Your article is very incisive and you describe the fundamentals of English society in a very convincing way. Trouble is though that questions of archaic land ownership, or the decrepit arrangements for constitution, government and elections….don’t register with people at all.
So the asset-stripping by foreigners, aided by the government also goes unnoticed and there is little awareness of who was responsible for the privatisations of the 1980s, or even that it was done.
Most people seem to be content with the hackneyed cliches put out by the media and, significantly, only just over 50% of adults vote in General Elections. The path of self-harm started by Brexit now looks like it is going into overdrive with the suggestion that Farage, an obvious fraud, should be Prime Minister.
As any Argentine will tell you, the only way up, is down.
You outline the consequences of well intentioned changes to public ownership that started with exasperation at the pedantic grind we had become used to when trying to get anything done by our public utility operators. At the time when privatisation was being introduced, I was a frustrated surveyor convinced that subjecting the various administrations to commercial pressures must bring about much needed change or efficiency. Dealing with the new private ownerships soon disillusioned me and I began to realise what a disastrous mistake we had made - in most cases. Overseas share ownership does not mean that the assets or their duty of care has gone abroad and they can be taken back net of loans, the cost of dilapidation through neglect and unpaid fines. We must do that by passing the necessary legislation as soon as possible. It is no use our waiting until they go bankrupt one at a time and neither is it unfair confiscation. Their disgraceful behaviour should have consequences for which they pay and not the UK taxpayers. At the same time, we need to reverse the enlargement of the asset black hole our habits have created for ourselves. That is a separate subject not for this comment.
I so very much agree with you Richard. The fundamental issue is the incentives are aligned to productivity and efficiency both in public and private endeavours. Not the sloth of public buaorocarcy or the theft of private extractive monopoly.
In other news, Brussels bigwigs (and their Euro-oligarch pimps) look fondly at the English Model and are.mandating more "public investment in infrastructure buidlout", particularly green investment which is driven by regulatory mandate. Literally creating a dodgy new asset class with public subsidy for future rents
Spot on: Have you read my Analaysis on Carbon Credits and Biodiversity Net Gain Credits excatly on this issue - the whole thing is a scam - 3 articles on different aspects:
“The country is, fundamentally, run on the cheap. Cheap wages, borrowed money..."
Maybe we also need to reform the monetary and financial system or build alternative exchange systems with new units of account--and take control of the allocation of our collective credit to facilitate the production and exchange of value.
The question of "ownership" also applies to the creation of money and allocation of credit.
Money nowadays is essentially credit; it is created with the click of a keyboard and "borrowed" into existence by making digital accounting entries.
But there are two main problems: credit is often misallocated for unproductive or downright destructive purposes; and there is an artificial scarcity of money because it is improperly issued on the basis of interest-bearing debt, which keeps us in a collective state of perpetual debt and contributes to unsustainable economic growth.
The monetary system has basically been designed to extract value through interest and inflation and to further concentrate wealth and power.
Money should not be created on the basis of interest-bearing debt and credit should not be misallocated for unproductive purposes.
Short-term interest-free credit should be allocated for productive purposes (not for speculation or simply consumption) within ecological limitations and material economic constraints; longer-term financing could be provided from savings (preferably as equity, not debt). Simple enough, but I'm not holding my breath...
You have to look at what has been done so far.i.e. where we started.
The more govt involvement t there has been, the worse the results, the system could be better but is working as well as could be expected given the state trying to hobble it.
Water shortages are the results of political decisions.
Thames application for a new reservoir has been rejected 4 times because the govt says there's no need.
I cannot see that the present dire fiscal situation justifies loading more debt onto the taxpayer.
IF we desire further improvements we need to look at where the best value improvements have been & that is wholly with the private water cos.
Not sure how you think you can borrow money without paying dividends.
Its interesting in all the screeching about privatised water companies that thebleft is very averse to comparing English water with Wales ot Scotland
English water can get worse than it already is – it could get as bad as nationalised Scottish Water or non-profit-community-service Welsh Water. Thames Water is an example of how bad privatised water can be but its predecessor, the municipally-owned Metropolitan Water Board put sewage in the *drinking water* on occasion. Just before being privatised South-West Water poisoned (mildly in most cases) a whole county by pouring Aluminium Sulphate into a reservoir.
Investment in the water system increased following privatisation. In fact, desiring that increase in investment was one of the reasons for privatisation. Logically we’d not, therefore, expect an increase in investment if privatisation were reversed.
