Hang on I missed a trick - as adept as Starmer denying his position on everything pre 2022?
I think Socialism is the default position for water supply really.
Have to agree with that.
<p>“<span style="caret-color: #555555; color: #555555; font-family: Roboto, 'Helvetica Neue', Arial, 'Noto Sans', sans-serif, -apple-system, BlinkMacSystemFont, 'Segoe UI', 'Apple Color Emoji', 'Segoe UI Emoji', 'Segoe UI Symbol', 'Noto Color Emoji'; font-style: italic; -webkit-tap-highlight-color: rgba(0, 0, 0, 0); -webkit-text-size-adjust: 100%;"> I think Socialism is the default position for water supply really.”</span></p><p>So buckle up and enjoy the ride as public sector inefficiency makes zero inroads into discharges and the cost of capital doubles or triples annual water bills.</p><p>If we use Scotland as the reference point for water company performance when run by the public sector:</p><p>- around half the water is lost in leaks</p><p>- the per minute leak rate in Scotland is higher than England</p><p>- more than 10,000 sewage discharges in 2022</p><p>Politicians are running to hoodwink the public with their quick fixes but the reality is:</p><p>- huge capex is required to make inroads into leaks or sewage discharges - one report I read suggested over £1000 a year per household for ten years</p><p>- that capex needs to be funded (government debt - currently 5-6% interest) or by shareholders (2-3% dividends)</p><p>- big projects like the Thames Tideway tunnel will be needed in many cities - which will mean a decade of huge civils works in neighbourhood areas - with another 5 years to plan it all then get planning permission.</p><p>I’m all for the above - clean rivers and seas is a no brainier. But everyone needs to recognise they will pay for this - and most people haven’t yet bothered to even try and reduce their own water consumption with simple water saving measures in their homes.</p>
kelvin
Full Member
I think Socialism is the default position for water supply really.Have to agree with that.
I thought you previously agreed with Starmer's claim that water nationalisation would be too expensive and therefore should remain in private hands. Have you changed your mind?
You can agree that something is a default position but have to work with what you have to bring out the best outcome without necessarily going back to that default position of course.
Well if you don't support a policy your "default" position is meaningless and pointless.
Would you believe there would be any point in Rishi Sunak saying that his "default" position was universal free school meals for all school children even if he didn't support the policy?
It would be an interesting development if politicians started going around making commitments to default positions which they have no intention of supporting. Just think how generous they could become. And how impressed people would be.
Isn't Sunak making generous offers he won't be around to make happen eg increasing the number of medical students and giving people a year's grace before being evicted. He's just dropping a pile onto Starmer's premiership.
Starmer’s claim that water nationalisation would be too expensive
A hilarious claim given the govt are now going to have to bail out Thames Water to the tune of 10bn after they've paid out billions to shareholders and are now talking about hiking bills by 40%. Just another example of daylight robbery committed by supposedly efficient 'free' markets.
At what point are Starmer and his cap-doffing cronies going to say enough is enough? Instead of going into the next election with a tsunami of cynicism and apathy in the air, he could have the entire country behind him and a mission to put an end to flagrant and corrupt profiteering. Even most daily heil reading tories would struggle to oppose that.
Indeed. The cost of nationalisation of water needs to be balanced against the increasing costs of not nationalising it. All that ever increasing private sector debt (being at least partly used to extract dividends) will, at some point, be transferred into public debt... because the state can't let water supplies fail, and there's absolutely no market switching possible for water users. Water as a private industry makes no sense whatsoever... you'd never "start from here"... and reverting to public ownership, or at least making companies into not for profits with tighter remits, will *have* to happen at some point. We could have something like that already... if people had voted for it in enough numbers in the right seats at the last election. Delaying it 'till it's inevitable seems an odd approach... but increasingly that's how nationalisation happens... at the point of total failure and not before. Do it once the inevitable becomes unavoidable (just like rail). Once the option is either the state steps in or people go thirsty... there is only one option. Waiting for that to happen is either shortsighted, or cowardice about being labelled profligate for ideological reasons... or both. Being scared of another 5, 10, 15 years of "carping from the sidelines" is a fear that shouldn't be ignored though... plenty of people in this country can't afford yet another Tory government.
