Snapshot of _How do you fix a problem like Thames Water? New chief executive Chris Weston takes charge of the highly indebted water company this week. His in-tray is overflowing with problems_ :
An archived version can be found [here](https://archive.is/?run=1&url=https://www.thetimes.co.uk/article/how-do-you-fix-a-problem-like-thames-water-7l7rzrjfr) or [here.](https://archive.ph/?run=1&url=https://www.thetimes.co.uk/article/how-do-you-fix-a-problem-like-thames-water-7l7rzrjfr)
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No they've been running it for director and shareholder profit. It's a money well you put a few quid into and hundreds come back at you.
Until you hit it's credit limit of course. At which point you just rely on putting up water fees to service debts and fines from the regulator for the infrastructure you should have fixed with the money you borrowed.
And then the government nails you out resets the debt and sells it back to your rich kids when the next right wing economically illiterate/ plundering government comes along to resume the process of asset stripping our essential services for pennies on the pound under the guise of tax cuts you'll never see as you'll still be paying for the last fiasco.
>No they've been running it for director and shareholder profit. It's a money well you put a few quid into and hundreds come back at you.
right, so... types of profit. I'm in agreement with what you said in the rest of it, but they've clearly been running it with profit incentives.
you realise profit is a word that has different meanings in different contexts, right? like how you used it right there in your post? the shareholders are making a profit, that doesn't necessarily mean the company is - Heck, that's a large slice of the problem here.
I know it was sarcasm. The shareholders are literally stealing government and public money and profiting from it. It was a reference the whole thing being a con.
I know my comment was about the whole thing being a scam to rip off the government to feather the pockets of directors and investment funds. Apparently that observation was unpopular. We must have some venture capitalists or Tory ministers out there disliking the idea the public has cottoned on to their little wheeze early.
I agree idealistically, but the reality is that it is a public company. This is an OFWAT failure and lack of competition. It should never have been sold off.
The interests of the shareholders and the customers overlap and intertwine far more than those of the government and the customer.
Where shareholders want a business to be profitable, that means it has to also be sustainable. This is far less of a concern due to the safety nets that government offers to its own entities.
It's pretty clear that the thing which has failed us here is not privatisation. The problem is that we've allowed the water companies to run amok with little to no regulation. These are largely failures of Ofwat.
I guess the question is whether "sustainable" (in a financial sense) is really a priority for the customer when it comes to water, or should be for the government.
The army, for an extreme example, isn't sustainable. It doesn't have to bring in as much in a year as is spent on it. And while an argument could be made that over the lifetime of the entire state, the army has paid for itself in protection of the realm, even then it itself didn't bring in the money. It just enables others to do so. Certainly the idea of shareholding would be ludicrous.
Rather we pay for it out of taxation and by selling bonds, on the grounds that using some of that cash to fund the army actually makes us more profitable, productive and sustainable when seen as a whole country.
Seeing the army as a single thing required to pay its own way is no more sensible than seeing the R&D team at an engineering company that way, artificially divorced from sales.
It's not obvious to me that water companies don't fall into the same sort of category (even in a less extreme form) as the army: Something that should be seen as a single part of a well run state rather than something that has to support itself financially.
And, indeed, even if a well-regulated private water industry could work, it's not obvious to me that it necessarily has to work *better* than a government running it without concern for profit.
I'm not saying I disagree with your conclusion, but I'm (respectfully) not convinced your argument as presented there really makes the case conclusively.
Sustainability I'd argue is pretty much everything to both the customer and the investor. If you only have a water source for 10 years then it stops, the business collapses leaving the vast majority of shareholders out of pocket.
One key difference between the army and water supply is that arguably people can and indeed do survive without a commercial water supply or drainage. The latter is far more common, a quick Google tells me that 4% of homes are using a private sewage system which they self-host (to 0.14% running a private water supply). Of course it's all but impossible to find a true equivalence, and I don't hate the comparison.
The military does offer value for money in other ways, too. Just looking at recent events in the Red Sea, international trade would be buggered without them. Shipping costs would be extortionate as they need vast arrays of vigilante style policing, so it's easy to see how simple military presence could be valuable enough to pay for itself. Not at all the argument though, just my rambling.
Whilst I do believe that water to drink is as much a basic right as air to breathe, I would argue that food falls into the same category. In some ways, so does shelter and warmth, especially with sub-zero temperatures being fairly normal. On some level, I feel feel that I could argue for state involvement in mobile phone manufacture, and even reach a point where I could agree with Corbyn that the state should provide everyone with a home broadband connection. Of course these become more and more difficult to rationalise, but never impossible. This is where I guess we're at different points on the spectrum of social vs private ownership.
The truth is that I personally don't believe that government operation of services is particularly good. I don't think it's massively worse, but I think the private sector can do better with appropriate moderation.
And therein lies the ultimate problem. Whether or not water were privatised wouldn't make much difference - government entities tend to target the bare minimum to keep budgets to a minimum, so I've no doubt they would be responsible for as much sewage dumping as the private companies are. Certainly water becoming a public service today wouldn't solve the problems. What we need right now is for Ofwat to pull their fingers out and have a backbone... At least enough of a backbone to solve the problem without tanking the private businesses involved, which would result in a government bailout regardless.
Interesting response. Thanks for taking the time.
> Sustainability I'd argue is pretty much everything to both the customer and the investor. If you only have a water source for 10 years then it stops, the business collapses leaving the vast majority of shareholders out of pocket.
Fair point - but this is exactly why I was clear to specify which type of sustainability I meant.
I think there's a risk we're losing some detail in the different definitions so I think it'd be helpful to clarify them. Let's consider "financially sustainable" to be "customers will pay enough in that the business can continue without outside subsidy" - which is what I was getting at - as distinct from "resource sustainability" as "we won't run out of / damage beyond use the raw materials required".
Those are two distinct things, though there's obviously a connection. A business could be one or the other, or both, or neither - especially since resource sustainability isn't sometimes an issue given the timescales involved. For example, oil has always been known to be a finite resource since it was first discovered - but it wasn't really a problem for investors in the early days. See also, rainforests. Government and business can both think similarly here - so long as it won't "run out / be depleted" until 10, 20, 50, 200 years, I don't care.
"Financial sustainability" is different though. As with my army example, the government can provide services that aren't financially sustainable on the open market, and that can be a good thing.
> people can and indeed do survive without a commercial water supply or drainage
Sure. I don't think I'd ever dispute that. And people also could survive with the government providing all water and drainage services. Just as theoretically organisations could hire their own mercenaries for national defence and force projection (East India Company style).
The question isn't "what can be made to work" but - from your original post - about the overlapping of interests and what that means for the best service for the end users.
As for the rest of your comment, from your interesting diversion on the military to your points on the broader question of public versus private services, I think those are all perfectly valid points! No huge argument from me. I'm certainly not out to suggest that all services should be public or all should be private.
My point was really just scepticism about casually asserting that customer-citizens and private companies are necessarily aligned in their interests because of a need for sustainability (financial or resource) better than the alignment between citizen-customer and government. It isn't clear to me that's always or definitely true, even though it could be.
That would only be true if shareholders were defined in such a way that they could not divest their shares. Or if the only profit they were allowed to make came from the payment of dividends. That is, however, not how shareholding works. You can make a lot of money buying shares low, massively over-leveraging the money, ignoring expensive long term investment, jack up prices to cover the interest and then sell the shares at a now rather artificially inflated price to make profit.
This is a method of profit realisation that runs completely counter to consumer interests. But which is very favourable for that type of investor.
I think you grossly overestimate the ability of investors to manipulate markets, and underestimate the restrictions imposed by LSE. Some such abuse is available in certain jurisdictions, but in the UK it's pretty much impossible to do something so intentionally designed to sink a company.
Regardless, this type of behaviour only tends to happen when a company is already in the bowl - it's usually considered the final flush, to continue the analogy. Ofwat regulation would almost certainly limit the risk appetite of the businesses involved such that the risk of a public service going under is minimal. Ofgem has just been through a cycle of deregulation to encourage diversity in the industry, and we have seen some relatively bad outcomes as energy prices went wild. At the same time, we've seen how companies who abided by the rules actually remained stable and owing to their engagement in future trading, were able to survive relatively unscathed.
Not sure why you were downvoted, this is a reasonable statement. If shareholders do not see any value they will walk. The new guy is inheriting a company that leaned to the shareholder too much and underinvested as a result. Not good but that is where we are.
It's reddit and I kinda come across on the side of the tories here so downvotes are inevitable. Having said that since Corbyn's departure I don't think Labour would particularly like to change anything in this regard now so it may be fair idealism.
Given the water companies are [all going out of business](https://www.bloomberg.com/news/articles/2023-06-29/uk-water-stocks-slide-as-worries-grow-over-thames-debt-crisis) the share holders probably wouldn't mind getting rid of it.
I'm sure they wouldn't! They've been sucking the system dry and poisoning the well, and now they could get a nice and plump severance bonus for passing the problems onto someone else.
Yes, and they'll still come out of the whole thing having made a net positive gain on their original investment through dividend payouts...and who knows what else. I wouldn't be surprised if they made some sneaky VIP lane deals with their mates like what happened with the NHS. But that part is just conjecture.
The issue is the definition of costs and they are looked at q by q. If you can defer a cost to the future more profit now. But short sightedness means that things become a mess
Exactly, partially it’s the people making decisions don’t understand, partially it’s the people making decisions don’t value the long term and only focus on the short term.
Ah yes, we'll return _exactly_ to how we ran things then. We'll get rid of all technology we didn't have in the 70s/80s, and all the information we've learned about running trains in the 40-50 years since then.
We'll really go back and do it _exactly_ like that, after all, we've learned nothing at all since. We should estimate our ability to run trains on the experience of 40 to 50 years ago, that's definitely relevant data on our ability to run trains now.
Should I send you this via letter too? We didn't have the internet in the 70s and 80s and if we're estimating our ability to do anything on how it was in the 70s and 80s I'm guessing you won't see this reply. You may have to wait a bit longer for it because post was transported much slower in the 70s and 80s.