The reason for this being that private sector companies have a longer investment horizon than government does. Or, perhaps in a more detailedly correct manner, than politics does. Politicians, therefore politics, look(s) to the next election. Things beyond that horizon tend not to get dealt with at all and if they are then not well.
Back when there was a wall of necessary investment arriving in that water system. Partly simply because politics hadn’t invested enough in it over the preceding decades - it was more important to pay off state workforces than dig drains. Partly because new water standards - which is righteous, a richer country should indeed have higher environmental standards, Mr. Kuznetz and all that - were arriving prompted by the EU.
Politics simply wasn’t going to provide those sums. Capitalism would - because capitalists were entirely delighted to invest now in order to receive a steady flow of utility related interest, dividends and so on over the next decade or four in return.
One of those very points of privatisation was to get the water system into the longer time horizons of the private, not political, sector and thereby increase investment in it.
In fact the British water industry is the very poster child, the real world exemplar, of why this belief is wrong.
Remember it was Labour that sold the Golden share Fatcha had put in to most privatised companies to keep native influence current.
That was the expectation when privatisation was done. My view now is that we came up with the wrong long term solution. The management certainly needed changing and, probably paying more, but it now would have been better to have imposed better regulations with enforcement. The reported £79 billion paid out in dividends plus all the debt taken on, has not increased investment in the pipes and cables that were already ageing beyond their life expectations. Sewage capacity has not been increased to meet the requirements of all new developments so that our rivers are more polluted than before. The subsequent fines merely increase costs and loan pressures. You may recall that ordinary residents were encouraged to buy shares at the outset as a means of reducing net household costs but it has not worked out that way. Instead, the fixed assets have been treated in the same way land purchase is handled with money banked without spending much on maintenance. All physical structures deteriorate in time and require an effective sinking fund to compensate for that inevitable eventual cost. Surplus assets and property were sold off to the highest bidder and the proceeds regarded as net profit. The result is that we now have less water storage than we need, cable networks cannot handle the distribution of green energy and pipes and drains need permanent replacement with endless traffic interruptions all over the country. To make matters worse, large data centres gain planning permission without government powers to insist that they generate their own power. In my view we dropped ourselves into a huge cost liability inadvertently for not thinking through likely consequences. However, when we take them back into public ownership, it must not involve buying shares back at market values. The debts and liabilities should stay with current owners who appear to have milked them for dividends that exceed the likely costs of restoration. If we do this, there must be effective ways to involve checks and balances.
The UK has run a real world experiment since privatisation.
England got 16 privatised water companies heavily regulated by bureaucrats.
Wales got 2 community owned not for profit companies.
Scotland got the nationalised scottish water fully run & controlled by the state.
NI retained water with local authorities.
The improvements have been in that order.
Most improved is England, then Wales, then Scotland., then NI.
There has been massive investment in England.
The water companies don’t own the infrastructure anyway. They own the operating concession, and generally get paid on a Regulated Asset Base model (although the water industry uses a different jargon)- more net assets under management means more money due to them.
So if the regulated return on RAB is higher than their financing costs – and it usually is – then they always want to invest *more* (up to their financial capacity), not less.
So generally they propose more capex, not less. But this has to be paid for by our bills, so OFWAT – the government basically – are the gatekeepers for the capex programs; they tell the water companies what has to be included, and what has to be cut to make sure bills don’t escalate too fast.
So it’s not really the water companies who aren’t fixing the sewage problem. They would happily fix it, if we agreed to monstrously jack up our water bills to make it financially worthwhile (remind you of renewables?!). It’s the government who has decided the cost/benefit analysis does not support it, and to be fair they are probably right and protecting our pockets.
But the water companies are a convenient PR shield for OFWAT and the government. And the water companies just accept it so the regulator treats them well. So no-one really dispels this notion and we get this whole bizarre debate that bears little relationship to how the industry actually operates.
Fixing the sewage problem provides lots of capex opportunities.
Prior to the privatisation of the water system, the UK had just two beaches that met EU cleanliness standards and we were dubbed the ‘dirty man of Europe’ Around the same time we were known as the ‘poor man of Europe’ and were looking for IMF handouts.
All while nationalised industries were the norm. As already pointed out, governments run things for their benefit. Money is spent where political advantage can be gained. Economics and efficiency don’t get a look in.
Nationalisation is just private equity done by politicians and civil servants.
All the things that lefties say private equity does – asset stripping, loading balance sheets with debt, and so on, will be done to the nationalised industries by government.
But for some reason the lefties will say that it is different.
