The Sorry Tale of Our Water Companies.

[TinFoilHat]

Hi Brian,

Royal Mail has debts of about 1.7billion according to Google. Its loses money ever year. But it isn't really a monopoly as you can use other postal services. I think it was state owned until this week when the Czech Billionaire , which raises other questions as to why he wants to buy it and should the government have approved the sale.

The other company that came from the postal services split, is Post Office Ltd is state owned and has debts of £800billion. It's also loss making but without doubt it has been mismanaged on a catastrophic level given the Postmasters/mistress horizon scandal.

If I'm honest, I don't think either has been mismanaged as badly as the water companies.

I'm sure the new Czech owner will run it for the benefit of the nation over their own pockets.

 

[Churchlawtonblue]

Great write up on something that is yet another national disgrace.

Not contesting the detail but how did you spot the fake water results?

I've worked at companies into Seven Trent Water - what was the comeuppance for the fancying companies to drive the valua up? Surely someone seniors had to see the inside of a cell for that?

As part of my job, for years I have analysed and checked soil and groundwater contamination in the private construction sector. I noticed the stream near us was sterile and often polluted by the nearby waste water treatment works, which is legaloy allowed to pump treated effluent into the stream under a discharge consent. They have to test the discharge to the stream regularly to ensure it does not exceed certain levels of contamination. The EA are the regulator for this not Offwat. The results are publically available for all UU WWT sites.

I downloaded the results which are reported in parts per billion per ml or less. Successive results are exactly the same for every determinant, which is impossible given the really low limits of detection and the variance in effluent content and quality. So either they are reporting the results incorrectly every time which is unlikely as you would think someone would check or they are fake results. I'm going to write to the EA and report UU for this.

 

[Alan Harper's Tash]

You're assuming @Alan Harper's Tash doesn't live in a Band H palace? ;)

To be honest, we only tend to use the east wing.

 

[Churchlawtonblue]

The fact that they have to ask permission to raise the prices in the first place is an admission that water isn't something that can be run as a private business. Private businesses don't have to ask permission to choose how much to charge for their product, because people are free to choose or not choose whether to buy it. Natural monopolies and essential public services, on the other hand, are things that people have no choice but to pay for.

Precisely. They should never have been privatised in the first place imo.

 

[Churchlawtonblue]

So not a huge difference between private and a nationalised version.

Can I ask where abouts are you blueparrot?

The difference is likely where that money goes, if you live in a place where the water companies are state owned your bills are paying for services and infrastructure. If you are in the UK they may be roughly the same but a large percentage of the money has clearly been going to shareholders, executives and not infrastructure.

 

[Saddleworth2]

Today Offwat have told us that our water bills will all rise above the rate of inflation for the next five years. This is on the back of the water companies continually under investing in infrastructure and polluting our rivers and seas while at the same time paying their shareholders and executives millions of pounds for several decades.

This is frankly a national scandal and a prime example of how an essential privatised nationalised utility company has been allowed to get away with doing whatever it wants.

The list of mismanagement is long and doesn't just involve the water companies but also the regulator Offwat and overseeing successive governments.

In summary, the water companies were privatised in the late 80s on the cheap to encourage investment. Initially this seemed to be working and investment in infrastructure increased.

The problems seem to start in the 1990s with some gross mismanagement, the solution decided by Offwat was to allow them to raise more investment by increasing their leveraged debt on assets from 35% to 55%.

At the same time the water companies decided they had the expertise to suddenly become multi faceted businesses and several bought other private businesses, such as engineering firms and hotels, not only in the uk but overseas. They had no experience in these busineses and they often ended in disastrous financial consequences. Offwat just watched silently on.

This ability to leverage more debt opened up further in the early 2000s, again under the guise of allowing more investment and not to scare investment away, a decision made under new Labour.
This resulted in a plethora of takeovers with, in some cases numerous offshore shell companies, from outside investors who clearly had no interest in running a water company. They did invest some more money in frastructure, but often paid out much more in dividends to shareholders and often avoided tax via the shell companies. The debt piled up while the interest rates were cheap and the bills for customers were allowed to way above inflation.

All approved by Offwat, who gradually allowed the debt to climb above the already revised guidance of 55%. Some debt now stands at over 80% in some companies.

Interest rates went up and the hedge funds and banks who owned the companies, quickly divested themselves of these companies to other private investors. Offwat stood by and did nothing, the horse had already bolted and there was nothing that could be done apart from letting the mismanaged companies put customers bills up even further.

So here we are today. David Black the CEO of Offwat has again agreed to huge above inflation bill rises, way above what they said they would be only a few short months ago, and surprise surprise all on the back of promised investment and that the empty promise that the investment would go into infrastructure.

Only back in 2023 Black stated that some water companies borrowed too much, and the risk for correcting this belongs to the companies and their shareholders.

