plan for collapse of Thames Water

[b0rn2sk8]

i think customers would stomach increased bills if they didnt see shareholders taking massive profits as the system crumbles.

now i know people have posted that it isnt as simple as that but when that is what is reported in the media that is the conclusion most people reach.

the top and bottom of it is essential public services should not be privatised..... they should not be run for profit at all, or more accurately any profit should be fed back into the system not skimmed off to investers.

it was a long time ago, however wasnt one of the promises of privatisation that the infrastructure would be completely revamped as part of the privatisation package?..... it looks to me like that has not happened , or at least not very much

I don’t disagree that the service should never have been privatised but I don’t agree with the above point.

They actually don’t make excessive/massive profits. The profits they make are actually relatively small, the only reason they are attractive to investors is the profits are consistent. Sure if you add up 30 years of profits it makes a big number but that’s the same with almost any company.

It’s the same people calling out Tesco for making a ‘massive profit’ despite their margin being under 3% most of the time which is miniscule.

I also don’t think you can categorically say the service is crumbling. They’ve always pumped a huge number of turds into the rivers, even when it was in public hands thanks to out victorian combined sewers.

As you say part of that is media spin and people are angry because they have been told to be angry. In reality the regulator has basically capped investment to maintain the status quo since they were privatised in the first place.

Although climate change probably isn’t helping with how much rain we get at once these days and that’s only going to get worse.

If people want them to invest and stop pumping turds into rivers, the same people will need to pay for the investment. The same would be true of it was in public or private hands. Thats just the reality of the situation.

It’s exactly the same issue with the way the National Grid and the local Distribution Network Operators have been regulated. They are regulated in a way where they are only allowed to spend money maintaining the network and they were not required to invest to build capacity for future need. That was to keep bills as low as possible but we are all paying for it now.

If a customer needs more capacity, they have to pay the entire cost of any upgrades regardless of whether they will use all of those upgrades or not. That has a massive impact on anyone’s ability to connect anything to the grid be that a house, commercial building to an EV charger or wind farm.

Other countries do this differently and the customer only has to pay for the ‘last mile’ connection, any costs which fall further upstream are socialised.

We not have a huge issue because the grid is falling behind what’s needed to service the UKs requirements. The way the charges are structured, it has a massive impact on growth.

 

[LeeUK]

^ But you have a choice if you want to shop at Tesco or not. You don't have that choice with water companies.

And DNO Northern Powergrid sent £90m to it's owner Warren Buffet the other year, that £90m could have been invested into the network had it been in public ownership.

 

[CaptainRAVE]

If you want them to stop pumping turds into the rivers,

That won’t happen though.

 

[arknor]

They actually don’t make excessive/massive profits. The profits they make are actually relatively small, the only reason they are attractive to investors is the profits are consistent. Sure if you add up 30 years of profits it makes a big number but that’s the same with almost any company.

people wouldn't mind if the services weren't crumbling and they were pumping sewage into rivers/oceans.


Tesco profit margin is between 6-7% now, it hasn't been around 3% since about 10 years, they started rinsing peoples wallet with covid and never stopped.
Also tesco is in a highly competitive market which should in theory mean slim margins, anyone going to a Tesco probably passes 2-4 other supermarkets on the way

There's no reason a public service should be attractive to investors anyway...

They should be non profit with any surplus reinvested in the infrastructure.

But then you have to worry about wage creep and gold plated pensions, the people working there will have their own interests above the publics.

look at councils.... horribly ran, people on massive wages seemingly doing sod all for the people who live there.

then it'll be like you can't get a job at a nationalised water company unless you have connections already.


god help us if we end up with the BBC version of a water company

 

[Oh Ed not again.]

If you want them to stop pumping turds into the rivers, that’s going to cost money. That cost is going to get passed on to the customer, I’m not sure how anyone can think it wouldn’t be.

This:

The main issue is that a number of Water Companies were purchased by investment companies, they then borrowed a lot of money against them, extracted that borrowed money out of the business for thier own benefit and then sold them on to other investment companies (This is what happened what Thames Water and Southern/South East Water?)

That means they are heavily in debt at a time when interest rates rose sharply and now revenue outstrips debt repayments, hence why we are where we are at least in TW's case.

The current owners arent willing to invest anymore money and with increase instances of Water Supply Failures, Scrutiny on Sewage discharge and Contamination problems customers are unwilling to pay more until some significant improvements are made.

