on.
Thames Water boss says bills need to rise by 40%
The regulator, whose approval is needed for any price rises, has pushed back on substantial bill increases.www.bbc.co.uk
We've gone from:
"Shareholders won't release money until bills go up" -> "Boss admits bills need to rise by 40%" -> "Nationalisation Possible"
Give it a few hours and Thames Water will be nationalised at this rate. Win.
I don't think shareholders should be rewarded.
Can we let them go bust then nationalise it in a way they don't make bank?
You COULD, cut all subsidy to zero, turn a blind eye to people not paying their bills, wait until they have no choice but to declare bankruptcy and buy up the assets for 0.1p on the pound.
The government can do whatever they like, really, the question is will they when it doesn't mean someone making a quick profit privately.
The current government is willing to break international law (e.g. Internal Markets Bill) and is happy to legislate that up is down (Safety of Rwanda Bill). We don’t have to compensate the current owners when we renationalise if we change the law.