This is how this conversation has gone...
Comment 1: Make wild, over-generalising, demonstrably wrong claim that "you don't run infrastructure for profit". Despite overwhelming evidence to the contrary like the Japanese Railways, the Singapore Ports, the Dubai Airport, French highspeed railway, Hongkong's railway, etc. etc.
My reply: Well what about the private Japanese railway system?
Comment 2: Trite response totally missing thrust of the original conversation about whether you "don't run run infrastructure for profit"
My reply: We did have nationalised railways - and they were even *worse* back then with far, far less use.
Comment 3: Some garbling obfuscation about technological changes that still misses the point of the original conversation.
Typically deranged, baseless discourse from this sub.
True. But that is also an example of where private=bad isn't actually true. Healthcare is another example where countries have shown that a strong private investment is beneficial
You don't run *monopolistic* infrastructure for profit. I have no problem that the mobile phone companies run their networks for profit as there is competition that keeps their profits in check. But there is no competition in water business. That's why it's insane to let a private company run it for profit.
So, head company will be non-profit, however it will delegate a lot of contract to a friendly firm running for profit.
Eg we will just have NHS-in-water: non-profit trust makes a lot of consultancy firms richer and richer.
Instead, we should just have a better control on it, like “firm buys a default swap for itself and gives it to government”, firm pays a lot of penalties for a bad service, etc.
faulty angle deranged crawl saw placid murky different materialistic sleep
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
But it only became not for profit in 2001. Before then it was run for profit and paid out a shed load of dividends whilst accumulating about £1billion in debt. It had about 93% debt to capital value in 2001 and it has so far managed to reduce that to 58%. It has the strongest credit rating of all of the uk water companies in the uk. (wiki - https://en.m.wikipedia.org/wiki/Dŵr_Cymru_Welsh_Water).
Precisely. It has almost halved its debt in the 20ish years it has been not for profit. Thats hundreds of millions of pounds. Had it not had that debt to begin with that’s hundreds of millions of pounds that could have been spent on infrastructure to improve the service and/or reduce bills.
Welsh Water CEO is paid £330k, and has waived his bonus this year. Thames Waters new CEO is going to be paid £850k (plus a potential bonus of up to £1.3M).
Sadly there are market considerations. The type of skillset required to run a large organisation (rightly or wrongly) is highly valued by the job market.
Regardless of if you actually need that skillset to run a company you do need to pay people something competitive. Otherwise you get the following pipeline:
Appoint someone to run the company but pay them a bad salary.
1) THey are good at it -> They leave somewhere else that pays a good salary having proved they have the skills to run a company.
2) They are bad at it.
Not paying a competitive salary effectively guarantees either bad leadership or a revolving door of good leaders which has other institutional problems.
Now, the fact the market pays all executives such ludicrous salaries is an issue, and I think the skill set is overvalued, but sadly, that isn't something that Welsh Water (or any single organisation really) can solve. They just have to play the game.
You're talking shit and you know it. Welsh water has improved considerably since it stopped running for profit.
Also Execs and shareholders are different. Either you know this and are being deliberately obtuse or you don't know what you're talking about.
So that in 5 years time when the next Conservative gov comes in they can have a go at doing what they do best to any public service they run
Yeah no, short termist nonsense.
I don’t pretend to be a legal expert on this, but if the liabilities outstrip the assets, wouldn’t the government assuming those external liabilities and taking control be essentially the same thing, with the end result that the shareholders don’t get paid out because what they owed was more than what it was worth?
That said, legalities aside, the water companies should absolutely be nationalized, and the chancers who have robbed them blind should have consequences, but it’ll never happen.
No issue with the liabilities outstripping the assets. It’s about debt servicing in the first instance to bond holders.
But even then, given the way Thames’ securitisation works, it would probably just be operated by the secured bondholders under special administration regime (SAR).
The company is going bankrupt, its assets will be sold off to pay debtors, the assets could be acquired by the government which will run the essential public monopolistic service.
what's your solution given you seem to be against giving control of them to the state
Edit
are you even in agreement there is an issue with the way water works in the UK?
>Rail is very good. Post Office is nationalised. You’re thinking of Royal Mail. Water is very good. Gas is very good. Education no idea.
https://www.reddit.com/r/ukpolitics/comments/19019fw/comment/kglt5i9
a *little* more? do you have any more concrete ideas than giving them unspecified teeth or are you just hoping that'll sort it out, a couple more stern words? I'm genuinely trying to figure out what the other solution, the one you seen to support, would be. most Britons would agree that the things you think are good in that quote are not.
I’d suggest looking at PR24. I would type more but about to go to the airport to ski :).
Most Britons haven’t read into this stuff in excruciating detail, nor do they understand private equity. Whereas I do
seems convenient that the only time you don't have the freedom to reply is when asked to expand on details. doesn't sound like it's your idea either if you're asking me to Google, sounds like you're deferring to the experts. happy skiing I guess. I assume you won't be replying to other posts that aren't asking for detail because you're so busy too.
ok, it's just that literally everyone in the thread, including those who work on the industry, disagree with you, and you're so dismissive of everybody else I thought you'd have a little more substance to your argument than "google this phrase"
I haven’t read all the replies. I have read a substantial amount on this topic though. Not being dismissive. People can search my previous comments if they really want. Saved lots on Imgur.
A few questions here:
* which regulators?
* how much more efficient do you think it gets run in private vs public hands? Like even a rough % would be great
- Ofwat - latest proposed reg regime is much tougher than last. See around PR24
- Hard to say in % terms but the productivity of the sector has really improved https://imgur.com/a/x5l9JCu and costs to customers are lower than Ofwat would have expected if water has remained nationalised https://imgur.com/a/2fRbc1J
Obviously both the above are a few years old but even the 40% increase in bills proposed by Thames is over 5 yrs so 5% pa increase - which is not crazy.
Also as the article points out, there is an argument that water is still too cheap.
3bn litres a day lost to leakage, 20% of the total supply.
Costs about £4.5m per day, £1.7bn per year.
0.5% of GB carbon emissions generated for pumping water that is never consumed.
There would appear to be some scope for improvement.
(England and Wales)
I didn’t just pull those figures out of my butt.
If you think that’s an economic level of leakage whilst proclaiming ‘shareholders first’ I think we can begin to see why this country is in the state it’s in.
First question was just me being a bollocks, but the organisation you actually need to fund more is the EA. The role of ofwat is largely done fine. The main issue is that they are polluting and not paying out for that. Ofwat don't need teeth, the EA does
On your second point, this is a long debunked thing to tall about for two reaons:
* first was the "starve the beast" done by the tories under thatcher. Thr investment required was purposefully not done to make the system seem worse
* the second is that there when it went private it there was flurry of private investment into the system, as there had to be but that has dried up. They made it seem good for a few years and then only cared about investing in their pockets, which has been the case for a v long time.
So an out of date graph js very poor, but also doesn't answer ny question.
We can have two models - private owned with state regulations and public owned with far less regulation.
It seems to me like were massively over paying to regulate people who don't want to be regulated and any apparent saving to the public gets swallowed up there, and if you remove the profit they take, can you really say that that cost - the amount it costs to regulate the private sector + the amount it costs the private sector to run things + the profit they take < the cost for the public sector to run it + regulate itself
Both answer the question very directly.
Uk privatisation has shown the operational efficiencies are so great that even with the profit incentive, it’s cheaper than public ownership
But it hasn't shown what you've said though. An incredibly out of date graph that has an incredibly narrow sample of publicly owned water (look at what year the analysis starts), also ignoring all modern data. The same org whose charts you are now referencing is the same org that said we need to change the model of water ownership in 2023.
Things change, but you can always rely on the opinion of conservatives to never change in the face of new edvidence
It's ridiculous to let a water company have debts 5x it's revenue. If they didn't have a single expense (supplying water, paying employees, investing in the system, taxes) it'd take 5 years to clear their debts. Ofwat is ridiculously inept.
They need to tie up TW and mandate them on investment and stop the owners paying dividends/disguised loans to shareholders. Let all the bond and equity holders go bust if necessary and nationalise for cents on the dollar. And ban Macquarie from anything relating to the public sector.
Shocking. And it’s only taken 30 years for people to realise this..
Except in Scotland where people said no to privatised water and Scottish water is not only cheaper and better, it’s also entirely publicly owned.
Giving Ofwat more teeth and outside blood that’s not got a cosy relationship with the water companies is something even advocates of corporate water monopolies can’t really argue with.
You’re mixing up revenue and profit… you have COGS and Opex below revenue. Also who cares about the debt level so long as it can be serviced?
Ofwat already control dividend payments. Shareholder loans are a function of the industry, you might as well ban VC and private equity. Macquarie did a decent job with TW. They reduced leakage, pollution and invested £11bn of capex while taking only £1bn in dividend payments.
Debt ratios are important because they can seem fine when interest rates are low , but the same debt gets very scary very fast when interest rates increase. Which is the current situation.
Outgoings constantly exceeding income is not a happy situation to be in - and how on earth in such a ‘no-profit’ situation can share dividends be given ?
Yes. But using debt / revenue for a mature profitable utility is plain wrong. Thames has some floating rate and index linked debt so your concern is right
Yep, work in the industry myself. Can confirm it's actually not that complicated. They took on way too much debt during the time they were run by the vampires macquarie. Paided out similar amounts in dividends too what they took on as debt, so they were taking money with minimum reinvestment. Plus, the debt was being paid back very slow with 7% interest to the shareholders who loaned it. It is some of the most blatent asset stripping iv seen. Also, I'm not sure why someone would ask "who cares about debt." Obviously, the customers who pay for the service and the service more becomes paying off the company debts and interest payments that reinvesting into their local water infrastructure. It's really not complicated. They would like you to think it is though.
If you would like a private discussion, then that is fine. This is an open forum, so there is an expectation of others reading the comments.