My opinion is OfWat were asleep at the wheel and lack atrong leadership even now. On the face of it they advocate for consumers but they spend far too much time in nice boardrooms with water companoes and not around Sarahs house who had to spend the last two months boiling drinking water, or the 5th day using bottled water to flush her log down the toilet

I mean you're right @b0rn2sk8, it is going to cost money because for far too long the previous administration allowed water companies to do whatever the hell they wanted to maximise profits whilst keeping operating costs and investment below where they needed to be.

Ministers may have broken law over sewage dumping in England, says watchdog

Government may be letting firms discharge raw sewage more often than law allows, says Office for Environmental Protection

www.theguardian.com

Labour’s Steve Reed MP, the shadow environment secretary, said: “Nothing represents 13 years of Conservative failure more graphically than the sight of stinking, toxic sewage pouring into our rivers, lakes, and seas. Rishi Sunak wouldn’t want raw sewage in his private swimming pool, yet he’s happy to let human excrement pollute our waterways.

“This scandal is the Conservatives’ fault. They cut back enforcement and monitoring of the water companies releasing this filth, and are now failing to prosecute them when they are blatantly breaking the law.”

Guy Linley-Adams, an in-house solicitor at WildFish, said: “Ofwat, the Environment Agency and the secretary of state are jointly responsible for the terrible sewage pollution of our rivers. They have allowed the water companies to pollute routinely, unlawfully, as a normal part of their usual business practice. Let’s be quite clear here. Those three public bodies are complicit in allowing the pollution. That must now end.”

River Action’s chair and funder, Charles Watson, said: “We have known for years that government action to protect our rivers is woefully inadequate.”

Why people aren't more angry about this, and why nobody is held to account ahead of pushing the cost to customers is just bonkers. We have corporate responsibility, we need government/watchdog responsibility to match.

 

[b0rn2sk8]

^ But you have a choice if you want to shop at Tesco or not. You don't have that choice with water companies.

Not really, you still need to buy food and they are priced very competitively in the market.

And DNO Northern Powergrid sent £90m to its owner Warren Buffet the other year, that £90m could have been invested into the network had it been in public ownership.

I don’t disagree but that £90m needs to be put into context. It’s not a significant profit for a business with a turnover well north of £1bn a year.

That £90m isn’t being given away for ‘free’, the U.K. already benefitted from the windfall from selling the asset in the first place. The U.K. government decided to spaff the money up the wall on tax cuts and trickle down economics… it worked out really well.

people wouldn't mind if the services weren't crumbling and they were pumping sewage into rivers/oceans.

They have always pumped turds into the rivers, including when they were in public hands.

Tesco profit margin is between 6-7% now, it hasn't been around 3% since about 10 years, they started rinsing peoples wallet with covid and never stopped.
Also tesco is in a highly competitive market which should in theory mean slim margins, anyone going to a Tesco probably passes 2-4 other supermarkets on the way

There's no reason a public service should be attractive to investors anyway...

Actually no. They made £2.3bn on a turnover of £68.187bn last year, I make that 3.3%. Not all of that is food, I expect they also have higher margins in their non-food business otherwise they wouldn’t have branched out into those markets.

They should be non profit with any surplus reinvested in the infrastructure

I don’t disagree but it is too late for that.

The whole purpose of these posts is to actually add some perspective and move the conversation to be a bit more intelligent rather than the usual rabble rousing dog whistle narrative.

The people you need to one pointing your fingers squarely at is the government who sold them off in the first place and established the regulator.

This:



I mean you're right @b0rn2sk8, it is going to cost money because for far too long the previous administration allowed water companies to do whatever the hell they wanted to maximise profits whilst keeping operating costs and investment below where they needed to be.

Ministers may have broken law over sewage dumping in England, says watchdog

Government may be letting firms discharge raw sewage more often than law allows, says Office for Environmental Protection

www.theguardian.com

Why people aren't more angry about this, and why nobody is held to account ahead of pushing the cost to customers is just bonkers. We have corporate responsibility, we need government/watchdog responsibility to match.

I agree, the issue here is poor regulation, not necessarily privatisation.

All privatisation should have done is added the companies profit margin to your bill in exchange for a one off windfall for the treasury. Whether that transaction was worth it or not is a whole other issue but the regulator should have been keeping on top of this.

Contrary to what the Conservative government thinks, the private sector is not materially more efficient than the public sector and these services were already operating like a business already where their customers were funding them through water rates. All the investment which should have happened to clean up our rivers would have been added to bills regardless of whether it was public or private.

We also need to accept that our rivers are cleaner (generally) than they were when water was in the public sector so some of that investment has happened but I think we can all agree is not been enough.

