The Sorry Tale of Our Water Companies.

[tregyblue61]

What ever happened to new builds having rainwater harvesting systems as standard?

What ever happened to every home that can, getting help to install rainwater harvesting systems?

These were supposed to help the environment and cut bills.

Yes, the water companies thought it would be impractical or, simply put, it would affect the bosses bonuses and shareholder dividends. Same with the power companies.

 

[blueinsa]

OFWAT has shown its teeth by hitting 2 water companies with fines, the grand sum of £1 each.

I shit you not.

Imagine the money it’s costing to run and all they can do is issue a £1 fine?

Fucking criminal.

 

[Rory Bluelow]

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.

This is a superb post. It’s heartbreaking to look at the state of our polluted rivers. When I was a kid in inner City Manchester all the waterways were highly polluted, all sorts of colours, devoid of life, filthy canals etc. Over the course of succeeding decades the rivers were cleaned, fish reintroduced and restocked and watching it all turn to shit (literally) in the last decade or so is very sad. I briefly held a senior role at Thames Water when they had acquired American Water and had made a major investment in Chile (which proved disastrous). I spent a week in Philadelphia in 2005 - Thames had developed an effective, sophisticated outsourced Customer Service model and an excellent IT strategy- they were a decade ahead of their US equivalents. They put in a UK executive to make improvements - Some capable people, but the resentment amongst the Yanks was palpable. I remember questioning why, in the World’s most dynamic economy, they couldn’t recruit Americans. A classic case of Executive over-confidence and overreach, fuelled by expensive Consulting advice. The overseas “adventures” were a disaster waiting to happen. The regulator was fairly weak back then and clearly has got worse. Water is a natural monopoly and it didn’t make sense to privatise. A better solution would’ve been to retain Public Ownership and control but progressively use the market to provide services and some operations. The level of inefficiencies and waste generally in Nationalised Industries/Public Corporations was on an unbelievably epic scale back then. You had to see it to believe it.

 

[Churchlawtonblue]

A long overdue review of our water industry and regulator annouced today by the Government. Clearly the system has been broken for a long time and the realtionship between Offwat and the water companies has been far too close. Self regulation is clearly open to abuse and is being abused.

Water should never have been privatised. The only bit I dont agree with is the Government telling everyone that it would cost billions to bring the water companies back into public ownership? If a company goes bust the people who lose out are the shareholders. The tax payer should not have to pay bad debts in any insolvency.

 

[Gorton_Tubster]

Self regulation is NO regulation in the majority of thi8ngs I have seen over the years. From child protection services to the police. Even the PL cant self regulate.

 

[Earlyriser]

I think we are the only country in Europe where water is controlled by the private sector. In Europe it is often owned through local authorities which in this country might not be a great solution. However it has to be better than in my case being owned by an Australian company. When people talk about the state of this country they fail to understand that virtually all our former public services are foreign owned in one form or another.

 

[gordondaviesmoustache]

Absolutely fucking insane that the supply of water is in private hands. Water ffs.

I am yet to see a single cogent argument as to why the industry shouldn’t be state owned.

I understand the benefits that the profit motive can bring to certain industries in terms of creativity and innovation, but the supply of water ffs?

As @Churchlawtonblue has said, and no one could accuse him of being a Marxist btw, just nationalise the lot - and any investment that shareholders lose is just a function of engaging with the risk-based capitalist system.

Overall, the shareholders have done very well out of the arrangement over the years and nothing lasts forever.

 

[BlueTG]

The corrupt fuckers have ruined many of the UK’s waterways. I find it embarrassing that they accept thisn “sewage releases will halve by 2030”. The numbers are exorbitantly high because they’ve been illegally releasing sewage for years and more and more so each year.

 

[Churchlawtonblue]

Absolutely fucking insane that the supply of water is in private hands. Water ffs.

I am yet to see a single cogent argument as to why the industry shouldn’t be state owned.

I understand the benefits that the profit motive can bring to certain industries in terms of creativity and innovation, but the supply of water ffs?