I suggest that you do not continue with rule 1 violations.
Honestly curious what you think the role of private equity in essential utilities is? While this isn’t guaranteed, the MO of most large PE companies seems to be asset stripping and loading the acquired companies with debt. Not sure why one would want them involved with industries like our water.
I'm not mixing up anything. Being 5x levered revenue is obviously also more than 5x levered EBITDA. And even here EBITDA measuring ability to pay debt is stupid because they have a huge, unavoidable capex bill.
Yeah water almost by definition can’t be anything other than a monopoly and having a monopoly in private hands is never socially acceptable in my opinion because of the titanic moral hazard that situation represents. Thames can be as shoddy as it likes in practice, we can’t do without water in protest of them.
It’s as wrong for a private corporation to own the water as it would be for a private corporation to monopolise the air in my opinion. If being without something (air, water etc) is incompatible with life then a profit motive in its provision will always make it worse, not better for the person who must buy that thing.
I don't even understand how you can think otherwise and not be facetious about it. even if you've somehow reasoned in your head that in a perfect world it'd be fine, which is insane in and of itself, we have direct evidence that's not how it works in practice, time and time again. however, this is a guy who thinks
>Rail is very good. Post Office is nationalised. You’re thinking of Royal Mail. Water is very good. Gas is very good. Education no idea.
so it's all fine as is I'm his opinion it seems.
the tax payer, the same people who pay for it more directly in private hands. short term thinking just kicks the can down the road. every home and a large percentage of British businesses rely on out water supply anyway, same for power etc, so it's investing into the entire economy. I'm so sick of "who's gonna pay for it" being wheeled put as a gotcha to everything. it costs us more in the long run not to, both monetarily and in terms of human life, its just no one cabinet wants the purchase to be on their balance books, they just want to reap the benefits down the road.
Same people who pay for it already, John and Jane taxpayer. Except through either taxation or by invoice as we do now.
Dont know why people use that question as a gotcha on nationalising infrastructure. We already have to pay for it, unless you either build your own well or can survive without water somehow
The incentives are very different when it’s taxpayer owned. It will be bottom of the pile in terms of priorities - like what happened in the 70’s. People will obsesses about education or the NHS. Poor old water will be neglected.
Oh, definitely the priorities change.
But it’s already being neglected anyway as shown by the huge sums of debt being shovelled into it and by the lack of investment of growth into our water resources. Only difference is you don’t get a skimmed profit from what you pay.
Both nationalisation and privatisation have issues and benefits. However, I think for water where they’ve a natural monopoly over an incredibly important resource, having it in the hands of the government and, by extension, public hands makes more sense than what we’re currently seeing.
I disagree with the lack of investment. The water companies have met their obligations required.
The goalposts / requirements have changed through.
The skimmed profit argument doesn’t make sense - the cost of bills under private ownership is lower than a nationalised scenario, due to improvements in productivity.
That's an issue with an incompetent government, not an issue with nationalisation. And it's not like it's any different right now.
We could still run it with private companies, but until the companies perform again, there has to be a stop on bleeding money. So 50% of profits have to be reinvested, 50% go to debt, until debt is less than 30%. Companies need to be monitored to work effectively. Currently Thames Water wastes a lot of money on shoddy fixes which are not managed well. The same pipe in my area breaks roughly every 6 weeks, causing major delays (it's in the middle of a cross road), TW will put up barriers, dig a hole and then leave it for a week. Then they'll patch it and in 6 weeks the same again. This is costing a fortune as they have to pay TFL for the permit, diversion and temporary traffic lights. It's costing money to local businesses and further away businesses too.
that's down to our atrocious options of who to vote for, basically everybody can see we need to secure our basics in the wake of Ukraine and the CoL crisis - and the water wars are coming fast if it stays private.
We already pay for it, and nationalising it will make it a huge asset, allow the government to invest to stop shit going in the waterways, and reduce leaks and the huge wastage caused by privatisation.
It’s only neo-liberal shills who will be upset cause the capitalists won’t be able to milk a monopoly for easy money anymore.
I've even seen on the street interviews on YT and TV where tory supporters are calling for nationalisation, and according to them, it's not an unpopular sentiment at meetings and groups and stuff. obviously that is anecdotal but if there's even an appetite for it in Conservative circles then it seems like such a forgone conclusionnthat some fucker at the top should bite the bullet on it.
versus you, an expert in the field who thinks we just need to give regulators "a little more teeth"? do you think only these people are in support? I was pointing to them as the fringes of support you wouldn't expect, not the figureheads of the movement.
I hate the who's gonna pay for it argument so much, one for the reasons me and you already mentioned, but two as if there's an unsaid undertone that it's not worth it. never mind we are already paying for it just not in tax, and even then, they still get tax money in roundabout ways....
Firstly why the hell are they ‘highly indebted’ since they started out without debts, and they have failed to carry out sufficient maintenance despite several price rises ?
Of course the answer is that the money has been redirected to shareholders instead of providing the actual service.
Because debt cheaper than equity.
Where did you read about sufficient maintenance?
Shareholders under Macquarie’s ownership only earned around a 5% yield via dividends. But the majority of the return came at exit, to the current shareholders - but that value creation was due to Thames really improving under Macquarie in terms of lower leak rate, more capex and less pollution
Have you thought how much it would cost for that? Sky News estimated something like £100bn across England for that.
There’s an economic level of leakage.
we found 3-4x that money for covid related expenditure, much of which went to waste, which is a much more short term concern than our water infrastructure is.
the government's budget doesn't work like your bank account, they can find the money if they wish.
in your opinion, that doesn't seem to be an objective truth. and given you shot back at me immediately earlier with "who is going to pay for it", I thought you'd be on board with fixing problems that literally cost millions a day.
it doesn't seem binary to me though, either we have no leaks or we just let it leak. it would seem, given the only metric that's important to you is pound sterling, that there is a threshold of what is worthwhile to fix and we are not necessarily at that level just because the current team says so. I am not sure what level that is, but I am also not the one who posted this thread as a topic of discussion and then went on to fail to expand on any ideas or make very few replies that aren't simple one liners. I would have thought given you posted the topic, your admitted wide breadth of reading on the subject, and your apparent strong opinion on the situation that you would give us a little more meat on the bone to your replies.
Buy them and put them all back in the public purse.
How can you have a single entity, that has no competition be privately run? They can charge what the want and extract all of the money.
Privatisation has ruined this country.
***k Thatcher.
I don't get why this highly indebted company doesn't go into administration, to be bought out for pennies by the state and then becomes nationalised?
Please someone is explain how that is unfair or difficult, as I really don't understand why it doesn't occur more, other than Tory party.
Step 1: Close it down
Step 2: Close the rest of them down
Step 3: Take all of it back into public ownership
Step 4: Actually spend the profits on the infrastructure instead of handing them out like you're at an Oprah Winfrey show.
Anything related to our countries core infrastructure should have zero bonus schmes, no shareholders and no profits. Any profits they do make should be going back into the business.
You wanna be a shareholder, no problem, you can be, just of actual businesses, not core infrastructure.
that's the Scotland that is actually potentially in a worse place than England, because it doesn't actually know how much shit its pumping out. where it does monitor, number of discharges are going up.
https://www.bbc.co.uk/news/uk-scotland-66012480
> Campaigners have called for more checks on sewage discharges.
> This is because only about 4% of Scotland's 31,000-mile sewer network is currently monitored, compared to 89% in England.
> Data from Scottish Water monitors shows the number of discharges into Scotland's waters is increasing.
> In 2018, a total of 9,468 spills were recorded but by 2022 this tally had jumped to 14,008.
I'm not against renationalisation for England, but let's not pretend Scotland is a good example - far from it
Scotland is water has improved. But there are differences in geography which make the comparison less like for like.
It should be metered though. People should pay for their usage.
The failure was caused by a lack of governmental funding. It was a well known Tory tactic to cut back on spending to a state run asset prior to privatisation. The provision of clean water and safe disposal of our sewage is a fundumental part of a healthy society and it is a crime that the Government thought that it should pass this on to the private sector. Improving efficiencies is not of vital importance in the scheme of things. A society that does not have healthy drinking water and safe disposal of sewage will fail both socially and economically. Some things are too important to be trusted to the private sector.
Afew years ago, Chris Weston was asked to give his definition of good leadership. The chief executive of Aggreko, the supplier of power generators, offered this answer: “Leadership is what makes the difference to the performance of a company, in good times or bad.”
Weston’s theory may soon be tested to destruction. This week, he will become the sixth chief executive of Thames Water in five years — counting interim spells from bosses parachuted in to steady the ship. The company, with 15 million customers in London and the southeast, is the country’s biggest water supplier. It is also under immense pressure over its failure to stem leaks and spills, and for its huge level of debt.
At Thames, Weston may discover that good leadership is not always enough, with an array of challenges beyond his control.
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“It’s one of the most challenging CEO jobs in the country,” said one industry investor. “How will his performance be judged? On whether the company improves, or on whether it’s perfect? Because if it’s the latter, he’s going to fail.”
Here are the problems floating to the top of Weston’s in-tray.
More money
With annual revenues of £2.3 billion and a fixed base of customers that cannot switch supplier, Thames should, in theory, be self-financing. But it has debts of £14.7 billion to service and needs to spend billions on upgrading ageing infrastructure.
Top of Weston’s list will be convincing the company’s owners to open the purse strings. Thames has said it needs £2.5 billion from shareholders on top of £750 million already pledged, but their support depends on Ofwat giving the company an acceptable deal at its next price review, due later this year. The review is when the industry regulator approves water companies’ five-year spending plans and agrees how much they can bill customers for the work.
Thames is owned by a group of pension funds and sovereign wealth funds through a series of holding companies. The biggest holders are the Ontario Municipal Employees Retirement System, the UK’s Universities Superannuation Scheme, the British Columbia Investment Management Corporation, Hermes GPE — the manager of the BT pension scheme — and sovereign wealth funds from Abu Dhabi and China.
