sh.t in Rivers

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Gfamily
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Re: sh.t in Rivers

Post by Gfamily » Thu Dec 07, 2023 12:43 pm

tenchboy wrote:
Thu Dec 07, 2023 12:20 pm
https://www.bbc.com/news/uk-england-bed ... s-67615231
Rookie mistake there. He should'a saved up a year's worth and dumped it on the village green.
Funny how they always prosecute the little guy and let the behemoth run and run.
Maybe his wife had insisted that he borrow more money than he was worth and at an interest rate that drained all his income which meant that he couldn't afford to install a new lavatory pan.
Or something.
Anyway: man has a piss by the side of the road.
Fixed the link for you
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Re: sh.t in Rivers

Post by tenchboy » Thu Dec 07, 2023 12:47 pm

Gfamily wrote:
Thu Dec 07, 2023 12:43 pm
tenchboy wrote:
Thu Dec 07, 2023 12:20 pm
https://www.bbc.com/news/uk-england-bed ... s-67615231
Rookie mistake there. He should'a saved up a year's worth and dumped it on the village green.
Funny how they always prosecute the little guy and let the behemoth run and run.
Maybe his wife had insisted that he borrow more money than he was worth and at an interest rate that drained all his income which meant that he couldn't afford to install a new lavatory pan.
Or something.
Anyway: man has a piss by the side of the road.
Fixed the link for you
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Re: sh.t in Rivers

Post by headshot » Wed Feb 28, 2024 10:05 am

IMG_0840.jpeg
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Looks like Thames Water are going for a Hail Mary whilst they still have a compliant Government.

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Re: sh.t in Rivers

Post by IvanV » Wed Feb 28, 2024 10:19 am

headshot wrote:
Wed Feb 28, 2024 10:05 am
IMG_0840.jpeg

Looks like Thames Water are going for a Hail Mary whilst they still have a compliant Government.
It looks like the government has been getting ready to put some water companies into administration. Because a few weeks ago it updated the water company administration provisions (FT). This gives it more options to restructure a bankrupt water company. The article suggests that some of the new provisions seem to be designed to enable it to sell the operating core and assets of the company, while leaving the existing shareholders and bondholders with the residual debt. If that works, then those who took the risk of buying a water company that failed to comply with its obligations will take the pain of that failure.

That would seem to suggest that such prayers will be in vain.

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Re: sh.t in Rivers

Post by Sciolus » Wed Feb 28, 2024 10:54 am

That's interesting if true, because just a couple of days go the chair of the EFRA committee told Ofwat that Thames Water is too big to fail, so lay off the enforcement.
“We have real concerns that Ofwat’s enforcement powers place it in a situation whereby enforcing regulations and issuing fines against consistently failing entities will place a further financial burden on these entities and increase the risk of corporate failure”, the letter states.

Goodwill said that “shareholders of the parent company [of Thames Water] have made it clear that future infrastructure funding is contingent on Ofwat taking a positive view of its proposed bill rises and taking a lighter touch on its regulatory enforcement measures.

“We are concerned, therefore, that it may not be in your organisation’s interest to use the full extent of its powers given the impact that the failure of a major business would have on the stability of the sector and the public purse.”

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Re: sh.t in Rivers

Post by IvanV » Wed Feb 28, 2024 11:24 am

Sciolus wrote:
Wed Feb 28, 2024 10:54 am
That's interesting if true, because just a couple of days go the chair of the EFRA committee told Ofwat that Thames Water is too big to fail, so lay off the enforcement.
“We have real concerns that Ofwat’s enforcement powers place it in a situation whereby enforcing regulations and issuing fines against consistently failing entities will place a further financial burden on these entities and increase the risk of corporate failure”, the letter states.

Goodwill said that “shareholders of the parent company [of Thames Water] have made it clear that future infrastructure funding is contingent on Ofwat taking a positive view of its proposed bill rises and taking a lighter touch on its regulatory enforcement measures.

“We are concerned, therefore, that it may not be in your organisation’s interest to use the full extent of its powers given the impact that the failure of a major business would have on the stability of the sector and the public purse.”
Some further things in that article:
[Goodwill's] letter also states that it is “unacceptable that certain actors in the sector have been able to take on large amounts of debt while failing to act as custodians for the infrastructure they have inherited”.

