In fact, it is anything about that. What is apparent is that to make Thames Water investable, it must, apparently, be both above the law and able to charge prices that are completely unaffordable by those to whom it is supposed to supply competitive services.
I cannot avoid asking the question, yet again, about why these discussions are continuing. The evidence that there is no future for a private water industry in the UK is now overwhelming. Surely it is time to get on with nationalisation and deal with the real problems that we face, including a lack of investment in water infrastructure, imminent and long-term water shortages, sewage in our rivers and on our beaches, and the risk that we face that this essential supply might not exist unless action on these issues happens.
So if it’s not investable then it’s not investable. The amount that can be charged does not cover the costs of investing.
Who owns does not change this. A nationalised water company will face exactly the same constraints. That there’s not enough revenue coming in from the customers to cover the costs of desired investments.
Nationalisation simply doesn’t solve this problem.
You are absolutely right, Tim. I also note that my water bill is a fraction of my electricity and gas bills, and less than my council tax. Not that I want to pay more, but it probably isn’t enough.
I think that the situation described here: https://www.bbc.co.uk/news/articles/c3wdj38eq91o is far more common than we realise, that is some builder has connected a building’s waste to a storm sewer. Similarly, stormwater being connected to a foul sewer is probably equally as common, hence potentially overpowering a sewage works during a period of heavy rainfall or snow melt. It isn’t all the Water Authority’s fault. While sometimes this must have been done deliberately, I’m prepared to bet that it is the result of builders being so ill-informed they don’t even know that there are two types of sewer!
Where I live there is no doubt that the builders of the estate back in the early 1960s put foul sewage into storm drains. It was the norm. And it has nothing to do with water authority privatisation.
The problem is stupid people not understanding what a drain is. I’ll give an example. In early 1970 I worked on a coastal slope stabilised with slope drains. A labourer working for the contractor was instructed to empty the site ‘elsan’ chemical toilets. A sensible person might have hunted out the foul sewers, and emptied the toilets into them. But what did our moron do? He emptied them into the nearest manhole cover, which was ‘a drain’ – part of the stabilisation scheme we were working on.
Unfortunately, two men were working in another manhole down at the bottom of the slope!
(The moron eventually set a site hut on fire, injuring the site agent, although the fire was put out. When he set the hut on fire a second time, it burned to the ground. The site agent, incidentally, died earlier this year, so his burns didn’t do lasting harm. However, as the moron had 5 children, he has contributed more to the national gene pool than I have. No wonder the country if full of morons).
Murphy chooses to ignore the reason for privatisation of the Water industry was the failure of almost# all the municipally-owned water boards to invest. The one and only case where Lady Thatcher allowed a privatised industry to raise prices faster than inflation instead of slower. [The handful of relatively tiny privately-owned water companies *did* invest because they were allowed to set prices to cover the dividends on the new (limited dividend) shares that they issued to fund the investment.
Thames Water is in debt because it has spent more than its accumulated profits on capital investment since it was privatised. The dividends taken out of it by short-sighted shareholders are less than its debts or the capital paid in by shareholders at privatisation.
Thames water average bill in 2024 was £488, about £9 per week per household so not unaffordable (JSA is £92.05 per head).
#Northumbrian Water built the Kielder reservoir because ICI paid such a large proportion of its income from local rates that it had a vested interest in keeping ICI supplied with enough water
The premise is nonsense, Thames Water is not the whole water industry. Thames Water is in trouble because a former owner loaded it with huge debt levels using clever ‘financial engineering’, trebles all round for them! Yes, some of that was used for actual business investment, but a lot of it was just rent extraction to make themselves rich. That the current owners and creditors decided to buy in to this pile of debt suggests they either didn’t do their due diligence, or they thought they could get rich too pulling the same clever ‘financial engineering’ tricks. The sob story of the corporate investors left standing when the music stopped is worthy of the world’ tiniest violin. There is a viable business underneath, one that can manage the investment plans, there just isn’t a viable business that can manage the investment plan plus servicing the outcome of all the rent seeking.
Let it go bust, let the special administrators deal with it. The Gov’t should just refuse to buy it. Eventually someone will make an offer to the administrator for the assets and if the speculators take a haircut that is their fault for investing in a risky business.
If Thames Water had to be owned by private individuals who were on the hook for all their worldly assets if it went belly up then none of this would have happened. Just sayin’…….
Nationalisation can solve this problem. It just means that the ratepayer/taxpayer has to stump up a lot more money.
Remember the govt can just print money and thus solve all of its problem with the click of a mouse key.
@ Jim
It’d never happen because no one with any sense would put their assets at risk when the business can change on the whim of a politician. So, no investors and thus no water (or rationed at the diktat of some government wonk).
You might not like limited liability, but it allows people to fail (which is a good thing) without losing everything.
@ Jim as the Agent says.
‘none of this would have happened’ because there would never be any water company. Or, perhaps I might be buying my water from a cart and storing it in a tank as I do for my heating oil. But where would the water carrier get their supply?
as MJW says, let the financial engineers fail.
MJW: 100%.
“Surely it is time to get on with nationalisation and deal with the real problems that we face, including a lack of investment in water infrastructure, imminent and long-term water shortages, sewage in our rivers and on our beaches, and the risk that we face that this essential supply might not exist unless action on these issues happens.”
The lack of investment in water infrastructure is because of planning. Thames Water really want to build a reservoir near Stanford-in-the-Vale, They have the dosh for it.