I've no skin in the game either way, apart from wanting to see cleaner rivers and seas, but it's not very clear what people think will happen if / when Water goes back into public ownership.
A cursory review of what was happening before privatisation in the 80s suggests that leaks were an issue, capital investment was low and the management of the infrastructure was pretty poor. The same is still true now for Scottish Water - which has been publicly run for quite a while.
Post privatisation we've had a sustained increase in capital investment and a reduction in headcount - so fewer people developing / implementing more assets i.e. it's more efficient.
From a consumer perspective, water charges in many areas are reasonable. We're on Thames Water and the charges are around £28 a month (metred) including waste. That's for a family of 4. The price hasn't risen a huge amount even though one of the biggest operating costs for Thames is energy to move the water round / pressurise it. That said our neighbours (similar properties / numbers of occupants) complain their water bills are double ours. The same is also true for their gas bills as well...
Turning to the ownership structure there seems to be a carte-blanche belief it will be cheaper / better under public ownership but everything points to that not being the case:
- The capex required to make major inroads into discharges is huge - see post above. On capital alone, the estimates point to £1K per household per year for 10 years.
- The financing of that will be by tax (public owned) or via shareholders (privately owned).
- The cost of finance is either tax to fund borrowing (government - currently 5-6% interest) or tax increases.
- Under private ownership, shareholders (of which I'm not one) receive a share of the profit. Current margins by the water companies are in the range of 2-4% so materially different to the political claims of "ripping off consumers".
One of the red herrings is that many of the politicians with a strong view don't seem to have any understanding even in the difference between Capex and Opex.
On LBC last night listening to the "round table" all of the MPs were completely clueless about how projects are funded - the Labour MP kept talking about "asset stripping" in the water companies when it's patently clear there has been none. Likewise the "loading with debt" is mostly borrowing to fund Capex - something the government would also need to do if under public ownership.
If we then turn to the key difference in public vs. private the biggest one is who takes project risk on multi £B capex projects and who is more likely to implement on time / budget. There are many variables in big civil projects but this is generally something the private sector does better than the public sector - and lots of reasons for that including skill, org culture, project discipline etc etc. Even with the budget overrun on Crossrail, the project ultimately delivered within the budget indicated in 2009 before it was "trimmed" for political purposes by the then new Tory govt in 2010/11.
There's also a number of systemic issues that aren't being talked about.
In the Thames region there's now a hosepipe ban - which sounds bad / let's all throw stones at them. Dig under the headlines and the picture is more nuanced:
- Consumers are using record volumes of water
- The population growth has massively outstripped forecasts from public bodies e.g. ONS with the result the infrastructure (long lead time) hasn't kept up with very rapid changes in short term demand.
- The actual population appears to be significantly bigger than the official population figures based on Thames Water's measuring of solid sewage volumes i.e. there's too much for the given number of people.
- Attempts by Thames to build more storage capacity have been consistently rejected by Ofwat for the last 20+ years - most noticeably the proposed storage reservoir in the Chilterns / Oxfordshire.
On the waste side we then have an equally nuanced picture:
- Even with metred water, consumers are happy to waste fresh water (see above on water bills) - with little or no attempts to reduce consumption (flow reducing shower / tap heads, more showers less baths, short flush WCs etc).
- We've also been buying more food that has a massive direct impact in field run off and sewage in rivers - the tens of millions of Chickens now being reared along the River Wye being a good example - households eating 2-3 £2.50 whole chickens a week and the huge number of fried chicken shops has effectively collapsed the river ecosystem all under the watchful gaze of Defra and Ofwat
- Changes in weather systems and the loss of green space in urban settings (car parking instead of front gardens) has resulted in huge increases in run off during storms which overwhelms the planned capacity of sewer systems.
