371–380 of 524 posts
As a German, what amazes me, it seems like many people in England are on a water flatrate, as far as I understand it. No one (?) in Germany is.
Thatcher era privatization has been proven to be epitome of "short term gains for long term pain". Water, Power, Gas and Rail all privatized in a short span of decade and now the future generations will be footing the bill.
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Why do what? Have private water companies? Same reason for having private food supply, private electricity providers, private communication providers, and in most countries private healthcare providers. They run the business better than the state would, which is itself a benefit to the public. A government bailout means nationalization, which means investors lose everything. That risk doesn't suppress interest rates,…
Unlike the others this is a natural monopoly. Your first message contradicts your second, which one is it are they paying government risk level interest rates or business risk level interest rates. Edit: I just went and looked up their rating with one of the big agencies. CCC rated (junk basically) with a negative outlook, they did get an upgrade on a refinance last year, but from CC (so now lesser junk). UK's last r…
https://fred.stlouisfed.org/series/BAA
Thames' debt costs are normal for a company of its type, but for a government this bond yield is danger-level high. That's why there's so much talk in financial circles now about the UK needing another IMF bailout, although I have grave doubts about whether that's actually possible given the sheer size of the UK's debt load compared to the smaller third world countries that normally need IMF help, and the near simultaneous talk in France of a bailout there too. The IMF just doesn't have the resources for even one bailout of that size, let alone two.
Don't pay attention to credit ratings of countries vs companies. They aren't comparable due to political interference and general crapitude at the ratings agencies (remember they rated sub-prime mortgage debt as AAA). They also disagree, S&P rates Thames' class A bonds as Caa3. What really matters is the yield. That's the ground truth.
Note that Thames' interest costs have been all over the place. 5.8% is the current amount it's paying, but the actual bonds it has issued have had a wide range of yields.
The reason it's considered high for a government is because government debt should be much lower risk than a company. Governments can order banks to transfer everyone's savings to themselves, they can print money, they can prevent their citizens from leaving and seize all the assets... they can do things to raise money that would be considered incredibly evil and criminal if companies tried. And of course they can in principle set bond yields to whatever level they like by making the central bank or other financial institutions legally required to buy their debt.
That's why economics textbooks teach that government bonds are the lowest risk possible and so should have yields far below corporate debt.
In reality:
1. Governments can default on their debts just like companies do. History is full of such examples. Bond yields reflect that fact.
2. Governments can sell bonds that are inflation linked, so printing money isn't a way to escape those debts. The UK has an abnormally high amount of such debt that's inflation linked. The only way to pay them back is via cutting spending or increasing tax revenue, but the UK can't do the latter (recent tax rises have failed to come close to expected revenue increases) and can't do the former either because...
3. Governments can be prevented from paying their debts by law. Some countries have "debt brakes" or "debt ceilings" that can block the issuance of new debt to pay old debt, and in other cases (like the UK) the government may rely on ideologically extreme MPs who refuse to pass laws that bring spending in line with revenues.
So you add these things together and something that could in principle be a sure bet ends up looking as risky as an ordinary company.
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I mean, all the more reason it shouldn't be privatised. If it only makes sense to have one of something (road network, water system) it's a natural monopoly, _and_ it's going to require large public investment to be maintained, why wouldn't you in-house the expertise needed to do that and avoid the shareholder dividends overhead?
Cynically, if you’re someone trying to make a lot of money, why wouldn’t you take a well run system, convince people they can save a bunch of money by ‘cutting waste’, then pocket as much money as you can by cutting long term maintenance and pocketing the difference - and when it blows up, sell them the solution at inflated prices too? It seems like the voters actively encouraged this kind of behavior. Eventually peo…
Focusing on Thames Water's particular example, if we assume malice as the cause, what would be the potential consequences? While the government could impose fines, the possibility of non-payment exists and what would happen in that case? Instead of debt collectors taking action, like ripping pipes from the ground or causing pension fund collapse, the government would act as a last resort investor, potentially providing further funding for a few additional years before the situation likely repeats.
