We really are run by idiots, aren't we? A few years back I was involved in trying to introduce a new leak-fixing technology that involved the deployment of tiny polymers into the flow within the pipe which would then bind together around the leak point in a similar way to platelets within our blood when we cut ourselves. We couldn't get any traction with it because the water authority with whom we were dealing just weren't interested in fixing the problem - they'd been though umpteen years where the watchdog's fines levied on the failure to fix leaks were less punitive than the costs involved in digging up roads and actually dealing with them. All about shareholder value, innit? Big argument for returning utility companies back to state ownership, I'd have thought.
The failure is surely the regulator. Privatisation worked initially and money poured into waterways etc. But the water companies have become complacent and indulgent, and Ofwat has done nothing. 10 million more people enjoy water-related hobbies than they did under national ownership. There was never money to do anything then and nothing could live in the rivers and lakes because they were so polluted. We're heading in that direction now. Better regulation is the key.
The argument for re-nationalising the utilities (and railways) is obvious and popular. The Tories won't do it of course and Starmer has said he wouldn't do it either. Gordon Brown is less reticent..... Gordon Brown says energy firms unable to offer lower bills should be temporarily re-nationalised (msn.com) Exactly what would you do, Keir?
I agree that the regulator should set fines such that fixing leaks becomes more attractive than paying the levy. My fear today is that these costs get recovered from the customer base, who have little choice but to “shop” with their local authority. I actually think it’s small-c conservative to want certain critical services in the hands of the state rather than corporations, although quite where the cut-off is I’m uncertain. One way of making it more attractive to the water companies to deal with problems is for the regulator to set the maximum bonus pot available to the management team alongside a list of SMART objectives. Each objective missed is a deduction from the bonus pot. That would encourage some focus. One such objective is to keep customer rate increases within a certain limit so they can’t hit them to compensate for their own incompetence.
I agree with the idea that you go after the company officers, rather than the company itself. For the less serious infringements it's their remuneration that's hit, for serious, there should be criminal liability and prosecutions should be pursued.
Would you compensate shareholders who will lose out? If so, how would you calculate it? It would cost many billions.
Let's say 66% of market value, payable over 10 years. The CBI estimated a cost of £196bn for the Corbyn/McDonnell renationalisation plans (which included Royal Mail and the railways), but this figure included a 30% mark-up on market value. Removing that takes the cost down to £150bn and if we said we're only prepared to pay 66%, we're down to £100bn. Spread that over 10 years and it's £10bn a year, a quarter of the amount spunked on Test & Trace. Shareholders wouldn't be happy of course, but as they're mostly overseas, I wouldn't be too fussed. Call it a Brexit dividend.
What about all the small pensioners that have these companies in their pension pot? How likely do you think it is that foreign investors will keep investing in the UK? It's state theft. Starmer is right not to go anywhere near it imo.
I can’t imagine it’s beyond the wit of the finest minds to drum up some sort of interest-bearing government bond with tax incentives for the holder to keep ‘em for a period of time before redeeming. There would, of course, be a new market created for such notes too. I’d probably also consider the state owning (up to) 51% of these companies and there being a short list of reserved matters in the shareholders’ agreement to keep (what would thus remain a quoted company) honest. Could then continue to be run as a public company, but dividends to the government treated as tax revenues. Where there’s a will.
The govt did something like this with banks. The feeling was that neither politicians nor civil servants were bankers, and their shareholdings were sold off. History of nationalised water is that it was neglected, no money was put in, politicians weren't comfortable running it and always had better things to spend money on. Consequently rivers and beaches were in a lot worse state than now. I sailed on the Thames. You could see raw sewage floating down, there were few fish(and none around the City of London like now) and it was a hugely unhealthy river. For me, the key is making sure govt supports Ofwat in enforcing good practices among the water companies. I mean real teeth, words alone are not enough.
I remember those days too, but that was 40 years ago. Anything is better than what we have now as far as ownership, regulatory, service and remuneration is concerned.
I think at least we can blame the government and have direct action over service and quality by holding them accountable Right now it's just a case of like it or lump it. Here's your water, here's your bill and here's the profits to our shareholders
You're right, Ubes. It was at least 40 years ago. But that was nationalised water. So I don't agree that that is better than what we have now. But I do agree that the current arrangements have deteriorated to chronically bad and we must look to Ofwat and the Environment Agency, both of which have been sleeping on the job.
No, the problem is the water companies which started well after privatisation, have reverted to complacency and greed. We need to look to regulators through the govt. They have to sort this out, and if govt don't hold regulators feet to the flames, the electorate will speak at the next GE. If the water companies were privatised now, there would be zero money allocated to them in the face of an energy crisis and probable recession.
What we have now is better than what we had 40 years ago. But what we have now is not fit for purpose. Yeah, maybe the regulator can sort it all out, but I just think (have always thought) that some things are better owned by the state, although I concede we should learn the lessons of our past and do it better next time (if there ever is a next time). In some ways, I suppose my view is similar to that of the NHS… I don’t much mind who owns it just so long as the service is better. As a principle, though, I’d prefer certain things were made to work under state ownership (if that’s at all possible).
The problem is, the NHS is swallowing gazillions and does not give a consistent service across the country or across the medical disciplines. If anything, because of its unmanageability, the NHS is moving to part privatisation. State-owned sounds great in theory, but it seems to me most industries thrive on competition and strong regulation. Energy companies have competed. Maybe something similar could be introduced into water.
If there was a choice i think i agree with privatisation. I don't think we have a choice on the rails we use or the water we use so there isn't that competition per se to incentivise the companies to give the best service at the best cost. We have to a certain extent a choice with which energy retail company we choose although we're about to pay sky high prices. The germans, and singaporeans all have "private" but state owned enterprises and i believe are both pretty cheap and efficient services.