While Goodwill acknowledged that much of the corporate structure and processes underpinning financial decision-making fall outside of Ofwat's remit, he said “we feel it is imperative that you, along with this Committee and others involved in regulating the sector, continue to press government to ensure that the burden of risk falls on the shareholders of those companies in the case of corporate failure.”
Mr Goodwill (MP Con, Scarborough) appears to exhibiting cakeist tendencies here. Because if Ofwat does what he said in the bit you quoted, then Ofwat will not achieve the things he would like in the bit I quoted. I suspect he is trying to write something that sounds both City-friendly and consumer-friendly at the same time, regardless of the inconsistency.

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Re: sh.t in Rivers

Post by noggins » Thu Feb 29, 2024 7:52 am

What would stop a future government nationalising water by bankrupting the water companies with a pincer of high fines and price caps?

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Re: sh.t in Rivers

Post by monkey » Thu Feb 29, 2024 1:01 pm

noggins wrote:
Thu Feb 29, 2024 7:52 am
What would stop a future government nationalising water by bankrupting the water companies with a pincer of high fines and price caps?
Keir Starmer.

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Re: sh.t in Rivers

Post by tenchboy » Thu Mar 28, 2024 8:54 am

Linky to BBC story
So the company is operating massively in debt because of all the high interest loans issued to it by and because the parent company regards it as a cash generator; all the money coming in from customers is either paying off that debt - lets carry on calling it a debt for now rather than a banking exercise - or paying out dividends to shareholders; the River Thames has gone from cleanest in Europe to being unfit to host a boat race - (I didn't mark the stories but yesterday the boat race teams were warned not to go into the water and to wear slippers in the boat cos of the risk from e-coli and in another story a water sample having been taken was photographed and it was bright yellow: deep first thing in the morning piss yellow) and now the shareholders are refusing to allow any improvements unless the bills to customers are increased.
It's almost as if doing actual water company work is a side hussle and that it's sole purpose is to pass on the money from the customers to the 'owners' and shareholders.
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Re: sh.t in Rivers

Post by TopBadger » Thu Mar 28, 2024 9:27 am

tenchboy wrote:
Thu Mar 28, 2024 8:54 am
It's almost as if doing actual water company work is a side hussle and that it's sole purpose is to pass on the money from the customers to the 'owners' and shareholders.
The role of all commercial companies is to take money from customers and generate profits for shareholders... task #1 for any director of any commercial company is to generate returns for shareholders.

The failing here seems to be that Thames has been allowed to generate returns at the expense of maintaining a critical regulated service which would indicate either a failing of complicit regulators, or a failing of politicians to give the regulators the powers they need.
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Re: sh.t in Rivers

Post by dyqik » Thu Mar 28, 2024 10:59 am

TopBadger wrote:
Thu Mar 28, 2024 9:27 am
tenchboy wrote:
Thu Mar 28, 2024 8:54 am
It's almost as if doing actual water company work is a side hussle and that it's sole purpose is to pass on the money from the customers to the 'owners' and shareholders.
The role of all commercial companies is to take money from customers and generate profits for shareholders... task #1 for any director of any commercial company is to generate returns for shareholders.
It's a little more complicated than that. In law, the duty is to maximize the value of the company to shareholders. That can include maximizing dividends, but it also includes preserving the value of the shareholders investments by not running the company into the ground to the point where the government takes its business activities away.

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Re: sh.t in Rivers

Post by jimbob » Fri Mar 29, 2024 9:51 pm

Just came across this which suggests that rather than let the shareholders take the hit if the water companies go bankrupt, the government is aiming to protect them.

I'd appreciate a more expert eye than mine on it.

https://www.taxresearch.org.uk/Blog/202 ... ake-a-hit/
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Re: sh.t in Rivers

Post by bjn » Fri Mar 29, 2024 9:55 pm

jimbob wrote:
Fri Mar 29, 2024 9:51 pm
Just came across this which suggests that rather than let the shareholders take the hit if the water companies go bankrupt, the government is aiming to protect them.