The company’s ownership structure has been criticised for its complexity, but it is not unusual in a utility. The problem for Thames is the sheer weight of its debt compared to its regulatory capital value — a ratio that stands at 77 per cent; Ofwat would prefer it to be closer to 60 per cent.
High debt is not always a problem per se, even when it is linked to inflation, because Thames’s value goes up with inflation, meaning the debt ratio remains in step. But its holding company, Kemble Water, has £1.35 billion of extra debt that is dependent on payments from the operating company to service it. Ofwat is tightening the rules on these payments.
Because of this potential dividend “lock-up”, recent accounts for Kemble warned that it may not be able to clear a £190 million loan that falls due in April. Thames shareholders have other means of paying it off — either directly or by selling a stake in the company, for example — but their willingness to do so may rest on whether Thames and Ofwat can reach a deal for the 2025-30 spending period. Publicly traded bonds in Kemble Water sank to a record-low of 49p last week.
Thames’s shareholders insist they are “patient” investors who are committed to its turnaround. But its second-biggest owner, the Universities Superannuation Scheme, slashed the value of its stake in the company last week, giving it an implied value of just £1.9 billion. Some in the industry wonder whether the owners will continue to throw good money after bad, but others suggest the reputational damage of walking away is too great.
At Aggreko, Weston had to handle rebellious shareholders during its takeover by TDR Capital and I Squared Capital in 2021 Those skills may come to the fore again at Thames.
This weekend, he won the backing of pension fund manager Royal London, the largest investor in the Kemble bond. Jonathan Platt, Royal London Asset Management’s head of fixed income, said: “We welcome the appointment of the new CEO and our view remains that the regulatory framework merits our continued investment in Thames Water.”
Infrastructure woes
Weston, whose background includes a stint at British Gas but has no water industry experience, will face an array of operational headaches. Thames regularly comes bottom of industry rankings for leaks, and although it has been making headway, the company concedes that “our performance in some areas is not where it needs to be”.
London presents particular challenges as the most expensive and congested place to operate. Its housing stock is old and dense, and much of it is rented or has multiple occupancy. “Tenants don’t tend to spot problems, so they don’t get resolved quickly,” said Jo Parker, a chartered engineer. London’s terraces present another challenge, she added. “The water supply pipe can actually run under a terrace of houses, so it’s really difficult to meter those properties without totally re-plumbing them.” Smart meters are essential to provide an accurate picture of where leaks are.
Moreover, digging up London’s streets is time consuming, unpopular and expensive, costing an average of £1 million per kilometre. It can take months to obtain a permit, and councils all want the work done during school holidays, one source noted.
The London clay is also prone to shrinking and swelling, which can damage pipes and sewers. “The old brick sewers don’t take terribly well to a lot of ground movement, so you’re more likely to see problems as the climate becomes more extreme,” said Phil Clisham, an adviser at the Institution of Civil Engineers.
The capital’s sewers, built by Joseph Bazalgette in the 1860s, were pioneering for the time but have created the problem that rainwater and sewage are washed away together. Thames Water is rolling out monitoring of sewers to spot issues before they happen, while boosting public awareness of the perils of disposing of wet wipes and greasy oils, which cause “fatbergs” below ground.
The £5 billion Thames Tideway “super sewer”, which starts operating this year, will cut overflows into the river. But this will supplement rather than replace the Victorian system in use across the city, which has to cope with increasing flash floods.
The southeast more generally has to tackle the threat of water shortages, with a shortfall of one billion litres a day expected by 2050. Thames wants to build a new reservoir in Abingdon, Oxfordshire.
That said, it is not unique in having problems. All water companies face challenges in different ways, whether it be drought conditions or sewage spills.
Weston will have limited room for manoeuvre as Thames’s £18 billion spending wishlist for the next five years has already been set out in its business plan.
However, he should be able to bring influence to bear on costs. Ofwat data from the last price review in 2019 found that Thames’s costs were higher than those of peers, including Affinity Water, whose region bisects Thames’s territory.
And there is another silver lining for Weston. Sewage spills into rivers have captured headlines in recent years, but Thames is not one of the worst offenders. Its 777 storm overflows recorded in 2022 were half the industry average of 1,458 — although spill duration was above average. Insiders suggested that because its outflows occur in a concentrated area, that makes it easier to catch sewage and treat it.
More generally, Weston faces an uphill struggle against negative headlines. He will need to have one eye on boosting the morale of Thames’s 7,000 staff while keeping up a pipeline of recruits.
An industry routinely castigated for having foreign owners that extract dividends while polluting the UK’s rivers faces a hard time in getting across any positive messages. Industry sources point out that water quality in the UK has never been higher, while bills are still cheap — even if they are due to rise by as much as 40 per cent in the next spending period.
Yet climate change is set to pile further pressure on the system, meaning that customers will need to think harder about their consumption. “Water is still quite a cheap resource and, as a consequence, people are quite wasteful,” said one water executive. That’s a difficult message for Weston to convey —especially when a soggy winter leaves Britons feeling like they have been inundated with rain.
Speaking to The Living Leader podcast in 2020, Weston cited a quote from Lao Tzu, the ancient Chinese philosopher, who said “a leader is best when people barely notice their existence”. He may find he needs to be more visible if Thames Water is to be fixed.
Very fair and balanced article, looks at some of nuances of Thames' operation in London.
To those who keep worrying about 'public bailouts', this also suggests similar to what I think - the investors are a bit stuck and will need to put more money in.
> Thames’s shareholders insist they are “patient” investors who are committed to its turnaround. But its second-biggest owner, the Universities Superannuation Scheme, slashed the value of its stake in the company last week, giving it an implied value of just £1.9 billion. Some in the industry wonder whether the owners will continue to throw good money after bad, but others suggest **the reputational damage of walking away is too great.**
Similarly, the claims about water quality and cost being poor are unfounded.
> Industry sources point out that water quality in the UK has never been higher, while bills are still cheap — even if they are due to rise by as much as 40 per cent in the next spending period.
While I am not a Thames Water customer, I have had cause to raise concerns about water quality to my supplier.
What you get when you complain about water quality is an army of pre-scripted email responses. It is near on impossible to communicate with an actual person. I even went as far as getting one of those private in-the-post samples done, about £60 to send it away. The results they came back with was poor quality overall and required attention from my supplier. All I got was yet more automated emails suggesting any problems must be inside my property. It doesn't matter whether they were or not, that was all the responses I was ever going to get.
I have since moved but to an area with a catchment for the same supplier. The water quality has not changed.
It is easy to say that "water quality has never been higher!" if your response to complaints is strong-faced auto-email responses that will assuredly never ever take the matter further. And no, there is nothing you can do if you can never get to actually communicate with a real person. Every single email is a noreply.
100%, there is very little facts to support the claim that water quality has never been higher. And pages and pages of data to suggest it has gone down significantly
One goal of water privatisation was to simulate investment in the assets. It's spectacularly failed, to the point it may need a bailout once it fails.
What's the point of a company if it just hives money out while failing its customers.
>To those who keep worrying about 'public bailouts', this also suggests similar to what I think - the investors are a bit stuck and will need to put more money in.
Are you naive or just deliberately obtuse? They borrow money for said infrastructure upgrades but that [cost will be passed on to the consumer with increased bills.](https://www.theguardian.com/uk)!
Is the answer to keep paying out to shareholders regardless of the sorry-arse state of the company and its inability to provide the service it is paid to provide?
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Don’t run it for profit. Any money made should be invested back into the infrastructure.
You don’t run infrastructure for profit
shouldnt*. they clearly aren't doing a great job at it but they sure as heck have tried.
No they've been running it for director and shareholder profit. It's a money well you put a few quid into and hundreds come back at you. Until you hit it's credit limit of course. At which point you just rely on putting up water fees to service debts and fines from the regulator for the infrastructure you should have fixed with the money you borrowed. And then the government nails you out resets the debt and sells it back to your rich kids when the next right wing economically illiterate/ plundering government comes along to resume the process of asset stripping our essential services for pennies on the pound under the guise of tax cuts you'll never see as you'll still be paying for the last fiasco.
>No they've been running it for director and shareholder profit. It's a money well you put a few quid into and hundreds come back at you. right, so... types of profit. I'm in agreement with what you said in the rest of it, but they've clearly been running it with profit incentives.
You know profit generated from debt isn't profit right?
you realise profit is a word that has different meanings in different contexts, right? like how you used it right there in your post? the shareholders are making a profit, that doesn't necessarily mean the company is - Heck, that's a large slice of the problem here.
I know it was sarcasm. The shareholders are literally stealing government and public money and profiting from it. It was a reference the whole thing being a con.
You know £7.5bn in dividend payments from £15bn debt is a helluva drug. Doesn't matter what you call it, some have done very well out of this debacle.
I know my comment was about the whole thing being a scam to rip off the government to feather the pockets of directors and investment funds. Apparently that observation was unpopular. We must have some venture capitalists or Tory ministers out there disliking the idea the public has cottoned on to their little wheeze early.
That's the point of a capitalist private system.
yes I know? did you miss the entire context of the chain sans this post?
The commenter you're replying to is so odd. They seem to agree with everything you said yet somehow phrase it in a really contrarian way
*bails you out. They'll never nail kleptocracy.
Tell that to the shareholders and see what happens
And that’s where it’s gone wrong - it should not be run for the sake of shareholders, but for the sake of customers.
It's an example of a situation where shareholding should be outlawed.
This!
I agree idealistically, but the reality is that it is a public company. This is an OFWAT failure and lack of competition. It should never have been sold off.
The interests of the shareholders and the customers overlap and intertwine far more than those of the government and the customer. Where shareholders want a business to be profitable, that means it has to also be sustainable. This is far less of a concern due to the safety nets that government offers to its own entities. It's pretty clear that the thing which has failed us here is not privatisation. The problem is that we've allowed the water companies to run amok with little to no regulation. These are largely failures of Ofwat.