So my view is this:
- We should think more carefully about the outcomes we want and the root cause of the problems before jumping to solutions
- The ownership structure is largely a red herring - it needs to be funded
- We should all expect to pay a lot more tax / water charges to fund the Capex required to fix the problem
- We can all take steps to reduce our own consumption of water now - and do our bit to reducing the size of the problem.
- We all need to think more widely about other choices (food, lifestyle, protecting green space) we make that ultimately contribute to the problem.
plenty of people in this country can’t afford yet another Tory government.
That's unfortunate, because if we continue with the current system they are going to get one.
Perhaps not in the next election, possibly not in the one after that, but there is a Tory government in our future and it'll undo any limited 'progress' Labour might have made because that is simply the nature of our democratic system.
And any progress Labour can make is limited naturally because they are chasing the same handful of swing voters the Tories are.
I understand your motivation. However, voting for Labour may result in some limitation of the pain for a short period but the pain is coming unless there is radical change. Change that Labour has no interest in offering.
If that is a "we need PR" claim, I agree. In the meantime... we don't... and need to vote using the system in front of us, not risk gifting the Tories seats and another term by ignoring the distorting effects of FPTP.
Ordinary folk have a choice, and if they continue to vote Tory they'll soon not have a choice (healthcare, education, freedom, etc etc) unless they're loaded, not just well off, LOADED.
Hold you nose when you vote if you have to, but be fully aware of what you've enabled so far, and be fully aware of where the UK is going if they're allowed in again.
If that is a “we need PR” claim, I agree. In the meantime… we don’t… and need to vote using the system in front of us, not risk gifting the Tories seats and another term by ignoring the distorting effects of FPTP.
No, it's a 'a vote for Labour is simply enabling the Tories to continue on their mission' claim.
A vote for Labour is a vote to say you're OK with the current two party system and you don't mind having another Tory government in 5 or 10 years that is just as hell bent on making the poor suffer and enriching their mates.
the Labour MP kept talking about “asset stripping” in the water companies when it’s patently clear there has been none. Likewise the “loading with debt” is mostly borrowing to fund Capex – something the government would also need to do if under public ownership.
You seem to have forgotten to mention the high level of dividends paid out.
1.4 billion across all the companies in 2022 and something like 55 billion since privatisation.
Whilst Thames water claims it hasnt paid dividends in the last 5 years that is only external and it paid 37 million to its parent company.
Despite being handed over without debt the levels are now up to about 60 billion. Oddly similar to the dividends.
https://www.ft.com/content/ee03d551-8eee-4136-9eeb-7c8b51169a99
The levels of investment are questionable and whilst there is a good argument the state did underinvest thats more an argument against not electing politicians who hate the concept of the state rather than anything else.
Scottish water charges less and has invested more in infrastructure than its private English counterparts.
Despite being handed over without debt the levels are now up to about 60 billion. Oddly similar to the dividends.
Yet another argument for MMT. As a private company they have to borrow from the market to pay for infrastructure improvements etc and then pay interest to their creditors. As a publicly owned entity the govt can fund all that without having to worry about where the money is coming from as they can just spend it as they see fit.
https://www.ft.com/content/8ee5d48a-6103-11e9-a27a-fdd51850994c
If you want to avoid the paywall search for the FT article in Bing
You seem to have forgotten to mention the high level of dividends paid out.
Not really - describing that as "asset stripping" would just be a sign you don't know what you're on about.
All that ever increasing private sector debt (being at least partly used to extract dividends) will, at some point, be transferred into public debt…
I don't think that's true. Thames Water can fail as a company and take its debt with it. The state can still resume operation of the assets, just as it has done with other failed privatisations on the concession/franchise model.
<p style="text-align: left;">This country and it's shit 'take' on failed market economics needs a kick in the balls.
Get the lot back in state ownership. There is no advantage if there ever was to a monopoly private business model that exists to keep the nation alive.</p>
It should operate for public good at a 'cost' to the government not to the public.
There is no other debate for me.
The creaming finance sector and its benefactors are pointlessly swilling government money around in their own pockets instead of your pockets and your infrastructure.
First party that steps up to this gets my support.