I'd appreciate a more expert eye than mine on it.

https://www.taxresearch.org.uk/Blog/202 ... ake-a-hit/
Privatise the profits, socialise the losses. f.ck if the management and the shareholders, they should lose every penny.

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Re: sh.t in Rivers

Post by Grumble » Fri Mar 29, 2024 10:09 pm

Isn’t the “limited” in limited company a reference to how your losses are limited to the face value of the shares? It’s a long time since I did anything approaching business studies though.
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Re: sh.t in Rivers

Post by bjn » Fri Mar 29, 2024 10:34 pm

You are limited to your equity, so shareholders can’t be chased to recover any debts. If the debts can’t be serviced and the company goes under, debt holders get first call on payment proceeds of any liquidated assets. If there is anything left after that, it goes to the shareholders.

I could have the wrong end of the stick, but I believe the bulk of the debt raised by Thames Water went to pay dividends to shareholders, not to install new pipes and fix whatnots. I also believe that the debt was raised from some of the shareholders. Unlike dividends, debt payments aren’t subject to corporation tax. So a nice bit of finance engineering to extract money tax free from UK rate payers. Currently 20% of my water bill.

Liquidate Thames Water and bring it back to public ownership or put it in a trust.

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Re: sh.t in Rivers

Post by dyqik » Sat Mar 30, 2024 1:21 am

The legislation mentioned above seems to protect shareholders equity completely, even if the company fails and is subject to debt collection.

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Re: sh.t in Rivers

Post by tenchboy » Sat Mar 30, 2024 8:23 am

I saw this on the BBC review of the papers and tried to follow it up but without a subscription I cant get past the i's 'front page'; and having tried once I can't even get that far: it just gives some idea of what we are dealing with. I still say they should dump it on the village green: if it's good enough to go in the river, then it's good enough for the village green. Either that or everyone should be able to dump the rubbish in the rivers: it needs something so mad that it would be madness to defend it to put what the water cos are doing into some sort of perspective.
Public has no right to swim in sea, claims firm that dumped sewage at bathing spot
As South West Water defends a court action from a Devon swimmer, it also claims it has no legal duty to keep waters clean
Sh.in r.1.png
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Keeping rivers clean is down to the Environment Agency who should be prosecuting the living f.ck out of these companies but they are under funded and incapable and it is left to 'civilian' organisations like the Angling Trust to 'make the polluter pay'.
(By going through the civil court they claim damages and restoration costs to restock and repair; whereas any fines that result from a criminal action go straight to the treasury.)
(IANAL please forgive any errors of detail)

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Re: sh.t in Rivers

Post by IvanV » Sat Mar 30, 2024 9:31 am

dyqik wrote:
Sat Mar 30, 2024 1:21 am
The legislation mentioned above seems to protect shareholders equity completely, even if the company fails and is subject to debt collection.
I don't read it like that. As it says, it potentially allows the shareholders to "retain a stake." That sounds like what happened when the Channel Tunnel was restructured. The shareholders retained a stake, but it was only worth about 5% of their original investment.

The old legislation simply nationalised the water company, and left the government with the debt. This seems to allow something nearer to what would happen if a commercial company was in financial distress and sought to renegotiate with its lenders. To the extent that the company remains a going concern if debt is reduced, there's a negotiation over who takes how much haircut. Because if the lenders take over the company, it might be worth less when they sell what is left off, as there might be value in keeping some of the shareholders on board if they do in fact have skill in running that company.

I would think that the government here would be having an eye to the investors in other water companies, and wouldn't want to scare the horses, and so it might be a more effective discipline on those other shareholders if they saw that there could be a reasonable way out of the situation for them, rather than simply saying, we're walking away.

Though there's the range of things that legislation empowers a government to do, and what the government actually chooses from that range of actions. It's quite possible that they might use that discretion in an inopportune way.

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Re: sh.t in Rivers

Post by jimbob » Sat Mar 30, 2024 10:01 am

bjn wrote:
Fri Mar 29, 2024 10:34 pm
You are limited to your equity, so shareholders can’t be chased to recover any debts. If the debts can’t be serviced and the company goes under, debt holders get first call on payment proceeds of any liquidated assets. If there is anything left after that, it goes to the shareholders.