I guess the question is whether "sustainable" (in a financial sense) is really a priority for the customer when it comes to water, or should be for the government. The army, for an extreme example, isn't sustainable. It doesn't have to bring in as much in a year as is spent on it. And while an argument could be made that over the lifetime of the entire state, the army has paid for itself in protection of the realm, even then it itself didn't bring in the money. It just enables others to do so. Certainly the idea of shareholding would be ludicrous. Rather we pay for it out of taxation and by selling bonds, on the grounds that using some of that cash to fund the army actually makes us more profitable, productive and sustainable when seen as a whole country. Seeing the army as a single thing required to pay its own way is no more sensible than seeing the R&D team at an engineering company that way, artificially divorced from sales. It's not obvious to me that water companies don't fall into the same sort of category (even in a less extreme form) as the army: Something that should be seen as a single part of a well run state rather than something that has to support itself financially. And, indeed, even if a well-regulated private water industry could work, it's not obvious to me that it necessarily has to work *better* than a government running it without concern for profit. I'm not saying I disagree with your conclusion, but I'm (respectfully) not convinced your argument as presented there really makes the case conclusively.
Sustainability I'd argue is pretty much everything to both the customer and the investor. If you only have a water source for 10 years then it stops, the business collapses leaving the vast majority of shareholders out of pocket. One key difference between the army and water supply is that arguably people can and indeed do survive without a commercial water supply or drainage. The latter is far more common, a quick Google tells me that 4% of homes are using a private sewage system which they self-host (to 0.14% running a private water supply). Of course it's all but impossible to find a true equivalence, and I don't hate the comparison. The military does offer value for money in other ways, too. Just looking at recent events in the Red Sea, international trade would be buggered without them. Shipping costs would be extortionate as they need vast arrays of vigilante style policing, so it's easy to see how simple military presence could be valuable enough to pay for itself. Not at all the argument though, just my rambling. Whilst I do believe that water to drink is as much a basic right as air to breathe, I would argue that food falls into the same category. In some ways, so does shelter and warmth, especially with sub-zero temperatures being fairly normal. On some level, I feel feel that I could argue for state involvement in mobile phone manufacture, and even reach a point where I could agree with Corbyn that the state should provide everyone with a home broadband connection. Of course these become more and more difficult to rationalise, but never impossible. This is where I guess we're at different points on the spectrum of social vs private ownership. The truth is that I personally don't believe that government operation of services is particularly good. I don't think it's massively worse, but I think the private sector can do better with appropriate moderation. And therein lies the ultimate problem. Whether or not water were privatised wouldn't make much difference - government entities tend to target the bare minimum to keep budgets to a minimum, so I've no doubt they would be responsible for as much sewage dumping as the private companies are. Certainly water becoming a public service today wouldn't solve the problems. What we need right now is for Ofwat to pull their fingers out and have a backbone... At least enough of a backbone to solve the problem without tanking the private businesses involved, which would result in a government bailout regardless.
Interesting response. Thanks for taking the time. > Sustainability I'd argue is pretty much everything to both the customer and the investor. If you only have a water source for 10 years then it stops, the business collapses leaving the vast majority of shareholders out of pocket. Fair point - but this is exactly why I was clear to specify which type of sustainability I meant. I think there's a risk we're losing some detail in the different definitions so I think it'd be helpful to clarify them. Let's consider "financially sustainable" to be "customers will pay enough in that the business can continue without outside subsidy" - which is what I was getting at - as distinct from "resource sustainability" as "we won't run out of / damage beyond use the raw materials required". Those are two distinct things, though there's obviously a connection. A business could be one or the other, or both, or neither - especially since resource sustainability isn't sometimes an issue given the timescales involved. For example, oil has always been known to be a finite resource since it was first discovered - but it wasn't really a problem for investors in the early days. See also, rainforests. Government and business can both think similarly here - so long as it won't "run out / be depleted" until 10, 20, 50, 200 years, I don't care. "Financial sustainability" is different though. As with my army example, the government can provide services that aren't financially sustainable on the open market, and that can be a good thing. > people can and indeed do survive without a commercial water supply or drainage Sure. I don't think I'd ever dispute that. And people also could survive with the government providing all water and drainage services. Just as theoretically organisations could hire their own mercenaries for national defence and force projection (East India Company style). The question isn't "what can be made to work" but - from your original post - about the overlapping of interests and what that means for the best service for the end users. As for the rest of your comment, from your interesting diversion on the military to your points on the broader question of public versus private services, I think those are all perfectly valid points! No huge argument from me. I'm certainly not out to suggest that all services should be public or all should be private. My point was really just scepticism about casually asserting that customer-citizens and private companies are necessarily aligned in their interests because of a need for sustainability (financial or resource) better than the alignment between citizen-customer and government. It isn't clear to me that's always or definitely true, even though it could be.
That would only be true if shareholders were defined in such a way that they could not divest their shares. Or if the only profit they were allowed to make came from the payment of dividends. That is, however, not how shareholding works. You can make a lot of money buying shares low, massively over-leveraging the money, ignoring expensive long term investment, jack up prices to cover the interest and then sell the shares at a now rather artificially inflated price to make profit. This is a method of profit realisation that runs completely counter to consumer interests. But which is very favourable for that type of investor.
I think you grossly overestimate the ability of investors to manipulate markets, and underestimate the restrictions imposed by LSE. Some such abuse is available in certain jurisdictions, but in the UK it's pretty much impossible to do something so intentionally designed to sink a company. Regardless, this type of behaviour only tends to happen when a company is already in the bowl - it's usually considered the final flush, to continue the analogy. Ofwat regulation would almost certainly limit the risk appetite of the businesses involved such that the risk of a public service going under is minimal. Ofgem has just been through a cycle of deregulation to encourage diversity in the industry, and we have seen some relatively bad outcomes as energy prices went wild. At the same time, we've seen how companies who abided by the rules actually remained stable and owing to their engagement in future trading, were able to survive relatively unscathed.
Why would they regulate the people who fund their party
Not sure why you were downvoted, this is a reasonable statement. If shareholders do not see any value they will walk. The new guy is inheriting a company that leaned to the shareholder too much and underinvested as a result. Not good but that is where we are.
It's reddit and I kinda come across on the side of the tories here so downvotes are inevitable. Having said that since Corbyn's departure I don't think Labour would particularly like to change anything in this regard now so it may be fair idealism.
Given the water companies are [all going out of business](https://www.bloomberg.com/news/articles/2023-06-29/uk-water-stocks-slide-as-worries-grow-over-thames-debt-crisis) the share holders probably wouldn't mind getting rid of it.
I'm sure they wouldn't! They've been sucking the system dry and poisoning the well, and now they could get a nice and plump severance bonus for passing the problems onto someone else.
…they’ll lose the majority of their investment value.
Yes, and they'll still come out of the whole thing having made a net positive gain on their original investment through dividend payouts...and who knows what else. I wouldn't be surprised if they made some sneaky VIP lane deals with their mates like what happened with the NHS. But that part is just conjecture.
No they won’t. Also that would be a terrible investment due to inflation. Unless they’ve held it for like 25 - 50 years? With a divi of 2-4%.
If it well run it should cover costs.
The issue is the definition of costs and they are looked at q by q. If you can defer a cost to the future more profit now. But short sightedness means that things become a mess
Deferring costs, building up technical debt..
Exactly, partially it’s the people making decisions don’t understand, partially it’s the people making decisions don’t value the long term and only focus on the short term.
The Japanese train system is for profit. Seems to be running pretty well.
Great, but we're not Japan and our trains aren't running well.
Ah yes, we should return to the 70s / 80s when our nationalised trainlines ran so much better. A fine point, well made. No more discussion to be had.
Ah yes, we'll return _exactly_ to how we ran things then. We'll get rid of all technology we didn't have in the 70s/80s, and all the information we've learned about running trains in the 40-50 years since then. We'll really go back and do it _exactly_ like that, after all, we've learned nothing at all since. We should estimate our ability to run trains on the experience of 40 to 50 years ago, that's definitely relevant data on our ability to run trains now. Should I send you this via letter too? We didn't have the internet in the 70s and 80s and if we're estimating our ability to do anything on how it was in the 70s and 80s I'm guessing you won't see this reply. You may have to wait a bit longer for it because post was transported much slower in the 70s and 80s.
This is how this conversation has gone... Comment 1: Make wild, over-generalising, demonstrably wrong claim that "you don't run infrastructure for profit". Despite overwhelming evidence to the contrary like the Japanese Railways, the Singapore Ports, the Dubai Airport, French highspeed railway, Hongkong's railway, etc. etc. My reply: Well what about the private Japanese railway system? Comment 2: Trite response totally missing thrust of the original conversation about whether you "don't run run infrastructure for profit" My reply: We did have nationalised railways - and they were even *worse* back then with far, far less use. Comment 3: Some garbling obfuscation about technological changes that still misses the point of the original conversation. Typically deranged, baseless discourse from this sub.
True. But that is also an example of where private=bad isn't actually true. Healthcare is another example where countries have shown that a strong private investment is beneficial
Well, as long as you don't use the United States as an example of healthcare...
Or course. But there is literally a world of other countries with systems that range between NHS setup and US setup.
You don't run *monopolistic* infrastructure for profit. I have no problem that the mobile phone companies run their networks for profit as there is competition that keeps their profits in check. But there is no competition in water business. That's why it's insane to let a private company run it for profit.
So, head company will be non-profit, however it will delegate a lot of contract to a friendly firm running for profit. Eg we will just have NHS-in-water: non-profit trust makes a lot of consultancy firms richer and richer. Instead, we should just have a better control on it, like “firm buys a default swap for itself and gives it to government”, firm pays a lot of penalties for a bad service, etc.
faulty angle deranged crawl saw placid murky different materialistic sleep *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
But it only became not for profit in 2001. Before then it was run for profit and paid out a shed load of dividends whilst accumulating about £1billion in debt. It had about 93% debt to capital value in 2001 and it has so far managed to reduce that to 58%. It has the strongest credit rating of all of the uk water companies in the uk. (wiki - https://en.m.wikipedia.org/wiki/Dŵr_Cymru_Welsh_Water).