 

[arknor]

Wessex Water’s TV ad banned for omitting sewage record

Advert trumpeting storm overflow plans should have disclosed past environmental harms, says ASA

www.theguardian.com

Their response

Wessex Water said: “We are disappointed with the ASA’s ruling based on one single complaint it received about our advert seen by hundreds of thousands of people … We acknowledge that past environmental performance has fallen below our expectations and we have taken steps to address this.”

They think the complaint was the problem, not their own actions

 

[b0rn2sk8]

To add to my post above:

Part of the ‘con’ of the original privatisation is that it would lower bills. As I noted that is a nonsense because the private sector isn’t any more efficient, particularly given everyone who was working for the business the day before it was privatised was still the same the day after.

The reason why the regulators remit is focused on bills (e.g. minimising investment) is to maintain the notion that on private hands it’s more efficient.

We are all paying for this now though as the investment which should have happened decades ago now costs more than what it would have done back then.

It’s similar to when BT was denied rolling out full fibre back in the 90’s. It’s utter madness and has no doubt massively held back the U.K. economy since.

 

[ttaskmaster]

the top and bottom of it is essential public services should not be privatised..... they should not be run for profit at all, or more accurately any profit should be fed back into the system not skimmed off to investers.

Under privatisation, it makes a profit and pays that out to shareholders in return for investing, and in interest to the lenders in return for their initial loans.
Under nationalisation, it makes a profit and pays that back to the public borrowing fund from which the money originally came.
Either way, it needs to be profitable in order to secure funding.

it was a long time ago, however wasnt one of the promises of privatisation that the infrastructure would be completely revamped as part of the privatisation package?..... it looks to me like that has not happened , or at least not very much.

Thames is in the final stages of building its second massive super-sewer and has, among other things, completely replaced all the Victorian water mains across its catchments.
They've also pretty much doubled their asset base with the sewer adoptions of previously private networks, many of which were.... I believe ****** is the technical term.
Since privatisation much of the network has been surveyed, often for the first time since construction, with electronic monitoring installed in many critical locations. The length of rehabilitated sewer pipe would stretch to the moon and back, and get you most of the way on a second trip.
There's loads more, but these are just the immediate ones that spring to mind.

^ But you have a choice if you want to shop at Tesco or not. You don't have that choice with water companies.

Commercial customers do have a choice of supplier, but even if domestic customers had that, it'd still be the same people at the same company who own and maintain the network. The front end are just wholesellers.

 

[Uther]

Hilarious that the water companies are whining that the 21% rise isn't enough.

Water bill row: Firms say £19 a year rise is not enough

Water firms have hit out at bill rises of £94 over the next five years after wanting bigger hikes.

www.bbc.co.uk

 

[Semple]

i think customers would stomach increased bills if they didnt see shareholders taking massive profits as the system crumbles.

now i know people have posted that it isnt as simple as that but when that is what is reported in the media that is the conclusion most people reach.

the top and bottom of it is essential public services should not be privatised..... they should not be run for profit at all, or more accurately any profit should be fed back into the system not skimmed off to investers.

it was a long time ago, however wasnt one of the promises of privatisation that the infrastructure would be completely revamped as part of the privatisation package?..... it looks to me like that has not happened , or at least not very much.

Maybe it is just unfortunate timing however it does also seem to have gotten much worse after we came out of the EU when the companies would have faced much higher fines due to the EU water quality Directive (cant remember the exact name) . Am sure i read somewhere that the French are considering sueing us for the amount of waste we are now dumping into the channel.

Did I read something today that Labour will pass a law to ringfence this extra money so that it can't be siphoned off to pay execs bonuses or shareholders dividends. If that can truly be done then I think people will stomach the rises because it's something that needs to be done.

 

[b0rn2sk8]

Hilarious that the water companies are whining that the 21% rise isn't enough.

Water bill row: Firms say £19 a year rise is not enough

Water firms have hit out at bill rises of £94 over the next five years after wanting bigger hikes.

www.bbc.co.uk

It’s not enough if you want them to actually improve the sewage systems to a point where they stop pumping turds into rivers every time it rains.

Private companies are not benevolent organisations that do things out of the goodness of their hearts.

What the public wants them to do will cost an absolute ’turd’ load of money and customers will ultimately pay for that.

 

[bigmike20vt]

Rees Mogg reckons Thames Water and any other water companies should be allowed to go bust, and then presumably be bought back under national control.