I could have the wrong end of the stick, but I believe the bulk of the debt raised by Thames Water went to pay dividends to shareholders, not to install new pipes and fix whatnots. I also believe that the debt was raised from some of the shareholders. Unlike dividends, debt payments aren’t subject to corporation tax. So a nice bit of finance engineering to extract money tax free from UK rate payers. Currently 20% of my water bill.

Liquidate Thames Water and bring it back to public ownership or put it in a trust.
I was thinking along these lines. Issue appropriate fines first, let it go bankrupt, with the government as the creditor of first resort - bondholders might be ahead of shareholders but they are behind taxes and fines. Run it in administration and take the material assets as payment of the fines. Yes the fines might need to be massive, but hey, it is a massive scandal. I'd say it would be fair to issue half a billion "turdfall" tax as well say.
Have you considered stupidity as an explanation

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Re: sh.t in Rivers

Post by IvanV » Thu Apr 04, 2024 1:40 pm

jimbob wrote:
Sat Mar 30, 2024 10:01 am
bjn wrote:
Fri Mar 29, 2024 10:34 pm
You are limited to your equity, so shareholders can’t be chased to recover any debts. If the debts can’t be serviced and the company goes under, debt holders get first call on payment proceeds of any liquidated assets. If there is anything left after that, it goes to the shareholders.

I could have the wrong end of the stick, but I believe the bulk of the debt raised by Thames Water went to pay dividends to shareholders, not to install new pipes and fix whatnots. I also believe that the debt was raised from some of the shareholders. Unlike dividends, debt payments aren’t subject to corporation tax. So a nice bit of finance engineering to extract money tax free from UK rate payers. Currently 20% of my water bill.

Liquidate Thames Water and bring it back to public ownership or put it in a trust.
I was thinking along these lines. Issue appropriate fines first, let it go bankrupt, with the government as the creditor of first resort - bondholders might be ahead of shareholders but they are behind taxes and fines. Run it in administration and take the material assets as payment of the fines. Yes the fines might need to be massive, but hey, it is a massive scandal. I'd say it would be fair to issue half a billion "turdfall" tax as well say.
Dŵr Cymru Welsh Water (DCWW) is a not-for-profit trust, but still regulated by Ofwat, as it was originally set up as a for-profit water company with the same rules as the rest of England and Wales.

It is not a conspicuously good water company, in terms of its water company performance. It also wasted money with private sector ventures that lost money. It bought some engineering consultancies, branded them Hyder, didn't do very well, and sold them off at a loss.

Because DCWW has no equity, it is leveraged to the eyeballs, even more than Thames, etc. So actually, it has done just the engineering we criticise in that case. But structure matters. Yorkshire Water proposed doing something similar to DCWW, but the regulator didn't allow that because the structure was a bit different and the regulator reckoned it was not in the interest of customers. In fact, I read their proposal, and hoped the regulator wouldn't fall for that, and fortunately they didn't. In principle, because DCWW has no equity, its cost of debt could well be higher. I believe that the regulator has taken account of that, in terms of not allowing them to charge higher prices as a consequence. Iirc, the regulator has also insisted that DCWW build up some reserves, to act as quasi-equity.

So yes, it is a model, a plausible way of running water companies, if you get the structure right. It is not obviously better, and there can be waste and worse in not-for-profit trusts. If there isn't a plausible way of stopping the private sector water companies taking advantage through financial engineering, it might be a better model than what we have.

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Re: sh.t in Rivers

Post by dyqik » Thu Apr 04, 2024 3:19 pm

IvanV wrote:
Thu Apr 04, 2024 1:40 pm
jimbob wrote:
Sat Mar 30, 2024 10:01 am
bjn wrote:
Fri Mar 29, 2024 10:34 pm
You are limited to your equity, so shareholders can’t be chased to recover any debts. If the debts can’t be serviced and the company goes under, debt holders get first call on payment proceeds of any liquidated assets. If there is anything left after that, it goes to the shareholders.

I could have the wrong end of the stick, but I believe the bulk of the debt raised by Thames Water went to pay dividends to shareholders, not to install new pipes and fix whatnots. I also believe that the debt was raised from some of the shareholders. Unlike dividends, debt payments aren’t subject to corporation tax. So a nice bit of finance engineering to extract money tax free from UK rate payers. Currently 20% of my water bill.