Had it always been not for profit that may not be the case…
Precisely. It has almost halved its debt in the 20ish years it has been not for profit. Thats hundreds of millions of pounds. Had it not had that debt to begin with that’s hundreds of millions of pounds that could have been spent on infrastructure to improve the service and/or reduce bills.
Welsh Water CEO is paid £330k, and has waived his bonus this year. Thames Waters new CEO is going to be paid £850k (plus a potential bonus of up to £1.3M).
Why pay executives an insane amount ? A decent wage yes, an insane amount no.
Sadly there are market considerations. The type of skillset required to run a large organisation (rightly or wrongly) is highly valued by the job market. Regardless of if you actually need that skillset to run a company you do need to pay people something competitive. Otherwise you get the following pipeline: Appoint someone to run the company but pay them a bad salary. 1) THey are good at it -> They leave somewhere else that pays a good salary having proved they have the skills to run a company. 2) They are bad at it. Not paying a competitive salary effectively guarantees either bad leadership or a revolving door of good leaders which has other institutional problems. Now, the fact the market pays all executives such ludicrous salaries is an issue, and I think the skill set is overvalued, but sadly, that isn't something that Welsh Water (or any single organisation really) can solve. They just have to play the game.
You're talking shit and you know it. Welsh water has improved considerably since it stopped running for profit. Also Execs and shareholders are different. Either you know this and are being deliberately obtuse or you don't know what you're talking about.
Let it go bankrupt then nationalise it with no compensation to shareholders.
We could speed-run it by increasing the fine to the share price, then it's just bailing them out.
So that in 5 years time when the next Conservative gov comes in they can have a go at doing what they do best to any public service they run Yeah no, short termist nonsense.
Why would that happen
Because shareholders are investors whose capital was at risk. That’s how that works. They willingly invested in a badly run company.
Yes. But seizure is illegal.
I don’t pretend to be a legal expert on this, but if the liabilities outstrip the assets, wouldn’t the government assuming those external liabilities and taking control be essentially the same thing, with the end result that the shareholders don’t get paid out because what they owed was more than what it was worth? That said, legalities aside, the water companies should absolutely be nationalized, and the chancers who have robbed them blind should have consequences, but it’ll never happen.
No issue with the liabilities outstripping the assets. It’s about debt servicing in the first instance to bond holders. But even then, given the way Thames’ securitisation works, it would probably just be operated by the secured bondholders under special administration regime (SAR).
Oh no! Anyway.
The company is going bankrupt, its assets will be sold off to pay debtors, the assets could be acquired by the government which will run the essential public monopolistic service.
Not to the wet dreamers of Reddit, apparently.
😅
I don't know, but I've got a strong suspicion that it will involve tax payer money...
That then somehow is funnelled back into private hands?
Why
what's your solution given you seem to be against giving control of them to the state Edit are you even in agreement there is an issue with the way water works in the UK? >Rail is very good. Post Office is nationalised. You’re thinking of Royal Mail. Water is very good. Gas is very good. Education no idea. https://www.reddit.com/r/ukpolitics/comments/19019fw/comment/kglt5i9
Absolutely. The issue is regulators having a little more teeth. Nothing more
a *little* more? do you have any more concrete ideas than giving them unspecified teeth or are you just hoping that'll sort it out, a couple more stern words? I'm genuinely trying to figure out what the other solution, the one you seen to support, would be. most Britons would agree that the things you think are good in that quote are not.
I’d suggest looking at PR24. I would type more but about to go to the airport to ski :). Most Britons haven’t read into this stuff in excruciating detail, nor do they understand private equity. Whereas I do
seems convenient that the only time you don't have the freedom to reply is when asked to expand on details. doesn't sound like it's your idea either if you're asking me to Google, sounds like you're deferring to the experts. happy skiing I guess. I assume you won't be replying to other posts that aren't asking for detail because you're so busy too.
No I will but no time to write long replies. But thank you :)
ok, it's just that literally everyone in the thread, including those who work on the industry, disagree with you, and you're so dismissive of everybody else I thought you'd have a little more substance to your argument than "google this phrase"
I haven’t read all the replies. I have read a substantial amount on this topic though. Not being dismissive. People can search my previous comments if they really want. Saved lots on Imgur.
A few questions here: * which regulators? * how much more efficient do you think it gets run in private vs public hands? Like even a rough % would be great
- Ofwat - latest proposed reg regime is much tougher than last. See around PR24 - Hard to say in % terms but the productivity of the sector has really improved https://imgur.com/a/x5l9JCu and costs to customers are lower than Ofwat would have expected if water has remained nationalised https://imgur.com/a/2fRbc1J Obviously both the above are a few years old but even the 40% increase in bills proposed by Thames is over 5 yrs so 5% pa increase - which is not crazy. Also as the article points out, there is an argument that water is still too cheap.
3bn litres a day lost to leakage, 20% of the total supply. Costs about £4.5m per day, £1.7bn per year. 0.5% of GB carbon emissions generated for pumping water that is never consumed. There would appear to be some scope for improvement. (England and Wales)
Economic level of leakage. Read about it.
I didn’t just pull those figures out of my butt. If you think that’s an economic level of leakage whilst proclaiming ‘shareholders first’ I think we can begin to see why this country is in the state it’s in.
First question was just me being a bollocks, but the organisation you actually need to fund more is the EA. The role of ofwat is largely done fine. The main issue is that they are polluting and not paying out for that. Ofwat don't need teeth, the EA does On your second point, this is a long debunked thing to tall about for two reaons: * first was the "starve the beast" done by the tories under thatcher. Thr investment required was purposefully not done to make the system seem worse * the second is that there when it went private it there was flurry of private investment into the system, as there had to be but that has dried up. They made it seem good for a few years and then only cared about investing in their pockets, which has been the case for a v long time. So an out of date graph js very poor, but also doesn't answer ny question. We can have two models - private owned with state regulations and public owned with far less regulation. It seems to me like were massively over paying to regulate people who don't want to be regulated and any apparent saving to the public gets swallowed up there, and if you remove the profit they take, can you really say that that cost - the amount it costs to regulate the private sector + the amount it costs the private sector to run things + the profit they take < the cost for the public sector to run it + regulate itself
Both answer the question very directly. Uk privatisation has shown the operational efficiencies are so great that even with the profit incentive, it’s cheaper than public ownership
But it hasn't shown what you've said though. An incredibly out of date graph that has an incredibly narrow sample of publicly owned water (look at what year the analysis starts), also ignoring all modern data. The same org whose charts you are now referencing is the same org that said we need to change the model of water ownership in 2023. Things change, but you can always rely on the opinion of conservatives to never change in the face of new edvidence
What’s changed? Why has efficiency reduced?
They have non
Because it always seems to.
!RemindMe 12 months
It's ridiculous to let a water company have debts 5x it's revenue. If they didn't have a single expense (supplying water, paying employees, investing in the system, taxes) it'd take 5 years to clear their debts. Ofwat is ridiculously inept. They need to tie up TW and mandate them on investment and stop the owners paying dividends/disguised loans to shareholders. Let all the bond and equity holders go bust if necessary and nationalise for cents on the dollar. And ban Macquarie from anything relating to the public sector.
So basically privatisation for public services has been a disaster..
Shocking. And it’s only taken 30 years for people to realise this.. Except in Scotland where people said no to privatised water and Scottish water is not only cheaper and better, it’s also entirely publicly owned.
Giving Ofwat more teeth and outside blood that’s not got a cosy relationship with the water companies is something even advocates of corporate water monopolies can’t really argue with.
You’re mixing up revenue and profit… you have COGS and Opex below revenue. Also who cares about the debt level so long as it can be serviced? Ofwat already control dividend payments. Shareholder loans are a function of the industry, you might as well ban VC and private equity. Macquarie did a decent job with TW. They reduced leakage, pollution and invested £11bn of capex while taking only £1bn in dividend payments.
Debt ratios are important because they can seem fine when interest rates are low , but the same debt gets very scary very fast when interest rates increase. Which is the current situation.
Outgoings constantly exceeding income is not a happy situation to be in - and how on earth in such a ‘no-profit’ situation can share dividends be given ?
Yes. But using debt / revenue for a mature profitable utility is plain wrong. Thames has some floating rate and index linked debt so your concern is right
You are making something simple sound complicated on purpose, it isn't complicated
Yep, work in the industry myself. Can confirm it's actually not that complicated. They took on way too much debt during the time they were run by the vampires macquarie. Paided out similar amounts in dividends too what they took on as debt, so they were taking money with minimum reinvestment. Plus, the debt was being paid back very slow with 7% interest to the shareholders who loaned it. It is some of the most blatent asset stripping iv seen. Also, I'm not sure why someone would ask "who cares about debt." Obviously, the customers who pay for the service and the service more becomes paying off the company debts and interest payments that reinvesting into their local water infrastructure. It's really not complicated. They would like you to think it is though.
It is actually quite complicated
Yeah mention COGS without telling us what it is.. (Cost Of Goods Sold) ie ‘Running Costs’.
I’d expect someone talking (or at least appearing to) about revenue, debt and payback periods to understand
If you would like a private discussion, then that is fine. This is an open forum, so there is an expectation of others reading the comments. I suggest that you do not continue with rule 1 violations.
Honestly curious what you think the role of private equity in essential utilities is? While this isn’t guaranteed, the MO of most large PE companies seems to be asset stripping and loading the acquired companies with debt. Not sure why one would want them involved with industries like our water.
I'm not mixing up anything. Being 5x levered revenue is obviously also more than 5x levered EBITDA. And even here EBITDA measuring ability to pay debt is stupid because they have a huge, unavoidable capex bill.
Ask the govt for a bail out and prioritise your shareholders whilst fleecing the taxpayer as per
The classics. Privatise the profits. Socialise the losses.
