As the FT has noted this morning (and I share this information in the pubic interest, since it is vital that this is widely known, hence the longer than usual quotation):
The UK's water watchdog has promised investors revenue guarantees, no competition and minimal risk as it tries to drum up more than £50bn for projects to address water shortages.
Investors will have the “right to collect” revenues from customers, “opportunities for upside”, “capped liabilities” and “investment positive” support from the government, according to an Ofwat briefing paper seen by the Financial Times.
The document, presented to investors at a conference at the London offices of investment bank Jefferies last Friday, adds that there is “no exposure to competitive or market stranding risks” — referring to the fact there is unlikely to be any change in demand for water infrastructure.
This is absolutely absurd. The supposed reasons for once privatising water were:
- To attract risk capital
- To reduce risk to the state
- To encourage competition and supposed efficiency
- To improve customer service.
What is now being offered is:
- A state-guaranteed monopoly
- Guaranteed rates of return
- No incentive to be efficient
- Exploitation of consumers.
Worse, the outcome will be:
- No incentive to remove pollution
- Limited, if any, real investment
- Threats to health and well-being
- Risk to life itself as water supplies fail in the face of climate change.
As policy goes, this is:
- Utterly irresponsible
- A sell-out for the people of this country
- An environmental disaster
- A strategic disaster.
And all because Labour is petrified of:
- Anything that looks to be left of centre, like the nationalisation of key services
- The power of the state to create money to invest
- Meeting the needs of people, rather than the City
- Policy, in general.
These people really do not deserve to be in government, and they are a threat to us every day that they are.
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What is
“right to collect” revenues from customers
It sounds like in effect a private power to tax
Typo BTW Company
Corrected. Thanks.
“And all because Labour is petrified of:”
I disagree.
LINO is in future pocket lining mode & possibly those in Ofwat as well (is there a “t” missing between the f and the w?).
The proposals will lead to a feeding frenzy and there are upsides for the corrupt politicos & regulators (the latter regularly shown to be both inept and corrupt @ various parliamentary committees). Those facilitating this corruption, need at some point in the future, to be held to account. Not by losing their seat and gracefully retiring to a prepared position in one of the companies they have helped – but by jail time. They are traitors to the country they pretend to govern. Treason still carries a sentence of life imprisonment & that is where many of the LINO rabble should be – in prison with a whole life sentence.
Just imagine if the greens or the lib-dems made that a manifesto commitment – they would go after the LINO rabble and their facilitators (I’m looking at you McSweeney).
Much to agree with
Corporate capture + economic illiteracy = Starmer’s Labour
…+ genocide enablers = Starmer’s Labour
And they are actually proud of their crimes…
“MARIA EAGLE, UK Minister for Defence Procurement and Industry, gave a keynote speech celebrating the RAF’s surveillance flights over Gaza which has provided key intelligence to Israel to enact their genocide in Gaza.”
Video here (at an “Israeli Independence Day” celebration held at the British Museum). Truly sickening. There is something far wrong with these people.
https://x.com/EEforpalestine/status/1922732877629821000
Like many business activities, water has been financialised as a source of economic rents. The owners are not interested in creating and running a successful business that will thereby be profitable. They are interested in getting out as much cash as possible as quickly as possible, with minimal input or risk.
It seems ridiculous, akin to the funding approach saddling NHS trusts with massive debts.
It’s a fiddle to make certain figures look better, but effectively opaquely borrows from future income, effectively creating a lending arrangement more equivalent to running up a long term credit card balance instead of borrowing at the preferential rates the government always has available to it.
Thank you, David.
That’s a feature, not a bug.
In Eurolalaland, countries, not just Greece, entered into swaps with Wall Street to hide their liabilities, enter the sub-optimal currency area and pretend that they continue to meet Euro area restrictions on budget deficits. It’s the same with local authorities in the zone.
Hi Richard,
As ‘serf’ to Thames Water agreed.
Bleeding outrageous.
Les
It looks like institutionalised, government-sanctioned extortion to me.
More profits before people.
No wonder trust an in politicians and confidence in Government is at an all time low. Water is one policy straw that is straining the camel’s back. The current drought extending into summer may break it.
Trust: British Social Attitudes (BSA) report, 12 June 2024
”45% now say they ‘almost never’ trust governments of any party to place the needs of the nation above the interests of their own political party. This is 22 points above the figure recorded in 2020 during the height of the pandemic.
As many as 58%, also a record high, say they ‘almost never’ trust ‘politicians of any party in Britain to tell the truth when they are in a tight corner’, up 19 points from 2020.”
Can’t see those figures will have improved.
It’s not very often I would praise the Labour or Liberal Democratic parties, but in this one case it’s due. In 2002 it was they who, in coalition, brought in the Water (Scotland) Act in the Scottish Parliament making Scottish Water a statutory corporation responsible throughout our country for all water and sewerage services, and accountable to the Scottish Government. Only the other day a report found we had the second cleanest water in the world, only beaten by the City of New York.
But unfortunately for us all, this government is not the Labour or Lib Dem party of 22 years ago!
I had just read the FT piece before turning to your blog.
Has nothing been learned from the failure of water privatisation and the PFI debacle?
I was encouraged to see from the BTL comments, which usually reflect economic orthodoxy, that a significant number of commenters see this proposal as complete madness.
Thank you, Maggie.
There’s often dissent BTL at the FT.
With regard to your question, come on, Maggie. If a regulator can’t do a favour to the firms he / she is supposed to regulate, how will that retirement nest egg fund itself?
I have observed. I have also heard of officials taking confidential information on firms they supervised to their new employer.
This is a charter to continue “financial engineering” for the benefit of the owners, not the people.
Accounting standards are hopelessy lax.
Macquarie got away with forcing TW to borrow from unknown parties at high interest rates for “tax efficiency” even though utilities can borrow at very low rates.
What are derivatives being used for? Who is taking the other side of these contracts?
I see that Thames Water wants to pay huge bonuses to senior management as they are an important resource who must be retained. What, those members of senior management who have so mismanaged this organisation in every respect that it is a complete failure? Why would you want to keep them?
Thank you.
Macquarie may well have earned an intermediary fee for having Thames Water borrow with certain parties and at higher rates of interest. It would not surprise me if Macquarie, knowing it would sell the firm, was the lender, even using another bank to front a collateralised loan. Macquarie may well be on the other side of the derivative trade.
About twenty years ago, I went to a talk by Macquarie about its ownership of Sydney airport.
“…because Labour is petrified of:
Anything that looks to be left of centre…”
I’m wondering if this is still a realistic way to explain the government’s attitude. As an initial stance, it makes political sense to appear to appease the right, but ultimately, plain and simple, apolitical logic must take hold? Please.
https://weownit.org.uk/news/invite-steve-reed-to-the-football/
https://weownit.org.uk/news/questioning-thames-water-is-a-waste-of-time/