There is about 100,000 km of combined sewers still in operation in the UK. (https://www.water.org.uk/news-views-publications/views/we-must-invest-our-sewers-regardless-their-age) If 20% of the whole is combined, and 12% of the whole is Victorian, then about 60% of the combined is Victorian. Digging trenches in the street costs about £100+ per metre, which is £100,000+ per kilometre, which means we're talking about a bill in the neighbourhood of £10,000,000,000+ just for the digging. Plus the indirect costs on the local economy of 100,000 km of roadworks...
The problem the water companies have is that they inherited a lot of combined sewers from the government, over the past 50 years were not allowed by the government to invest the vast sums needed to fix it, and now the goalposts have been moved by the government to say this state of affairs created and perpetuated and previously allowed by the government is now terribly shocking and totally unacceptable and illegal. OK, so we voted for the fools so they have the power to do that to us. But fixing it now is going to be hugely expensive, which means the water bills to consumers are going to skyrocket and all the roads are going to have to be dug up again, which means you, the low-information voting public are going to be very, very angry. Who does the government / socialists want you to blame? Yes, that's right. The water companies.
The problem with our privatised water system is that it's not really privatised. The government (through Ofwat) still manages it. The government still makes the rules. The private company simply operate it for them, doing what the government tell them to do. And while (as the national statistics show) this is better than purely government run, it's still a crock.
You state sewage capacities were not increased for new developments.
Thats because the state / socialists would not allow the water cos to either block the new developments nor to increase the bills to pay for it- again its the state that is the problem.
Finally, you posit rationalising without compensating the owners - in plain English that is called theft.
I know socialists atruggle with 2nd order consequences but consider that UK is increasing national debt now faster than any country bar Botswana & has higher borrowing costs than Greece or Tunisia.
Thats because lending to UK is seen as risky already.
What do you think will happen to borrowing costs when UK gets a reputation for rationalising without compensation?
Water cos can borrow to invest more cheaply than UK govt anyway
I cannot find other exmaples that private water companies working. Yes the Welsh system is corrupt and just as bad as the English - if not worse - but across Europe municiple water companies deliver far better outcomes for cost, quality of infastrucutre, cost of investment, cost of borrowing, water quality and supply resiliance and lack of debt. These provable metrics are well studied in the industry and counter your cliams. The Scottish system while not up to European averages is provably better than England and Wales. I will do some research and publish an essay on this at some time. Of course if we have proper monopoly taxing of abstraction and externalities then that will incentivse, with proper price signals for a private company to opperate - the problem is where are the examples? Ithink the clue here is municiple and democratic are key drivers of quality with proper enforcment. Private, and public, monoplies are wasteful and downright criminal.
I would add that monopolies tend to be bureaucratic preferring standard practice throughout but which tends towards laziness and suppression of innovation. Even with all the separate privatised companies, they still have a monopoly status within their administrative areas. That does not represent competition for improving services.
You are correct that monopolies can use bureaucracy & rules to stifle competition, the worst exemplars of that practice are the various arms of the state, far exceeding the worst in the orivate sector.
Local monopolies -Thats because the state set it up that way - as operating concessions.
Do you have a cunning plan for companies to compete by having separate pipes in the same area?
The real world evidence of capital invested, sewage treatment worls completed, CSO overflows monitored & pipes replaced show that the most improved or the most efficient use of the sums spent had been in the 16 English water companies.
If you were correct, the welsh & scottish water cos would be outperforming england, instead they pollute far more, are very bureaucratic & indulge in waste more.
Again you need to look at the results of the UKs 4 methods experiment & adopt the best performer, not the worst.
Thank you again for your further explanation. Firstly, I do acknowledge that any utility does require a bureaucracy to run it and they will vary in effectiveness depending upon the quality of management whether private or state controlled. I live in an area controlled by Thames Water.which makes me aware of their pipework problems and untreated sewage discharge into the River Thames. I used to coach rowing and sculling in my spare time to a local school which meant stopping crews for instruction on a bend near a discharge from a sewage works. On an ordinary Sunday morning there was often a distinct smell of coffee and, after heavy rain, all sorts of unmentionable objects forming pungent islands drifting around the discharge. It appeared to me that the problem developed when one sewage works was sold for development and the sewage pumped over the hill to the next with insufficient capacity. I could be wrong. On water, there is a national grid delivering water from distant reservoirs or artesian sources and Thames Water distributes that, subject to regular hosepipe bans. There used to be a network of hilltop covered water storage chambers and water towers with many sold off for other purposes. I appreciate they are difficult to keep clean. As I see the matter, we have three problems. Not enough reservoirs in distant parts of the UK, not enough surplus local storage for drought conditions and an aging network of pipes subject to more breakages probably not able to cope with major developments or higher pressure. It seems to me that only a government can collectively finance such costs and there shouldn't be any payment of dividends to private shareholders. That requires an army of bureaucrats and engineers to run it like a professional civil service and, frankly, I do not know how best to run it or regulate it. I am not happy about what I see at present.