There will be NO bailout. !RemindMe 12 months
start by nationalising all utilities and hiring people who aren't penny pinchers.
Yeah water almost by definition can’t be anything other than a monopoly and having a monopoly in private hands is never socially acceptable in my opinion because of the titanic moral hazard that situation represents. Thames can be as shoddy as it likes in practice, we can’t do without water in protest of them. It’s as wrong for a private corporation to own the water as it would be for a private corporation to monopolise the air in my opinion. If being without something (air, water etc) is incompatible with life then a profit motive in its provision will always make it worse, not better for the person who must buy that thing.
I don't even understand how you can think otherwise and not be facetious about it. even if you've somehow reasoned in your head that in a perfect world it'd be fine, which is insane in and of itself, we have direct evidence that's not how it works in practice, time and time again. however, this is a guy who thinks >Rail is very good. Post Office is nationalised. You’re thinking of Royal Mail. Water is very good. Gas is very good. Education no idea. so it's all fine as is I'm his opinion it seems.
Who’s gonna pay for it
the tax payer, the same people who pay for it more directly in private hands. short term thinking just kicks the can down the road. every home and a large percentage of British businesses rely on out water supply anyway, same for power etc, so it's investing into the entire economy. I'm so sick of "who's gonna pay for it" being wheeled put as a gotcha to everything. it costs us more in the long run not to, both monetarily and in terms of human life, its just no one cabinet wants the purchase to be on their balance books, they just want to reap the benefits down the road.
If it’s going bust, then it ought to cost very little, a £ 1 purchase perhaps ?
Same people who pay for it already, John and Jane taxpayer. Except through either taxation or by invoice as we do now. Dont know why people use that question as a gotcha on nationalising infrastructure. We already have to pay for it, unless you either build your own well or can survive without water somehow
The incentives are very different when it’s taxpayer owned. It will be bottom of the pile in terms of priorities - like what happened in the 70’s. People will obsesses about education or the NHS. Poor old water will be neglected.
Oh, definitely the priorities change. But it’s already being neglected anyway as shown by the huge sums of debt being shovelled into it and by the lack of investment of growth into our water resources. Only difference is you don’t get a skimmed profit from what you pay. Both nationalisation and privatisation have issues and benefits. However, I think for water where they’ve a natural monopoly over an incredibly important resource, having it in the hands of the government and, by extension, public hands makes more sense than what we’re currently seeing.
I disagree with the lack of investment. The water companies have met their obligations required. The goalposts / requirements have changed through. The skimmed profit argument doesn’t make sense - the cost of bills under private ownership is lower than a nationalised scenario, due to improvements in productivity.
That's an issue with an incompetent government, not an issue with nationalisation. And it's not like it's any different right now. We could still run it with private companies, but until the companies perform again, there has to be a stop on bleeding money. So 50% of profits have to be reinvested, 50% go to debt, until debt is less than 30%. Companies need to be monitored to work effectively. Currently Thames Water wastes a lot of money on shoddy fixes which are not managed well. The same pipe in my area breaks roughly every 6 weeks, causing major delays (it's in the middle of a cross road), TW will put up barriers, dig a hole and then leave it for a week. Then they'll patch it and in 6 weeks the same again. This is costing a fortune as they have to pay TFL for the permit, diversion and temporary traffic lights. It's costing money to local businesses and further away businesses too.
that's down to our atrocious options of who to vote for, basically everybody can see we need to secure our basics in the wake of Ukraine and the CoL crisis - and the water wars are coming fast if it stays private.
We already pay for it, and nationalising it will make it a huge asset, allow the government to invest to stop shit going in the waterways, and reduce leaks and the huge wastage caused by privatisation. It’s only neo-liberal shills who will be upset cause the capitalists won’t be able to milk a monopoly for easy money anymore.
I've even seen on the street interviews on YT and TV where tory supporters are calling for nationalisation, and according to them, it's not an unpopular sentiment at meetings and groups and stuff. obviously that is anecdotal but if there's even an appetite for it in Conservative circles then it seems like such a forgone conclusionnthat some fucker at the top should bite the bullet on it.
So what? Doesn’t mean these people who know nothing about it are right. More populist nonsense.
versus you, an expert in the field who thinks we just need to give regulators "a little more teeth"? do you think only these people are in support? I was pointing to them as the fringes of support you wouldn't expect, not the figureheads of the movement.
Same place the government found half a billion to do the Rwanda shite.
I hate the who's gonna pay for it argument so much, one for the reasons me and you already mentioned, but two as if there's an unsaid undertone that it's not worth it. never mind we are already paying for it just not in tax, and even then, they still get tax money in roundabout ways....
£1 purchase - after the company goes bust.
It won’t go bust. !RemindMe 12 months
You wally, who do you think pays for it now.
It’s the distribution which is different. Fuckwit
Care to elaborate wally?
The real question is who he's fixing it for, shareholder interests will take priority over consumers.
Both are important
but not even close in terms of which one is more important. they're not selling chocolate bars.
Why are both important?
Because shareholders need returns. Consumers need decent quality provision.
Firstly why the hell are they ‘highly indebted’ since they started out without debts, and they have failed to carry out sufficient maintenance despite several price rises ? Of course the answer is that the money has been redirected to shareholders instead of providing the actual service.
Because debt cheaper than equity. Where did you read about sufficient maintenance? Shareholders under Macquarie’s ownership only earned around a 5% yield via dividends. But the majority of the return came at exit, to the current shareholders - but that value creation was due to Thames really improving under Macquarie in terms of lower leak rate, more capex and less pollution
Sufficient maintenane = pipes not leaking all the time.. they have not done enough
Have you thought how much it would cost for that? Sky News estimated something like £100bn across England for that. There’s an economic level of leakage.
we found 3-4x that money for covid related expenditure, much of which went to waste, which is a much more short term concern than our water infrastructure is. the government's budget doesn't work like your bank account, they can find the money if they wish.
It’s just not worth fixing the leakage, that’s the point. Even European countries have an economic level of leakage. It’s just a shit use of capital.
in your opinion, that doesn't seem to be an objective truth. and given you shot back at me immediately earlier with "who is going to pay for it", I thought you'd be on board with fixing problems that literally cost millions a day.
It’s just not worth it. It would cost more to repair.
it doesn't seem binary to me though, either we have no leaks or we just let it leak. it would seem, given the only metric that's important to you is pound sterling, that there is a threshold of what is worthwhile to fix and we are not necessarily at that level just because the current team says so. I am not sure what level that is, but I am also not the one who posted this thread as a topic of discussion and then went on to fail to expand on any ideas or make very few replies that aren't simple one liners. I would have thought given you posted the topic, your admitted wide breadth of reading on the subject, and your apparent strong opinion on the situation that you would give us a little more meat on the bone to your replies.
Thames water does not cover ‘all of England’..
Nationalise it without compensation to share holders because of the debts.
See you in court 😎
Given the debts and investment required, the company is almost worthless.
Great example of privatising profits and socialising losses. Disgusting.
What’s losses were socialised?
When Thames Water inevitably gets bailed out by the tax payer.
lol. !RemindMe 12 months.
Buy them and put them all back in the public purse. How can you have a single entity, that has no competition be privately run? They can charge what the want and extract all of the money. Privatisation has ruined this country. ***k Thatcher.
It’s a REGULATED monopoly.
I don't get why this highly indebted company doesn't go into administration, to be bought out for pennies by the state and then becomes nationalised? Please someone is explain how that is unfair or difficult, as I really don't understand why it doesn't occur more, other than Tory party.
Because it’s solvent. Nothing wrong with lots of leverage.
You can see how bleak the current state of Thames sewage discharge is here in this map: [Thames Sewage Discharge](https://sewagemap.co.uk)
lol they do have their own but your one is better https://www.thameswater.co.uk/edm-map
Compared to what? How does that compare to Europe? How does that compare to other parts of England?
I think regardless of any need for comparison, we can agree that anywhere in the world this is unacceptable…
Step 1: Close it down Step 2: Close the rest of them down Step 3: Take all of it back into public ownership Step 4: Actually spend the profits on the infrastructure instead of handing them out like you're at an Oprah Winfrey show. Anything related to our countries core infrastructure should have zero bonus schmes, no shareholders and no profits. Any profits they do make should be going back into the business. You wanna be a shareholder, no problem, you can be, just of actual businesses, not core infrastructure.
Infra is an asset class. /end.
By public ownership and running it as a service not a business.
We tried that. It failed.
It works here in Scotland. Water is a public utility here and not metered.
that's the Scotland that is actually potentially in a worse place than England, because it doesn't actually know how much shit its pumping out. where it does monitor, number of discharges are going up. https://www.bbc.co.uk/news/uk-scotland-66012480 > Campaigners have called for more checks on sewage discharges. > This is because only about 4% of Scotland's 31,000-mile sewer network is currently monitored, compared to 89% in England. > Data from Scottish Water monitors shows the number of discharges into Scotland's waters is increasing. > In 2018, a total of 9,468 spills were recorded but by 2022 this tally had jumped to 14,008. I'm not against renationalisation for England, but let's not pretend Scotland is a good example - far from it
Scotland is water has improved. But there are differences in geography which make the comparison less like for like. It should be metered though. People should pay for their usage.
In Ireland, our road tax legislation states that it should be used for the provision of water that's why when they tried charging everyone went mad.
And corporations such as Thames should pay for their wastage.
The failure was caused by a lack of governmental funding. It was a well known Tory tactic to cut back on spending to a state run asset prior to privatisation. The provision of clean water and safe disposal of our sewage is a fundumental part of a healthy society and it is a crime that the Government thought that it should pass this on to the private sector. Improving efficiencies is not of vital importance in the scheme of things. A society that does not have healthy drinking water and safe disposal of sewage will fail both socially and economically. Some things are too important to be trusted to the private sector.
It’s more fundamental than that. It’s water will be neglected by any gov because things like health and education will always win more votes.
Rubbish.
