Opens a thread on "rain" sees English people complaining about how wet it is. Laughs.
Come to my island FFS, the rain you get is what's left AFTER it passes over us.
@Mini99 you're half right on the water companies. They were chronically under funded under State ownership. Why spend X billions fixing something that can be ignored for 4/5yrs and left to the next lot. So successive Governments, of both colours, did exactly that. Not saying Privatisation was a panacea, but it made sense. The Gov got money for stuff it would have otherwise have had to spend billions on.
Initially it worked ok as the water companies could be run more efficiently, ever heard anyone call any Gov/local Council run service "efficient"? The problem came when they were bought over, or allowed to be bought, over by overseas Pension funds and Private Equity (PE) groups. I think the Canadian Teachers Pension Fund owns a few of them. In Thames Water's case Macquarie, the Aussie PE outfit, bought them.
PE works by loading debt on to a company and using the cash flow, your water bills, to cover the interest payments. They then pay themselves a dividend as share holders as that is taxed at a lower rate (it is in the UK, Aussie tax laws may differ). The interest payments on the debt are tax deductible so the debt actually allows them to save on tax. THAT is the problem, and a loop hole the Gov should have closed a long time ago. Macquire then sold Thames a few years ago and the rising Interest rates, remember they were all but zero percent for over a decade, will have massively increased their interest payments and reduced the money left over to invest in infrastructure. If they don't make the interest payments the banks can repossess the company, so debt payments come first for a company. Then it's easy to prioritise paying yourself a dividend over investing in infrastructure.
The new owners were probably sold a pup. I would NEVER buy anything from PE.
To use a car analogy it's like buying a car that's been owned by a boy racer. Any sensible person would not. It's been raced and run hot for weeks/months/years, it may look good now but chances are a lot of the parts have been through so much they will need replaced sooner than expected.
That's what PE do. Run it hot then sell it on, bank their profit (on top of the dividends) and leave someone else to pay off the debt.
If the Gov have any sense they will let Thames go bankrupt, in 12-18 months (when Labour are in power) and nationalise it (once they are bankrupt the Gov can step in for all but nothing), sort it out and then re-sell it (when the Tories get back in, be that 4/5 or 8/10yrs time) but make sure it can't be bought up by PE.
Water companies need massive on going spending (what's called 'Capital expenditure' or CapEx) effectively replacing a few pipes a year is easier, and cheaper than replacing a whole System. But the problem is, it is also easy to think "ahhh that can wait a year". The Gov did it when they owned it and Macquarie did it too. Realistically, if you are going to Nationalise something like that you need either a watchdog with teeth, which is never gonna happen, or to specify that the company must spend X% of profits/Revenue on CapEx. And don't allow any deductions, like interest payments, from the profit figure.
Sorry, slightly more long winded answer than I planned there. Hopefully it makes sense.
Still, enjoy the rain boys. We get 365 days a year like that!