As @Churchlawtonblue has said, and no one could accuse him of being a Marxist btw, just nationalise the lot - and any investment that shareholders lose is just a function of engaging with the risk-based capitalist system.

Overall, the shareholders have done very well out of the arrangement over the years and nothing lasts forever.

I dont actually think you need to forcibly nationalise them. Just impose the appropriate fines for every pollution event ans only allow them to raise bills by inflation before paying shareholders. That was they may go insolvent and if they did they could then swiftly be brought under state control retaining the essential staff while removing the very top management? Just an idea. Shareholders take the risk in all private companies. And so far they have taken little if any risk?

 

[stan bowles]

A long overdue review of our water industry and regulator annouced today by the Government. Clearly the system has been broken for a long time and the realtionship between Offwat and the water companies has been far too close. Self regulation is clearly open to abuse and is being abused.

Water should never have been privatised. The only bit I dont agree with is the Government telling everyone that it would cost billions to bring the water companies back into public ownership? If a company goes bust the people who lose out are the shareholders. The tax payer should not have to pay bad debts in any insolvency.

Yes, but why has no one been scrutinising Ofwat ?

 

[The Light Was Yellow Sir]

I dont actually think you need to forcibly nationalise them. Just impose the appropriate fines for every pollution event ans only allow them to raise bills by inflation before paying shareholders. That was they may go insolvent and if they did they could then swiftly be brought under state control retaining the essential staff while removing the very top management? Just an idea. Shareholders take the risk in all private companies. And so far they have taken little if any risk?

You don’t need to force nationalisation as they are, to all intents and purposes, completely uninvestable. They are a monopoly overseer, of a vital national resource, who were brought in to ‘invest in a way government couldn’t do’. What they’ve done is concentrated on racking up debt in order to pay shareholders huge dividends and pay their management teams huge salaries. The regulator has been asleep at the wheel and they’ve been robbing everyone in plain sight.

From the FT last month.

“Thames Water's creditors, who are providing a £5bn backup rescue of the utility, are demanding waivers that would exempt the UK's largest water company from key environmental laws. The lenders are calling on the government and regulator Ofwat to grant licence changes and even emergency legislation to shield Thames Water from laws and regulations, according to documents seen by the Financial Times.”

The FT has added:

They also want fines removed, including those already imposed.

And they also suggest:

The creditors are also asking for changes to Thames Water's licence, which would provide added protection against Ofwat fines and penalties and would also allow them to raise prices at any time before 2030.

The claim being made is that unless these changes are made, then Thames Water is not a suitable investment vehicle.

The blindingly obvious conclusion, which should be clear to the world and his wife, current and previous government excepted, is that what this makes clear is that Thames Water is, in fact, not an investment proposition.

So, what is clearly being stated by people willing to ‘invest’ is that to make a possibility, it must be allowed to not only be above the law but to be able to charge prices that are likely completely unaffordable by those to whom it is supposed to supply essential services, whilst piling up dividends and paying their management teams fortunes.

Let’s just take it off them for a £1, pay any third party creditors, and hopefully, Rachel from accounts can spot the growth opportunities in the infrastructure spending needed to protect future water supplies.

Share holders will get burnt but so what? “The value of your investment can go down as well as up”.

 

[stan bowles]

It certainly doesn't.

 

[Churchlawtonblue]

You don’t need to force nationalisation as they are, to all intents and purposes, completely uninvestable. They are a monopoly overseer, of a vital national resource, who were brought in to ‘invest in a way government couldn’t do’. What they’ve done is concentrated on racking up debt in order to pay shareholders huge dividends and pay their management teams huge salaries. The regulator has been asleep at the wheel and they’ve been robbing everyone in plain sight.

From the FT last month.

“Thames Water's creditors, who are providing a £5bn backup rescue of the utility, are demanding waivers that would exempt the UK's largest water company from key environmental laws. The lenders are calling on the government and regulator Ofwat to grant licence changes and even emergency legislation to shield Thames Water from laws and regulations, according to documents seen by the Financial Times.”

