Thames Water. What a depressing future

What a depressing future

Isn't it just.

Thames Water was privatised in the late 80s (I think).

Would it have fared better if the whole water & sewage industry had not been sold off? I don't know.

When you look at its history of TW ownership...

Until 2017 it was under the ownership of Macquarie - during the 11 years running up to that year, TW acquired the highest debt in the whole sector as the owners, allegedly, pursued drastic underfunding and cost-cutting measures - at the same time as very large shareholder dividend pay outs.

... but that's how it works isn't it? Investors won't invest unless the rewards are worth it. And Chief Executives won't work for anything less than comparable salaries in similar industries.

Both shareholders and Chief Executives expect their rewards to increase year-on-year, so the upward trajectory continues - as does the price the consumer pays for these essential services...

It is a failed company. If it weren't responsible for an essential public utility it would go bust and be worthless. With that in consideration the government should nationalise it without any compensation to shareholders and undertake the necessary investment in its infrastructure.

The state investment would contribute to growth in just the same way that private investment would and has the advantage of not having to satisfy any shareholders.

How come TW ended up with so much debt?

Again - Macquarie... the debt was increased hugely under their ownership...

According to the BBC, "Thames Water's current debt amounts to about 80% of the value of the business, making it the most heavily indebted of England and Wales' water companies."

The article describes a horrific future for Thames Water. All of the efforts and engineering invested into the company in the 1970s 1980s has been lost. Only engineering talent can bring it back. I suppose that wouldn't gain shareholder approval now that it is out of British control.

Despite all this they still pay 6 figure bonuses to their top staff and then expect Ofwat to agree to an increase in customers bills to cover it.
Although it will cost a large amount of money, I think the Government need to take control of Thames Water. It has been allowed to break the rules and pollute our waterways for long enough. Whether Labour will do this I have no idea. Let's hope they aren't all of Angela Rayner's thinking that house building comes before wildlife.

The cost of a government buy out would be astronomical, when you add the investment billions, which as the article says is already known to have been underestimated, on to the buyout billions, Sarnia, and that’s going to be a headache for not only this, or any government, but for the electorate. It’s both literally and figuratively a real s..t show.

Casdon

The cost of a government buy out would be astronomical, when you add the investment billions, which as the article says is already known to have been underestimated, on to the buyout billions, Sarnia, and that’s going to be a headache for not only this, or any government, but for the electorate. It’s both literally and figuratively a real s..t show.

The company is worthless, Casdon. No-one in their right minds pays billions for a failed company. This is the downside of shareholding, shares aren't guaranteed to hold their value. You know the warning, 'Share prices can go up and down'? It is there for a reason.

The government could easily create the money to invest to return it to working order. It doesn't need to borrow it or beg 'investors' to put money into it. We have a sovereign fiat currency which we can never run out of...

And, according to the recently published whole government accounts, we appear to have £1.5 trillion hidden down the back of the sofa.. 😆
www.taxresearch.org.uk/Blog/2024/11/29/the-governments-latest-accounts-show-its-debts-fallen-massively/

MakzieD if we have got £1.5 trillion down the back of the sofa, hopefully it will stop every Labour MP banging on about the £22 billion black hole…

Unfortunately, GG13, we have a Chancellor who seems unable to read her own national accounts and who is disastrously wedded to 'the city' and private finance. The money will remain down the back of the sofa while she continues to plead poverty and sell off whatever remains of the family silver.

Oh yes, blame Reeves for years of creaming off to shareholders and doing nothing esle for almost 40 years!

MaizieD

Unfortunately, GG13, we have a Chancellor who seems unable to read her own national accounts and who is disastrously wedded to 'the city' and private finance. The money will remain down the back of the sofa while she continues to plead poverty and sell off whatever remains of the family silver.

I know we are poles apart politically but I agree with you regarding RR, she is a Tory Chancellor in all but name.

We are getting the same austerity policies ad nauseam.

GrannyGravy13

MaizieD

Unfortunately, GG13, we have a Chancellor who seems unable to read her own national accounts and who is disastrously wedded to 'the city' and private finance. The money will remain down the back of the sofa while she continues to plead poverty and sell off whatever remains of the family silver.

I know we are poles apart politically but I agree with you regarding RR, she is a Tory Chancellor in all but name.

We are getting the same austerity policies ad nauseam.

It basically just boils down to a more sophisticated version of The Great Money Trick (Robert Tressell).

The most depressing aspect of it is that so many appear to believe that this is the natural order of things.

keepingquiet

Oh yes, blame Reeves for years of creaming off to shareholders and doing nothing esle for almost 40 years!

I'm not blaming Reeves for that at all.

I am saying that she is an incompetent chancellor who has no ideas beyond kow towing to the (volatile and uncertain) financial markets and no real understanding of how the economy of a country with a sovereign currency can actually work.

It basically just boils down to a more sophisticated version of The Great Money Trick (Robert Tressell).

Can you remind us of that, Dickens? It's many years since I read the book and it depressed me so much I can't bear to re-read it.. I haul it down from the bookshelf sometimes, but can't actually open it. 100 years later nothing has changed..

MaizieD

It is a failed company. If it weren't responsible for an essential public utility it would go bust and be worthless. With that in consideration the government should nationalise it without any compensation to shareholders and undertake the necessary investment in its infrastructure.

The state investment would contribute to growth in just the same way that private investment would and has the advantage of not having to satisfy any shareholders.

With that in consideration the government should nationalise it without any compensation to shareholders and undertake the necessary investment in its infrastructure

Yes, and asap.