So why the sudden change of tack by Black and Offwat. Well it would seem that we have a classic case of gamekeeper turned poacher. Over 35 executives of Offwat have left and joined water companies in the past few years.

The above catalogue of disaster doesn't stop there. Pollution of our rivers and seas is continually going unchecked, under reported with falsified environment records produced for submission to the Enviornment Agency. I know this as I downloaded the actual discharge consents from our local waste water treatment plant and identified fake laboratory testing. The Environment Agency is so under staffed it can't check all these records, so the illegal pollution just goes unchecked.

Panorama recently investigated Severn Trent setting up fake companies to inflate their book price to enable them to borrow more money, in excess if their profits. Offwat has done nothing on this issue, as it is clearly beyond their ability, experience or remit or they may have just complicity agreed to it, who knows!

The new Government has announced a review of the whole industry. Which is clearly long over due, I am not sure who is doing this but clearly Offwat should not be involved. Frankly a public enquiry would be more apt to investigate this national scandal. Fingers crossed this is a thorough and independent review by the new Government.

IMO, water companies should never have been privatised in the first place for two reasons, firstly they are essential and secondly they are monopolies. After privatisation the problems just exasperated with little or no regulation. Because they are essential services, they are deemed too important to let fail financially and go bankrupt. Personally I believe there must be a way the Government could do this with some form of nationalisation, without the taxpayers again taking on the debt and leaving that with the private bankrupt companies. But the Energy Minister said this wasn't possible this morning.
The saga goes on.

If I haven't bored you enough already. Nils Pratley of the Guardian produced a brilliant but damming summation back in July of this disaster which can be found online.

Excellent post mate. There is an environmental tragedy taking place in front of our eyes through water extraction and pollution of our rivers. Our rivers are the countries jewels. Simply irreplaceable. We have pristine chalk streams down to a trickle through extraction, the Test and its tributaries are having shit pumped into them. Those guilty should be imprisoned rather than gifted millions. The government needs to move quickly and robustly. Another thing we can thank Thatcher for.

 

[Onholiday(somemightsay)]

As part of my job, for years I have analysed and checked soil and groundwater contamination in the private construction sector. I noticed the stream near us was sterile and often polluted by the nearby waste water treatment works, which is legaloy allowed to pump treated effluent into the stream under a discharge consent. They have to test the discharge to the stream regularly to ensure it does not exceed certain levels of contamination. The EA are the regulator for this not Offwat. The results are publically available for all UU WWT sites.

I downloaded the results which are reported in parts per billion per ml or less. Successive results are exactly the same for every determinant, which is impossible given the really low limits of detection and the variance in effluent content and quality. So either they are reporting the results incorrectly every time which is unlikely as you would think someone would check or they are fake results. I'm going to write to the EA and report UU for this.

Fair play - they need to be call out for it!

You would think there would be a lot more scrutiny on it - beggars belief!

Quick question - are you as good looking as Julia Roberts in Erin Brockovich? :-)

 

[blueparrot]

Can I ask where abouts are you blueparrot?

The difference is likely where that money goes, if you live in a place where the water companies are state owned your bills are paying for services and infrastructure. If you are in the UK they may be roughly the same but a large percentage of the money has clearly been going to shareholders, executives and not infrastructure.

Scotland.Yes I've never looked into it and happy to be corrected, but don't remember seeing reports of the issues in England with river and sea pollution and losing supply occuring in Scotland. So maybe that's the main difference in the money being re invested .

 

[Churchlawtonblue]

Excellent post mate. There is an environmental tragedy taking place in front of our eyes through water extraction and pollution of our rivers. Our rivers are the countries jewels. Simply irreplaceable. We have pristine chalk streams down to a trickle through extraction, the Test and its tributaries are having shit pumped into them. Those guilty should be imprisoned rather than gifted millions. The government needs to move quickly and robustly. Another thing we can thank Thatcher for.

Thanks, I know people on the politics threads often have polarised intransigent views, myself included, but this is surely something we can all agree on.

It's nothing short of a national outrage and frankly disgusting that Lake Windermere is now not fit to swim in along with nearly every other water course in the country. The drainage system isn't fit for purpose anymore and leads to flooding in numerous places across the country. And the water supply network is hanging on by a thread. We've lost our supply over 10 times in the last two years!

It annoys me when the news jounalists report on these issues, but don't really grill the water companies or Offwat and ask them to explain the reasons for these bill rises. It is easy to see where our money has gone and where it hasn't !

 

[Churchlawtonblue]

Fair play - they need to be call out for it!

You would think there would be a lot more scrutiny on it - beggars belief!

Quick question - are you as good looking as Julia Roberts in Erin Brockovich? :-)

To be fair the EA are massively understaffed to check these results. But they could be reported better. Interestingly the lab analysis is done in house by UU. If it was subbed out to a private testing lab they would be very unlikley to make the results up I'm sure.

With regards to the very lovely Julia Roberts, I'm a bloke and no I'm not unfortunately.