Liquidate Thames Water and bring it back to public ownership or put it in a trust.
I was thinking along these lines. Issue appropriate fines first, let it go bankrupt, with the government as the creditor of first resort - bondholders might be ahead of shareholders but they are behind taxes and fines. Run it in administration and take the material assets as payment of the fines. Yes the fines might need to be massive, but hey, it is a massive scandal. I'd say it would be fair to issue half a billion "turdfall" tax as well say.
Dŵr Cymru Welsh Water (DCWW) is a not-for-profit trust, but still regulated by Ofwat, as it was originally set up as a for-profit water company with the same rules as the rest of England and Wales.

It is not a conspicuously good water company, in terms of its water company performance. It also wasted money with private sector ventures that lost money. It bought some engineering consultancies, branded them Hyder, didn't do very well, and sold them off at a loss.

Because DCWW has no equity, it is leveraged to the eyeballs, even more than Thames, etc. So actually, it has done just the engineering we criticise in that case. But structure matters. Yorkshire Water proposed doing something similar to DCWW, but the regulator didn't allow that because the structure was a bit different and the regulator reckoned it was not in the interest of customers. In fact, I read their proposal, and hoped the regulator wouldn't fall for that, and fortunately they didn't. In principle, because DCWW has no equity, its cost of debt could well be higher. I believe that the regulator has taken account of that, in terms of not allowing them to charge higher prices as a consequence. Iirc, the regulator has also insisted that DCWW build up some reserves, to act as quasi-equity.

So yes, it is a model, a plausible way of running water companies, if you get the structure right. It is not obviously better, and there can be waste and worse in not-for-profit trusts. If there isn't a plausible way of stopping the private sector water companies taking advantage through financial engineering, it might be a better model than what we have.
Access to (cheap) government borrowing is probably a key requirement to turn things around at these organizations.

Obviously government can run things badly, but at least those doing it don't or shouldn't have an incentive to do so.

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Re: sh.t in Rivers

Post by Gfamily » Thu Apr 04, 2024 3:25 pm

IvanV wrote:
Thu Apr 04, 2024 1:40 pm
Dŵr Cymru Welsh Water (DCWW)
[...]
It bought some engineering consultancies, branded them Hyder, didn't do very well, and sold them off at a loss.
I found an unexpected titbit that Hyder were the supervising engineers for the Burj Khalifa
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Re: sh.t in Rivers

Post by IvanV » Thu Apr 04, 2024 5:33 pm

dyqik wrote:
Thu Apr 04, 2024 3:19 pm
Access to (cheap) government borrowing is probably a key requirement to turn things around at these organizations.

Obviously government can run things badly, but at least those doing it don't or shouldn't have an incentive to do so.
I remember when the government rescued one of the big high street banks in the financial crisis. They went, ooh look, we are unbankruptable now, and laid out a trough for management to stick their noses in. That was because government said they wouldn't be interfering in a commercial business. But that doesn't work, you own something, you have to take control of it, or they'll do what's in their own private interest. That was the long story of the lack of success of - much of - public enterprise in the post-war period in this country. You can do it better, there are other countries that do it better. But we don't seem to have the structures and knowledge to do it well in this country.

That said, we do water companies completely wrong in this country. Some labour government, in the days they believed in Marx, went for the "basin management" approach, which was a central planner's wet dream, but utter nonsense in reality. Nowhere else does it like that. It's much more at municipality or city level. And then you can look at a country like France, where, would you believe, there is actually a mosaic of public and private water companies. The private ones are mainly in more rural areas, because it's too difficult for small rural municipalities to run a water company, so they contract it out.

There was never a strong argument in principle for private water companies in Britain. It was done mainly for two reasons, first because there were constraints on public finance, such that the government could not put the capital in that they needed, and second because water charges were going to have to go up to pay for higher water quality standards, and the government preferred that customers have a private supplier to blame rather than blaming the government. So I have no real argument with nationalising them, and when they get themselves in a pickle is a good time to do that. But we should recognise that it is difficult for governments to get people to pay the proper price for water, when it is a state company, because people are voters and are voting for who will manage their water company. And we should recognise that we have a silly structure for the water industry and reform it back to something sensible.