Macquarie Bank has a poor reputation, so I understand, and Macquarie Group seems uninterested in providing a good service to the customers of Thames Water, just in making money from them.

MaizieD

Casdon

The cost of a government buy out would be astronomical, when you add the investment billions, which as the article says is already known to have been underestimated, on to the buyout billions, Sarnia, and that’s going to be a headache for not only this, or any government, but for the electorate. It’s both literally and figuratively a real s..t show.

The company is worthless, Casdon. No-one in their right minds pays billions for a failed company. This is the downside of shareholding, shares aren't guaranteed to hold their value. You know the warning, 'Share prices can go up and down'? It is there for a reason.

The government could easily create the money to invest to return it to working order. It doesn't need to borrow it or beg 'investors' to put money into it. We have a sovereign fiat currency which we can never run out of...

And, according to the recently published whole government accounts, we appear to have £1.5 trillion hidden down the back of the sofa.. 😆
www.taxresearch.org.uk/Blog/2024/11/29/the-governments-latest-accounts-show-its-debts-fallen-massively/

Well, that's extremely interesting!

Time to start putting right everything that is wrong in this country. 🙂

MaizieD

keepingquiet

Oh yes, blame Reeves for years of creaming off to shareholders and doing nothing esle for almost 40 years!

I'm not blaming Reeves for that at all.

I am saying that she is an incompetent chancellor who has no ideas beyond kow towing to the (volatile and uncertain) financial markets and no real understanding of how the economy of a country with a sovereign currency can actually work.

Sounds like blame to me. Why not blame the previoius chancellors whose mess she now has to deal with.

keepingquiet

MaizieD

keepingquiet

Oh yes, blame Reeves for years of creaming off to shareholders and doing nothing esle for almost 40 years!

I'm not blaming Reeves for that at all.

I am saying that she is an incompetent chancellor who has no ideas beyond kow towing to the (volatile and uncertain) financial markets and no real understanding of how the economy of a country with a sovereign currency can actually work.

Sounds like blame to me. Why not blame the previoius chancellors whose mess she now has to deal with.

Please tell me how I am blaming her.

I blame Margaret Thatcher and all her successors for their terrible economic dogma of free markets and small state which has led to the privatisations of our utilities, with the subsequent loss of state control and the destruction of some companies through financial engineering.

I also blame the people who voted for her😁

I think Reeves is a very bad Chancellor, as I've said, but I don't blame her for the mess that is Thames Water.

Another Thatcher Tory privatisation mess up. It created a monopoly and thus a licence to print profits at the expense of the public.

MaizieD

Casdon

The cost of a government buy out would be astronomical, when you add the investment billions, which as the article says is already known to have been underestimated, on to the buyout billions, Sarnia, and that’s going to be a headache for not only this, or any government, but for the electorate. It’s both literally and figuratively a real s..t show.

The company is worthless, Casdon. No-one in their right minds pays billions for a failed company. This is the downside of shareholding, shares aren't guaranteed to hold their value. You know the warning, 'Share prices can go up and down'? It is there for a reason.

The government could easily create the money to invest to return it to working order. It doesn't need to borrow it or beg 'investors' to put money into it. We have a sovereign fiat currency which we can never run out of...

And, according to the recently published whole government accounts, we appear to have £1.5 trillion hidden down the back of the sofa.. 😆
www.taxresearch.org.uk/Blog/2024/11/29/the-governments-latest-accounts-show-its-debts-fallen-massively/

I don’t buy that MaizieD. The shareholders are not just going to walk away are they?

Reeves will want to return to banking when Labour is no longer in power. She wants the "natural order" to continue.

Casdon

MaizieD

Casdon

The cost of a government buy out would be astronomical, when you add the investment billions, which as the article says is already known to have been underestimated, on to the buyout billions, Sarnia, and that’s going to be a headache for not only this, or any government, but for the electorate. It’s both literally and figuratively a real s..t show.

The company is worthless, Casdon. No-one in their right minds pays billions for a failed company. This is the downside of shareholding, shares aren't guaranteed to hold their value. You know the warning, 'Share prices can go up and down'? It is there for a reason.

The government could easily create the money to invest to return it to working order. It doesn't need to borrow it or beg 'investors' to put money into it. We have a sovereign fiat currency which we can never run out of...

And, according to the recently published whole government accounts, we appear to have £1.5 trillion hidden down the back of the sofa.. 😆
www.taxresearch.org.uk/Blog/2024/11/29/the-governments-latest-accounts-show-its-debts-fallen-massively/

I don’t buy that MaizieD. The shareholders are not just going to walk away are they?

They're going to have to walk away. In fact, I think I read somewhere in the past few weeks that one major shareholder has already written their shares off. I'll try to find it.

If a company is worthless, as TW plainly is, then the shareholders have no claim on it. When Northern Rock went bust I got nothing for my (few) shares..

That is why shareholding is a risky business.

Well, that didn't take long to find. From the Financial Times 17/5/24

Thames Water’s biggest shareholder has written off its investment in the utility in a sign of the escalating financial crisis at the UK’s largest water company.

A Singapore-registered subsidiary of Ontario Municipal Employees Retirement System, which holds a 31 per cent stake in Thames Water, said in accounts filed on Friday it would make “a full writedown of [its] investment and loan receivable with accrued interest”.

It’s not worthless, it is worth 20% of what its value would be without debt. It has assets, and it has a customer base who are not able to get their supply from anybody else. More has recently been invested to keep it afloat. Here’s the investment profile as of August.
www.bbc.co.uk/news/business-66051555
Please don’t think I want it to stay as a private company, I don’t, but I can’t see it being handed over to the government for free any time soon.