(Also we're going to jump through hoops pretending we can't afford it and then some cash will magically appear.)
Share holder dividends on public service companies should be outlawed.
There is no economic evidence for anything good other than the transfer of a state asset to a few rich people.
"1.4 billion across all the companies in 2022 and something like 55 billion since privatisation.
Whilst Thames water claims it hasn't paid dividends in the last 5 years that is only external and it paid 37 million to its parent company."
This is a meaningless statement though.
£1.4B across all companies in 2022 over 31 million households is £45 a year.
So when we're being told about the "rip off" what we're actually talking about is 12p a day per household. Many of those inter company dividends are also subject to corporation tax - most at 25-40% - so the net dividend is c7p a day per household when taking into account the money the Govt gets back through tax.
Likewise the £55B since privatisation figure. That's £55B over a c34 year period - or £52 year / £1 a week per household for the whole of that time.
We then need to consider the alternative model.
Could the state finance the operating costs of same services (cashflow) and fund the £Bs of capex required (working capital finance) for 7p a day? Based on current govt borrowing costs almost certainly not.
And what's the likelihood of that being consistently achieved i.e. across all of the water companies, if the state were running it - would the cost of over runs / lack of productivity negate the saving and actually increase costs to the consumer?
It's very noticeable than particularly on the left, politicians use big numbers to "prove" the supposed rip off. But in most cases the claims are provably false with simple maths. This sort of issue is covered very well on the likes of "more or less" on Radio4.
The same is true of "greedflation" criticisms of Supermarkets. Most of Starmer's team have been trotting this out in recent months but it's a deliberate and massive misrepresentation of the truth which is:
- Supermarket margins are typically 2-4% - so on a regular weekly shop of £103 the supermarket makes £2-4 profit
- Food prices with recent inflation are still lower in Europe
- Corporate Earnings by supermarkets don't show any evidence of huge changes in profit - in many cases their profit forecasts are actually lower
- The margin of 2-4% has actually been eroded as prices have risen i.e. they've gone from 4% on £90 weekly shop to 3% on £103 shop
- The biggest supermarkets have seen huge falls in profit in the last year e.g. Tesco from £2.03B to £1B - Sainsbury's fell by the same %age.
Anyway, I guess these issues ultimately boils down to political viewpoint and whether we're willing to examine the facts and expect politicians to do the same before opining.
Is it right for any politician to wilfully mislead the public solely in order to create a false sense of injustice / drive voting intentions? There are examples of this with Brexit, Prison Reform, Boat Crossings etc etc and from my perspective this is often a cynical abuse of the electorate.
And if our worldview is just everything now is the fault of someone / reflects corporate greed I don't doubt that any contributions like this one will change anyone's viewpoint. That said, my hunch is that the people who contribute to the forum probably don't represent the worldview of all STW subscribers / forum users - it just feels that way.
Could the state finance the operating costs of same services (cashflow) and fund the £Bs of capex required (working capital finance) for 7p a day? Based on current govt borrowing costs almost certainly not.
It absolutely could.
Government borrowing only exists to swap one asset for another. It pays for nothing. The money used to purchase government bonds is previously issued Government money
And if the government borrowing really concerns you then do it with Q/E at net cost of nothing in monetary terms.
Look we're at a tipping point - ultimately just like the pandemic the government will have to pay because it's the only thing between a functioning water supply and illness or death.
So when we’re being told about the “rip off” what we’re actually talking about is 12p a day per household.
Sounds like a lot to me. Why are we paying them that?
Is it just me or do hite-rite's posts resemble those of a certain ex-forum member who also wrote very long posts often defending the corporate point of view?
Simple ruthless corporate behaviour - extract as money as possible and under invest, then hang it out to dry until the government produce a support package, that is probably temporary.
The share holders should not be compensated either. That's the risk of buying a share and enjoying the profit that came before.
Sounds like a lot to me. Why are we paying them that?
12p a day is absolute peanuts. The problem with water is that it's too cheap so that consumers and businesses waste it.