I cant help but think this sounds very much not the Tory way so i assume it would be with a view to selling to someone else. Also my initial reaction to anything the conservatives say at the moment is probably rubbish however.........

His argument was iirc that investors would lose their money, but he claims they are only in this predicament because they were too greedy and took too much out of the system and that the potential to lose money is something that every investor has to accept when "investing".

I know people in this thread have suggested this isnt the case at all and the profits execs have taken is only very small and not greedy.

Who is telling the truth i do not know...... but in principle, a privatised company which is failing to operate a service legally or competently would normally be allowed to fail, with another company taking the slack. Obviously with critical services the government would ultimately have to be that organisation to buy them out if need be.

Whether this is fair or sensible i am not sure, i suspect there would be more to it than that

 

[Uther]

JRM probably wants to buy it cheap. I'm in favour of them coming back under public control.

 

[EdwardTeach]

I don’t disagree that the service should never have been privatised but I don’t agree with the above point.

They actually don’t make excessive/massive profits. The profits they make are actually relatively small, the only reason they are attractive to investors is the profits are consistent. Sure if you add up 30 years of profits it makes a big number but that’s the same with almost any company.

It’s the same people calling out Tesco for making a ‘massive profit’ despite their margin being under 3% most of the time which is miniscule.

I also don’t think you can categorically say the service is crumbling. They’ve always pumped a huge number of turds into the rivers, even when it was in public hands thanks to out victorian combined sewers.

As you say part of that is media spin and people are angry because they have been told to be angry. In reality the regulator has basically capped investment to maintain the status quo since they were privatised in the first place.

Although climate change probably isn’t helping with how much rain we get at once these days and that’s only going to get worse.

If people want them to invest and stop pumping turds into rivers, the same people will need to pay for the investment. The same would be true of it was in public or private hands. Thats just the reality of the situation.

It’s exactly the same issue with the way the National Grid and the local Distribution Network Operators have been regulated. They are regulated in a way where they are only allowed to spend money maintaining the network and they were not required to invest to build capacity for future need. That was to keep bills as low as possible but we are all paying for it now.

If a customer needs more capacity, they have to pay the entire cost of any upgrades regardless of whether they will use all of those upgrades or not. That has a massive impact on anyone’s ability to connect anything to the grid be that a house, commercial building to an EV charger or wind farm.

Other countries do this differently and the customer only has to pay for the ‘last mile’ connection, any costs which fall further upstream are socialised.

We not have a huge issue because the grid is falling behind what’s needed to service the UKs requirements. The way the charges are structured, it has a massive impact on growth.

Its not the "profits" that the company makes that is the issue it is the dividends being paid out, ie the profits the shareholders made on their investments. This was often achieved by strapping the water company with insane levels of debt, as is the case with Thames water.

 

[b0rn2sk8]

They should be allowed to fail but that doesn’t mean the company can be bought back into public control for free.

The assets of the company have a significant value and creditors of the company need to be paid from the sale of those assets to whomever obtains them be that the U.K. government or someone else.

 

[b0rn2sk8]

It’s not the "profits" that the company makes that is the issue it is the dividends being paid out, ie the profits the shareholders made on their investments. This was often achieved by strapping the water company with insane levels of debt, as is the case with Thames water.

Taking on debt increases cash on hand but actually reduces profit through interest payments.

Cash on hand isn’t profit. Dividends can only be paid from retained profit.

 

[Minusorange]

It’s not enough if you want them to actually improve the sewage systems to a point where they stop pumping turds into rivers every time it rains.

Private companies are not benevolent organisations that do things out of the goodness of their hearts.

What the public wants them to do will cost an absolute ’turd’ load of money and customers will ultimately pay for that.

I don't think the majority of people would object to paying what it would cost with the caveat that the execs who were in charge and took bonuses for what amounts to a fraudulent service see some jail time, they enjoyed having a monopoly on regional service, took money for the service, but didn't provide the service

 

[arknor]

Private companies are not benevolent organisations that do things out of the goodness of their hearts.

yea they only do things if forced too.

If they can't raise funds to continue the business then go bankrupt and let the state seize all the assets
assets the state mainly built and paid for anyway

 

[b0rn2sk8]

If they can't raise funds to continue the business then go bankrupt and let the state seize all the assets
assets the state mainly built and paid for anyway

Not happening....

They should be allowed to fail but that doesn’t mean the company can be bought back into public control for free.

The assets of the company have a significant value and creditors of the company [will] need to be paid from the sale of those assets to whomever obtains them be that the U.K. government or someone else.