The FT has added:

They also want fines removed, including those already imposed.

And they also suggest:

The creditors are also asking for changes to Thames Water's licence, which would provide added protection against Ofwat fines and penalties and would also allow them to raise prices at any time before 2030.

The claim being made is that unless these changes are made, then Thames Water is not a suitable investment vehicle.

The blindingly obvious conclusion, which should be clear to the world and his wife, current and previous government excepted, is that what this makes clear is that Thames Water is, in fact, not an investment proposition.

So, what is clearly being stated by people willing to ‘invest’ is that to make a possibility, it must be allowed to not only be above the law but to be able to charge prices that are likely completely unaffordable by those to whom it is supposed to supply essential services, whilst piling up dividends and paying their management teams fortunes.

Let’s just take it off them for a £1, pay any third party creditors, and hopefully, Rachel from accounts can spot the growth opportunities in the infrastructure spending needed to protect future water supplies.

Share holders will get burnt but so what? “The value of your investment can go down as well as up”.

I agree entirely, the question is why are the Government saying it would cost billions?

 

[BTH]

Tip of the iceberg. Starting with Thatcher, the Tories sold every public company off behind the lie of the free market/competition driving down prices. A handful of people benefitted, but the public lost out big time, and continues to do so.

 

[The Future’s Blue!]

Absolutely fucking insane that the supply of water is in private hands. Water ffs.

I am yet to see a single cogent argument as to why the industry shouldn’t be state owned.

I understand the benefits that the profit motive can bring to certain industries in terms of creativity and innovation, but the supply of water ffs?

As @Churchlawtonblue has said, and no one could accuse him of being a Marxist btw, just nationalise the lot - and any investment that shareholders lose is just a function of engaging with the risk-based capitalist system.

Overall, the shareholders have done very well out of the arrangement over the years and nothing lasts forever.

They’ve been taking absolute liberties! The issue is that the original contracts make it deliberately difficult, near impossible, to take the companies back and I’d like to see, as CLB mentions, a concerted effort fining these shysters out of business, forcing them to hand their company over because the losses would be too great to cover.

I’m the same for all our critical national infrastructure. If you don’t look after it for the people, you pay the price.

 

[gordondaviesmoustache]

I dont actually think you need to forcibly nationalise them. Just impose the appropriate fines for every pollution event ans only allow them to raise bills by inflation before paying shareholders. That was they may go insolvent and if they did they could then swiftly be brought under state control retaining the essential staff while removing the very top management? Just an idea. Shareholders take the risk in all private companies. And so far they have taken little if any risk?

Yes, your suggestion seems more rational than mine. And more lawful. Just fucks me off so much how many liberties these piss taking cunts have been taking.

 

[johnny crossan]

Public ownership is the solution - the French not the Scottish version.

 

[gordondaviesmoustache]

Tip of the iceberg. Starting with Thatcher, the Tories sold every public company off behind the lie of the free market/competition driving down prices. A handful of people benefitted, but the public lost out big time, and continues to do so.

I don’t think that is universally correct. I’d say telecommunications has overall benefitted the public from being in private ownership. I’d say most means of transport and utilities should definitely be state owned though.

 

[The Future’s Blue!]

Tip of the iceberg. Starting with Thatcher, the Tories sold every public company off behind the lie of the free market/competition driving down prices. A handful of people benefitted, but the public lost out big time, and continues to do so.

What Thatcher didn’t realise is that the capitalist culture is to look after themselves and that at some point the vultures would flock together to create a quasi-monopoly through global investment funds.

Or, did she?

 

[gordondaviesmoustache]

You don’t need to force nationalisation as they are, to all intents and purposes, completely uninvestable. They are a monopoly overseer, of a vital national resource, who were brought in to ‘invest in a way government couldn’t do’. What they’ve done is concentrated on racking up debt in order to pay shareholders huge dividends and pay their management teams huge salaries. The regulator has been asleep at the wheel and they’ve been robbing everyone in plain sight.

Absolutely fucking outrageous what’s been allowed to happen. Fucking thieves.