Imminent and long-term water shortages in because of lack of reservoirs. See ^^^
Sewage in rivers and beaches is an absolutely mental thing to complain about and only became a thing because of drone photography which meant footage of poop going out to sea on the news, something that everyone was blissfully unaware of before then. It happens rarely. A few fishermen and wild swimmers are barely inconvenienced by it. The idea of spending the money to build the capacity to stop it is crazy. But, I think we will.
@ Western Bloke
You may be interested to learn that Salmon returned to the Thames *after* Thames Water was privatised.
The Metropolitan Water Board, pre-privatisation, occasionally put sewage into the drinking water (so dumping some into the Thames seems a minor peccadillo).
He really is clueless. Let’s start with “affordability”. How many citizens can’t afford the tax they have extracted from them? Plenty, I’m sure. Best cu that, then…
“Above the law”. You must be joking! There are legal limits to what they can charge, legal minima (constantly changing) as to the services they must provide and vast legal impediments to them being able to accomplish their aims efficiently, like the creation of new reservoirs.
There are also limits on the amount they can distribute as dividends (4% ..?) which is roughly the equivalent of the cost of money if nationalised, so no saving there. The whole point of privatisation is that private sector pressures would bring about efficiencies. Leave it in the public sector, and poacher and game-keeper are on the same side. Result? Either a reduction in standards (so that they don’t have to meet them), a lack of investment because of budget constraints, or an increase in subsidies because of some strange reasoning that as “we own it” we should have below cost charges. If sewage needs attention, then it can best be addressed by the private sector, to government targets. If the costs seem unreasonable, then that suggests that the benefits are not worth the cost.
He just hasn’t a scooby.
“It’d never happen because no one with any sense would put their assets at risk when the business can change on the whim of a politician. ”
When the State controls 50% of the economy, every business is at the whim of a politician. Ask anyone who employs people about how that works under the current government.
Anyone who runs any sort of business in the UK has to accept that the State can and probably will f*ck them over at some point.
@ Jim
That’s true, but also misses the point. Most businesses of any decent scale are limited companies. The ones you don’t like!
Let’s be clear about this – Limited Liability Companies limit the liability of INACTIVE SHAREHOLDERS to the amount unpaid on partly-paid shares. Any misfeasance by directors or employees *or shadow directors* are subject to the full weight of the criminal and civil law. If Thames Water shareholders had stripped out assets in excess of its revenue reserves they could be sued by any creditor who was not paid in full.
“Let’s be clear about this – Limited Liability Companies limit the liability of INACTIVE SHAREHOLDERS to the amount unpaid on partly-paid shares. Any misfeasance by directors or employees *or shadow directors* are subject to the full weight of the criminal and civil law. ”
Its touching you think that is what actually happens in the real world. Or rather that ‘ the full weight of the criminal and civil law’ is akin to be being tickled with a feather duster, for all the effect it has on the fraudsters.
@ Jim
The persecution of Mike Lynch by an incompetent who had taken over running Hewlett-Packard was not equivalent to tickling with a feather duster – and he was *innocent*!
Commie dick Murphy wants to nationalize water service (and everything else).
‘including a lack of investment in water infrastructure, imminent and long-term water shortages, sewage in our rivers and on our beaches, and the risk that we face that this essential supply might not exist unless action on these issues happens’
He doesn’t care about any of this. He wants government ownership. Period. Consequences be damned. If millions die, so be it.
The totalitarian state strangles UK business. Should people be able to produce distributable water and sell it to customers at a profit, they would. It’s not rocket surgery. But the government will slap you down with a thousand rules if you try. They want the business for themselves. Not for the money – they will lose money. Not for your protection – you won’t be protected. They want control over critical infrastructure.
Is it usual for foul sewer and stormwater to be segregated? AFAIK on my property they both drain into the same sewer that goes off to the local works for treatment. (Some of the rainwater does go into soakaways, though.)
I’d thought (quite possibly wrongly) that this was the normal situation, explaining why sewage overflows can occur when there’s heavy rain.
@ Chris Miller
I think that they are segregated in the Corporation of London’s Barbican estate but they are not where I now live because when some incompetent allows the storm drain to block the sewage backs up.
Some new built areas have totally separate systems. My Portuguese village does. But not most of Britain.
“The persecution of Mike Lynch by an incompetent who had taken over running Hewlett-Packard was not equivalent to tickling with a feather duster – and he was *innocent*!”
Was Mike Lynch prosecuted for anything in the UK? No he wasn’t. Regardless of his guilt or innocence the UK company authorities couldn’t give a toss what sharp suited wide boys get up to, or how many people lose money because of their fraudulent behaviour. His mistake was making some Americans look stupid (not hard it has to be said). Thats what they tried to nail him to the wall for. If he’d sold Autonomy to the Japanese (or pretty much anyone other than the Americans) he’d have never had a problem.
@Jim – “If Thames Water had to be owned by private individuals who were on the hook for all their worldly assets if it went belly up then none of this would have happened.”
Doubtful. Limited liability was introduced because of the level of personal bankruptcy among people starting businessses. There were plenty people willing to risk everything.
“In that case, the commercial providers are an unnecessary intermediary. Ditto electricity, gas, transport, telecommunications, and so on.”
Yeah glods! Because The State built that road you’re driving on, that bus company, that taxi, that removal van, that Tesco van, is an unnessary intermediary.
@Tim
Thanks. Another example of first mover disadvantage.
Well, yes.
Tho first movers did have a sewage system a few generations before others. And thus a – say – halved death rate among their children for a few generations.
All is trade offs.