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Re: sh.t in Rivers

Post by jimbob » Thu Apr 04, 2024 6:01 pm

IvanV wrote:
Thu Apr 04, 2024 5:33 pm
dyqik wrote:
Thu Apr 04, 2024 3:19 pm
Access to (cheap) government borrowing is probably a key requirement to turn things around at these organizations.

Obviously government can run things badly, but at least those doing it don't or shouldn't have an incentive to do so.
I remember when the government rescued one of the big high street banks in the financial crisis. They went, ooh look, we are unbankruptable now, and laid out a trough for management to stick their noses in. That was because government said they wouldn't be interfering in a commercial business. But that doesn't work, you own something, you have to take control of it, or they'll do what's in their own private interest. That was the long story of the lack of success of - much of - public enterprise in the post-war period in this country. You can do it better, there are other countries that do it better. But we don't seem to have the structures and knowledge to do it well in this country.

That said, we do water companies completely wrong in this country. Some labour government, in the days they believed in Marx, went for the "basin management" approach, which was a central planner's wet dream, but utter nonsense in reality. Nowhere else does it like that. It's much more at municipality or city level. And then you can look at a country like France, where, would you believe, there is actually a mosaic of public and private water companies. The private ones are mainly in more rural areas, because it's too difficult for small rural municipalities to run a water company, so they contract it out.

There was never a strong argument in principle for private water companies in Britain. It was done mainly for two reasons, first because there were constraints on public finance, such that the government could not put the capital in that they needed, and second because water charges were going to have to go up to pay for higher water quality standards, and the government preferred that customers have a private supplier to blame rather than blaming the government. So I have no real argument with nationalising them, and when they get themselves in a pickle is a good time to do that. But we should recognise that it is difficult for governments to get people to pay the proper price for water, when it is a state company, because people are voters and are voting for who will manage their water company. And we should recognise that we have a silly structure for the water industry and reform it back to something sensible.
I would suggest that East Coast Mainline is probably a better counterexample and model than bailing out the banks.
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Re: sh.t in Rivers

Post by dyqik » Thu Apr 04, 2024 7:44 pm

IvanV wrote:
Thu Apr 04, 2024 5:33 pm
dyqik wrote:
Thu Apr 04, 2024 3:19 pm
Access to (cheap) government borrowing is probably a key requirement to turn things around at these organizations.

Obviously government can run things badly, but at least those doing it don't or shouldn't have an incentive to do so.
I remember when the government rescued one of the big high street banks in the financial crisis. They went, ooh look, we are unbankruptable now, and laid out a trough for management to stick their noses in. That was because government said they wouldn't be interfering in a commercial business. But that doesn't work, you own something, you have to take control of it, or they'll do what's in their own private interest. That was the long story of the lack of success of - much of - public enterprise in the post-war period in this country. You can do it better, there are other countries that do it better. But we don't seem to have the structures and knowledge to do it well in this country.

That said, we do water companies completely wrong in this country. Some labour government, in the days they believed in Marx, went for the "basin management" approach, which was a central planner's wet dream, but utter nonsense in reality. Nowhere else does it like that. It's much more at municipality or city level. And then you can look at a country like France, where, would you believe, there is actually a mosaic of public and private water companies. The private ones are mainly in more rural areas, because it's too difficult for small rural municipalities to run a water company, so they contract it out.

There was never a strong argument in principle for private water companies in Britain. It was done mainly for two reasons, first because there were constraints on public finance, such that the government could not put the capital in that they needed, and second because water charges were going to have to go up to pay for higher water quality standards, and the government preferred that customers have a private supplier to blame rather than blaming the government. So I have no real argument with nationalising them, and when they get themselves in a pickle is a good time to do that. But we should recognise that it is difficult for governments to get people to pay the proper price for water, when it is a state company, because people are voters and are voting for who will manage their water company. And we should recognise that we have a silly structure for the water industry and reform it back to something sensible.
All of the municipal water supplies here in MA are either wells run by the towns' departments of public works, or run by the Massachusetts Water Resources Authority, a state body. There are towns without municipal or with limited coverage of municipal supplies as well.

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