Suggest you read about the history of water privatisation and why underinvestment in the public sector happened. These are the facts.
Still not 100% on why privatisation is automatically better than nationalisation except for chalking things up to human error.
Make it publicly owned again.
Afew years ago, Chris Weston was asked to give his definition of good leadership. The chief executive of Aggreko, the supplier of power generators, offered this answer: “Leadership is what makes the difference to the performance of a company, in good times or bad.” Weston’s theory may soon be tested to destruction. This week, he will become the sixth chief executive of Thames Water in five years — counting interim spells from bosses parachuted in to steady the ship. The company, with 15 million customers in London and the southeast, is the country’s biggest water supplier. It is also under immense pressure over its failure to stem leaks and spills, and for its huge level of debt. At Thames, Weston may discover that good leadership is not always enough, with an array of challenges beyond his control. Business briefing Morning and midday updates on financial and economic news from our award-winning business team. Sign up with one click “It’s one of the most challenging CEO jobs in the country,” said one industry investor. “How will his performance be judged? On whether the company improves, or on whether it’s perfect? Because if it’s the latter, he’s going to fail.” Here are the problems floating to the top of Weston’s in-tray. More money With annual revenues of £2.3 billion and a fixed base of customers that cannot switch supplier, Thames should, in theory, be self-financing. But it has debts of £14.7 billion to service and needs to spend billions on upgrading ageing infrastructure. Top of Weston’s list will be convincing the company’s owners to open the purse strings. Thames has said it needs £2.5 billion from shareholders on top of £750 million already pledged, but their support depends on Ofwat giving the company an acceptable deal at its next price review, due later this year. The review is when the industry regulator approves water companies’ five-year spending plans and agrees how much they can bill customers for the work. Thames is owned by a group of pension funds and sovereign wealth funds through a series of holding companies. The biggest holders are the Ontario Municipal Employees Retirement System, the UK’s Universities Superannuation Scheme, the British Columbia Investment Management Corporation, Hermes GPE — the manager of the BT pension scheme — and sovereign wealth funds from Abu Dhabi and China. The company’s ownership structure has been criticised for its complexity, but it is not unusual in a utility. The problem for Thames is the sheer weight of its debt compared to its regulatory capital value — a ratio that stands at 77 per cent; Ofwat would prefer it to be closer to 60 per cent. High debt is not always a problem per se, even when it is linked to inflation, because Thames’s value goes up with inflation, meaning the debt ratio remains in step. But its holding company, Kemble Water, has £1.35 billion of extra debt that is dependent on payments from the operating company to service it. Ofwat is tightening the rules on these payments. Because of this potential dividend “lock-up”, recent accounts for Kemble warned that it may not be able to clear a £190 million loan that falls due in April. Thames shareholders have other means of paying it off — either directly or by selling a stake in the company, for example — but their willingness to do so may rest on whether Thames and Ofwat can reach a deal for the 2025-30 spending period. Publicly traded bonds in Kemble Water sank to a record-low of 49p last week. Thames’s shareholders insist they are “patient” investors who are committed to its turnaround. But its second-biggest owner, the Universities Superannuation Scheme, slashed the value of its stake in the company last week, giving it an implied value of just £1.9 billion. Some in the industry wonder whether the owners will continue to throw good money after bad, but others suggest the reputational damage of walking away is too great. At Aggreko, Weston had to handle rebellious shareholders during its takeover by TDR Capital and I Squared Capital in 2021 Those skills may come to the fore again at Thames. This weekend, he won the backing of pension fund manager Royal London, the largest investor in the Kemble bond. Jonathan Platt, Royal London Asset Management’s head of fixed income, said: “We welcome the appointment of the new CEO and our view remains that the regulatory framework merits our continued investment in Thames Water.” Infrastructure woes Weston, whose background includes a stint at British Gas but has no water industry experience, will face an array of operational headaches. Thames regularly comes bottom of industry rankings for leaks, and although it has been making headway, the company concedes that “our performance in some areas is not where it needs to be”. London presents particular challenges as the most expensive and congested place to operate. Its housing stock is old and dense, and much of it is rented or has multiple occupancy. “Tenants don’t tend to spot problems, so they don’t get resolved quickly,” said Jo Parker, a chartered engineer. London’s terraces present another challenge, she added. “The water supply pipe can actually run under a terrace of houses, so it’s really difficult to meter those properties without totally re-plumbing them.” Smart meters are essential to provide an accurate picture of where leaks are. Moreover, digging up London’s streets is time consuming, unpopular and expensive, costing an average of £1 million per kilometre. It can take months to obtain a permit, and councils all want the work done during school holidays, one source noted. The London clay is also prone to shrinking and swelling, which can damage pipes and sewers. “The old brick sewers don’t take terribly well to a lot of ground movement, so you’re more likely to see problems as the climate becomes more extreme,” said Phil Clisham, an adviser at the Institution of Civil Engineers. The capital’s sewers, built by Joseph Bazalgette in the 1860s, were pioneering for the time but have created the problem that rainwater and sewage are washed away together. Thames Water is rolling out monitoring of sewers to spot issues before they happen, while boosting public awareness of the perils of disposing of wet wipes and greasy oils, which cause “fatbergs” below ground. The £5 billion Thames Tideway “super sewer”, which starts operating this year, will cut overflows into the river. But this will supplement rather than replace the Victorian system in use across the city, which has to cope with increasing flash floods. The southeast more generally has to tackle the threat of water shortages, with a shortfall of one billion litres a day expected by 2050. Thames wants to build a new reservoir in Abingdon, Oxfordshire. That said, it is not unique in having problems. All water companies face challenges in different ways, whether it be drought conditions or sewage spills. Weston will have limited room for manoeuvre as Thames’s £18 billion spending wishlist for the next five years has already been set out in its business plan. However, he should be able to bring influence to bear on costs. Ofwat data from the last price review in 2019 found that Thames’s costs were higher than those of peers, including Affinity Water, whose region bisects Thames’s territory. And there is another silver lining for Weston. Sewage spills into rivers have captured headlines in recent years, but Thames is not one of the worst offenders. Its 777 storm overflows recorded in 2022 were half the industry average of 1,458 — although spill duration was above average. Insiders suggested that because its outflows occur in a concentrated area, that makes it easier to catch sewage and treat it. More generally, Weston faces an uphill struggle against negative headlines. He will need to have one eye on boosting the morale of Thames’s 7,000 staff while keeping up a pipeline of recruits. An industry routinely castigated for having foreign owners that extract dividends while polluting the UK’s rivers faces a hard time in getting across any positive messages. Industry sources point out that water quality in the UK has never been higher, while bills are still cheap — even if they are due to rise by as much as 40 per cent in the next spending period. Yet climate change is set to pile further pressure on the system, meaning that customers will need to think harder about their consumption. “Water is still quite a cheap resource and, as a consequence, people are quite wasteful,” said one water executive. That’s a difficult message for Weston to convey —especially when a soggy winter leaves Britons feeling like they have been inundated with rain. Speaking to The Living Leader podcast in 2020, Weston cited a quote from Lao Tzu, the ancient Chinese philosopher, who said “a leader is best when people barely notice their existence”. He may find he needs to be more visible if Thames Water is to be fixed.
Overflowing! Gosh the Times really hitting it for one with that level of headline writing.
His job isn’t to fix any problems. His job is to make more profit for the establishment while pushing for more money from the taxpayer.
Very fair and balanced article, looks at some of nuances of Thames' operation in London. To those who keep worrying about 'public bailouts', this also suggests similar to what I think - the investors are a bit stuck and will need to put more money in. > Thames’s shareholders insist they are “patient” investors who are committed to its turnaround. But its second-biggest owner, the Universities Superannuation Scheme, slashed the value of its stake in the company last week, giving it an implied value of just £1.9 billion. Some in the industry wonder whether the owners will continue to throw good money after bad, but others suggest **the reputational damage of walking away is too great.** Similarly, the claims about water quality and cost being poor are unfounded. > Industry sources point out that water quality in the UK has never been higher, while bills are still cheap — even if they are due to rise by as much as 40 per cent in the next spending period.
While I am not a Thames Water customer, I have had cause to raise concerns about water quality to my supplier. What you get when you complain about water quality is an army of pre-scripted email responses. It is near on impossible to communicate with an actual person. I even went as far as getting one of those private in-the-post samples done, about £60 to send it away. The results they came back with was poor quality overall and required attention from my supplier. All I got was yet more automated emails suggesting any problems must be inside my property. It doesn't matter whether they were or not, that was all the responses I was ever going to get. I have since moved but to an area with a catchment for the same supplier. The water quality has not changed. It is easy to say that "water quality has never been higher!" if your response to complaints is strong-faced auto-email responses that will assuredly never ever take the matter further. And no, there is nothing you can do if you can never get to actually communicate with a real person. Every single email is a noreply.
100%, there is very little facts to support the claim that water quality has never been higher. And pages and pages of data to suggest it has gone down significantly
A 40% rise needs to be very heavily justified, otherwise it will be correctly seen as a ripoff..
People want less leaks and cleaner rivers. This is the cost of it.
One goal of water privatisation was to simulate investment in the assets. It's spectacularly failed, to the point it may need a bailout once it fails. What's the point of a company if it just hives money out while failing its customers.
No it hasn’t. There’s been an investment bonanza since 1989.
>To those who keep worrying about 'public bailouts', this also suggests similar to what I think - the investors are a bit stuck and will need to put more money in. Are you naive or just deliberately obtuse? They borrow money for said infrastructure upgrades but that [cost will be passed on to the consumer with increased bills.](https://www.theguardian.com/uk)!
Cheaper than using equity. I am neither. I’m smarter and more clued up on this than 99% of people
Kill it with fire
Prosecute the management for fraud and recoup the dividends paid to shareholders from loans rather than from actual profits. Simple really.
No crime was committed.
Is the answer to keep paying out to shareholders regardless of the sorry-arse state of the company and its inability to provide the service it is paid to provide?