There's no way out of this that doesn't involve using less water and paying more for it. Whether it's to private or public operators - meh, the public operations in Scotland today or in the rest of the UK before privatisation don't have a stellar reputation either.
I agree that water should generally be publicly operated for the public good. I don't see renationalisation as a priority when it's hardly a panacea. But you know maybe we will get lucky, Thames Water (or even better a smaller company) will fail, the state can regain control, and it becomes a model for effective public operation.
There’s no way out of this that doesn’t involve using less water and paying more for it
Agreed. But why are we paying *extra* above the rising costs (to fix/improve the infrastructure) to someone who we have no choice but to deal with, just so that they can extract profit from the situation? Where's the market? Where's the options? Where's the competition? Where's the choice?
I don’t see renationalisation as a priority when it’s hardly a panacea.
Agreed. But it's still likely to happen, priority or not. The choice then becomes between trying to flip it back out into the profit extracting private sector to risk failing again, or keeping it in public hands (or make it a non profit org with a tighter remit). Things get interesting then. Support for re-privatisation is likely to be very thin indeed.
The problem with water is that it’s too cheap so that consumers and businesses waste it.
Maybe they should start charging us for the air we breathe too?
<p style="text-align: left;">I agree that water should generally be publicly operated for the public good. I don’t see renationalisation as a priority when it’s hardly a panacea. But you know maybe we will get lucky, Thames Water (or even better a smaller company) will fail, the state can regain control, and it becomes a model for effective public</p>
No model is perfect.
But we can try and have an accountable water infrastructure paid for by the government that invest and fix at no real terms cost.
Or we can have a seemingly unaccountable private monopoly that exists first and foremost to hive money to shareholders, and under invest.
Seems a pretty clear choice to me.
At some point the government will step in. There will be no other option.
The landscape has been warped by the privatisation model.
Labour talking like baby ****ing weasals and claiming the cost to tax payer, again. What about the cost to us all now as private bill payers?
What a set of pricks.
(Just like energy we have tolerated the 10% discount on an energy increase of 200% plus.)
Thatcher really sold everyone a load of crap.
Maybe they should start charging us for the air we breathe too?
Lol. Total Recall incoming.
Lol. Total Recall incoming.
In fact they should just charge us for existing (they pretty much do anyway). Call it 'existential surchage' or something.
Where’s the market? Where’s the options? Where’s the competition? Where’s the choice?
Or we can have a seemingly unaccountable private monopoly...
I'm not saying it's a good way to run the water sector, but the competition comes at the time the government chooses to award the concession. Obviously there is no competition or choice for the consumer at an individual level - that would, obviously, be impractical.
Also, the regulation and the outcomes (price, quality, infrastructure investment...) are determined by the terms of the concession agreement and the regulatory framework imposed by Parliament. The water companies can't choose just any price to charge consumers, and they can only extract profits if they meet investment obligations.
Is all that effective? It seems not when it comes to discharges. There is massive investment in infrastructure happening in the Thames Water service area. On balance, I don't really know.
So when we’re being told about the “rip off” what we’re actually talking about is 12p a day per household. Many of those inter company dividends are also subject to corporation tax – most at 25-40% – so the net dividend is c7p a day per household when taking into account the money the Govt gets back through tax.
The rip-off is that we're paying 12p a day and the waterways and beaches are covered in sewage and used toilet paper instead of being in good condition. If we're paying for something it needs delivering else it's a rip-off no matter how much or little it costs daily. Don't be fobbed off with low amounts and don't excuse it.
Not really – describing that as “asset stripping” would just be a sign you don’t know what you’re on about.
I was commenting on the debt situation but the labour mp could well have been commenting on the fact that they have been busy selling off land as well including various water storage facilities.
Thames water for example had sold off 100 million worth by 2006.
Is it just me or do hite-rite’s posts resemble those of a certain ex-forum member who also wrote very long posts often defending the corporate point of view?
The claims the nasty left are making things up is pretty special since its only the terminally deluded who are defending the water companies now.
Even the hate are thinking hang on a minute whereas the FT has been publishing several good articles on it. Possibly because unlike the more deluded on the right they know that its not really a good thing for the corporations to extract too much cash.