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When it comes to things like utilities every penny of profit comes at the expense of the public. Either prices are raised so that a small number of people can stuff their pockets with extra cash above what it costs to deliver the service and maintain the system or they get that extra money by failing to deliver the service or they do it by failing to maintain the system itself. I think the neglect and failure to inve…
> I think the neglect and failure to invest in infrastructure is the worst Cumulative capital investment by water companies in England and Wales since privatisation: £250bn. The infrastructure they inherited was never designed for the things it's being asked to do today, and it has a life expectancy. It would literally cost trillions to upgrade the entire sewerage system. This isn't apologia, it's just reality. The r…
Don't worry about it. Just lower taxes on corporations and the wealthy and reduce regulations, the magic hand of the market will fix everything!!! :D
Last I heard the rich are leaving the UK eroding your tax base. Im sorry but it is going to be higher taxes for you all
Of course, the narrative suits the wealthy owners of the media, so the story gets repeated anyway.
https://www.newstatesman.com/politics/2025/07/the-british-we...
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No. https://www.scientificamerican.com/article/why-dont-we-get-o...
> It can cost from just under $1 to well over $2 to produce one cubic meter (264 gallons) of desalted water from the ocean. That's about as much as two people in the U.S. typically go through in a day at home. Uhhhh that seems pretty cheap and affordable?
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Yes, in theory nationalized companies can set prices rationally and turn a profit. In practice they rarely manage this for long because sooner or later a populist comes along and forces them to lower prices in order to win votes. It's not just water where the UK has a problem with this. Transport for London has also been forced to underprice its services for years by London's socialist mayor, it's a big part of how h…
> It's not just water where the UK has a problem with this. Transport for London has also been forced to underprice its services for years by London's socialist mayor In the US we have a problem with fantastically underpricing public roads. We don't expect their books to break even, much less generate a profit. Meanwhile everyone asks why train systems are not profitable. > The US is a very right wing country. Yeah,…
It's true that the US subsidizes its road network. The effect is somewhat different though. If TfL doesn't get enough money in due to price controls then the network just degrades. If the US subsidizes its roads, the network can be maintained using subsidies. For it to be equivalent, roads would have to be privately owned but unable to charge the true cost of maintenance.
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Good find, I admit I had jumped on the Thames Water is Evil bandwagon, and for the record they are evil, but in this case they have been out-eviled by that other driver of British societal regression: > Campaigners had fought the plan, claiming there was no need for such a large reservoir and that it would damage the environment. > Leader of the Vale of White Horse Council Tony de Vere said: "We are delighted with th…
Reservoirs are nice, aren't they? Nice to look at, swim in, kayak on, walk around etc. Unless your house is going to be flooded, of course.
So I don't know what the objections were about. You can easily ignore them, and just as easily enjoy them. But they are hardly going to "destroy the environment".
That said, they would of course destroy "some" environment. I'm not aware of the specific objections in this case. So I'll leave an open mind until I do.
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The concept of reservoirs and emergency supply seems to be completely at odds with privatisation. What private company is going to spend loads of money to build deep reservoirs that are stressed only once every 5 or 10 years. None. They're going to reach for an immediate supply like a river or aquifer and then raise prices if those sources run low. It's insane to plan out infrastructure on the belief that private com…
I'm inclined to agree that privatisation is bad for long term planning, but the history of the Abingdon Reservoir proposal seems to be counter evidence: https://en.wikipedia.org/wiki/Abingdon_Reservoir Looks like Thames Water (a private company) proposed the development nearly 20 years ago, but it was turned down by the Environment Agency , a government body. > Plans for a £1bn reservoir in Oxfordshire to supply more…
But for something like water supply, there should be more competition via legally mandated unbundling, like with Internet service providers and energy suppliers who use the same delivery infrastructure while competing with each other.