Talk Morgan Forums Community The Malvern Arms Thames Water

Absolutely on the money.........I find a predictable politically motivated dialogue every time on these type of issues, without as you pointed out the full appreciation of where those evil dividends go to support the pensions many currently enjoy or may come to enjoy in the future .

The reason why they were privatised in the first place was most of the UK water systems were Victorian, needed massive investment to update and the public purse couldn't support that future level of needed investment after decades of public ownership underinvestment and a equally abysmal management. The only real difference is basically the private sector has milked the current infrastructure for longer, than originally envisaged.

Without question there are clear cases of asset stripping and the various watchdogs should be given sufficient teeth to ensure that minimum standards are observed. Clearly the various governments since privatisation have not set clear deliverables expected of the water companies eg stop sewage discharges into rivers and coastline and so on.

That is true but I predict if you let one fail the behaviour will alter.

Yep .... not really commenting on the business situation ... just an observation triggered by the press harping on about 'Dividends'.

K

So basically, all the dividends and bonuses have been paid by borrowing the money to pay them...

If anyone is interested, here is a "We own it" petition.
https://weownit.org.uk/act-now/bring-thames-water-into-public-ownership

I'm not so sure that is the case, too much of the corporate financial success measures (hence resultant management bonuses and dividend policies) are geared to maintain higher share prices, which large dividend pay outs help support..

You would have to change completely the corporate and investor reward structure which may lead to share prices fall on lower dividend returns, if profits fall as a result of increased investment and a higher cost base to fix the real issues and replace the old water infrastructure. Lower returns often result in lower share prices is something the markets don't always appreciate. The dividends also allow the pension funds to fund much of their day to day payment of their pensions.

It seems that we are building a solid case for critical infrastructure being state owned because the current investment structure is incapable of supporting industries with substantial long term investment requirements that will not increase profitability.

The state is not well regarded for delivering infrastructure projects on time and within budget.....quite the reverse actually, it has a track record of failing miserably. Secondly, the state may not want to raise increase/maintain the current tax burden to fund such infrastructure projects, as the UK is now becoming less attractive to investors due to its tax burden. So the question will be who picks up the tab, and most likely it will be the consumer. I'm not so sure the government wants the water companies and its future infrastructure costs/liabilities on the UK balance sheet.
The government does as a minimum need to restrict the dividend distribution policies of ex public sector industries, whilst they undertake massive capital investment programmes to update our infrastructure, which will of course have an impact on future returns for pension funds etc..