And isn't water the original community owned asset in human society?
For thousands of years access to water was seen as a basic right of every individual and all necessary water infrastructure projects were provided by the wider community.
I guess it was the indispensability of water which made it too attractive for the privateers to resist.
Never mind the long-winded intellectual debates about regulatory framework, they've got everyone by the bollocks and the only acceptable solution is to wrestle the family jewels from their grip.
It is one of those rare issues on which I can agree with the majority of Tory voters.
"68% of Conservative voters want water to be nationalised"
https://weownit.org.uk/blog/biggest-ever-poll-shows-huge-support-nationalisation
Starmer is already drawing up plans to U-turn on his U-turn if Tory voters want nationalisation.
Some daft Tory citing the choice of the electricity market as a shining example.
This winter we will put the nail in that one too.
I was commenting on the debt situation but the labour mp could well have been commenting on the fact that they have been busy selling off land as well including various water storage facilities.
Thames water for example had sold off 100 million worth by 2006.
🤣🤣🤣 They have to invest £800m-£1bn every year into physical infrastructure. £6.3m a year of land disposal is nothing. That's not asset stripping!
That’s not asset stripping!
I know its hard to defend the indefensible but well done for trying.
They have failed to invest anywhere near the money required and the investment which has happened has been linked to the higher costs to users (minus the skimming for profit).
Its like the hilarious statement about "investing 10 billion" immediately followed by bills will skyrocket to actually pay for it without any mention of the investors taking a haircut. Odd that.
And isn’t water the original community owned asset in human society?
When you got water out of holes in the ground, streams and so on. Having very clean water piped straight into your house is a different and much more complicated matter. It has to be paid for by someone so just a question on how it is paid I suppose.
Nationalise and recover costs through government mechanisms would seem to make a lot of people happier but a) would anyone actually notice and b)would it actually be cheaper for everyone?
The government can subsidise water provision to whatever level it desires.
It simply doesn't need us to pay for it actually at all. And neither does it need to recover it through general taxation. Although I admit neither party is going to see it this way now we've all got used to paying for it.
Imagine a progessive party jumping in now and saying we will subsidise your water bill by 50% as long as we remain in power.
I guess it might just be a vote winner.
So without compensation it would cost 15bn. Peanuts. (90bn if paying the shareholders.)
With Covid they created 450bn in a few months.
Did your income tax go up to cover the cost of that?
And isn’t water the original community owned asset in human society?
When you got water out of holes in the ground, streams and so on. Having very clean water piped straight into your house is a different and much more complicated matter.
And yet it was community owned until 1989. So unless clean piped water didn't arrive to my house until 1989 I am guessing that the answer to my question is "yes"?
When you got water out of holes in the ground, streams and so on. Having very clean water piped straight into your house is a different and much more complicated matter.
It doesn't have to be. In Ireland they have group water schemes. I've been involved with one that supplies 1000 homes. They all pay into the scheme and have a share of its ownership. Seems to work well. They operate way more efficiently than Irish Water
As a playful aside (and I totally support nationalising resources are essentials), can we imagine what a Johnson government would have done with these industries? They profiteered privately from a public health emergency with what was, effectively, a centralised, nationalised response.
I suspect that they would have looked to Africa for inspiration (again) and borrowed elements of the Mobutu model of state governance.
Banana Republic.
And yet it was community owned until 1989
Community owned by human society all over the world, wow.
It simply doesn’t need us to pay for it actually at all. And neither does it need to recover it through general taxation. Although I admit neither party is going to see it this way now we’ve all got used to paying for it.
It is still a cost though i.e. the 1,000s of people working in water industry and the materials required to maintain it.
I know its hard to defend the indefensible but well done for trying.
I think you just don't know what asset stripping is, otherwise you wouldn't still be banging that drum.
Imagine a progessive party jumping in now and saying we will subsidise your water bill by 50% as long as we remain in power.
I guess it might just be a vote winner.
Making it cheaper would certainly increase consumption and waste, which is the exact opposite of what we need.