I thank you for taking the time to offer your considered response and I am not offended in the least. Indeed my family will be highly amused at me being described as a left wing socialist. The main issue I had as a surveyor was the tedious issue of dealing with pedantic old style beurocrats with little incentive to accelerate answers I deemed to be urgent. They were clearly routine to them as one might expect. The new management turned out to be very much the same but with a different emphasis. My interest was always in finding solutions that worked for my clients, irrespective of politics. You are right about the huge cost we face to bring the system into a fully sustainable state and so it comes back to the basis of needing a full assessment of what is needed now and in the future taking into account development plans and treatment works. If you are correct, it would not matter who owns the operating companies. What I see now is a system that is not working in favour of the users and I cannot see that the present finances justify sending 'profits' to remote shareholders when debt is visibly out of hand. The water shortages strongly suggest the need for more reservoir storage or desalinisation plant. That may well be a liability the government has to finance for all of us and a workable national set of rules must be found. My concern spreads to the other utilities and services as well.
The scottish system polluted far more than the English one as we already know and is massively in debt without having done the improvements that the 16 English Co's have managed:
Scottish Water simply does not monitor the overflows of many of its CSO, - so the numbers here are artificially low, the real situation is far worse.
Of the 702 CSO locations we know about for Scottish Water, 452 of them have ZERO reporting"
Your assertionss about European comparators appear to be statements of faith which the industry does not agree with( Although I note youve given up on the comparisons of the 4 UK systems)
What you appear unable to process is that the European systems did not have the backlog to deal with that the UK Water cos inherited as their politicians had kept investing and their systems were younger.
Instead of considering abstracts of how you'd like the world to behave it would be better to look at the real world examples in front of us.
Then remember that with the catastrophic fiscal cliff approaching there will have to be drastic cuts either before or after another IMF bailout of an insolvent UK.
The money won't be there for nice to haves, we may have to admit that Fearghal Sharkey's campaign to have drinking water quality rivers is unattainable without an economy as vibrant as Singapores.
Your article is very incisive and you describe the fundamentals of English society in a very convincing way. Trouble is though that questions of archaic land ownership, or the decrepit arrangements for constitution, government and elections….don’t register with people at all.
So the asset-stripping by foreigners, aided by the government also goes unnoticed and there is little awareness of who was responsible for the privatisations of the 1980s, or even that it was done.
Most people seem to be content with the hackneyed cliches put out by the media and, significantly, only just over 50% of adults vote in General Elections. The path of self-harm started by Brexit now looks like it is going into overdrive with the suggestion that Farage, an obvious fraud, should be Prime Minister.
As any Argentine will tell you, the only way up, is down.
You outline the consequences of well intentioned changes to public ownership that started with exasperation at the pedantic grind we had become used to when trying to get anything done by our public utility operators. At the time when privatisation was being introduced, I was a frustrated surveyor convinced that subjecting the various administrations to commercial pressures must bring about much needed change or efficiency. Dealing with the new private ownerships soon disillusioned me and I began to realise what a disastrous mistake we had made - in most cases. Overseas share ownership does not mean that the assets or their duty of care has gone abroad and they can be taken back net of loans, the cost of dilapidation through neglect and unpaid fines. We must do that by passing the necessary legislation as soon as possible. It is no use our waiting until they go bankrupt one at a time and neither is it unfair confiscation. Their disgraceful behaviour should have consequences for which they pay and not the UK taxpayers. At the same time, we need to reverse the enlargement of the asset black hole our habits have created for ourselves. That is a separate subject not for this comment.
I so very much agree with you Richard. The fundamental issue is the incentives are aligned to productivity and efficiency both in public and private endeavours. Not the sloth of public buaorocarcy or the theft of private extractive monopoly.
Mad that Britain does not charge land values as Churchill and Lloyd George wanted in 1910. The owners of a country should pay for running it.
"Tax wealth, not work" - Gary Stevenson
Excellent.
well said.
Yup. Awesome.
In other news, Brussels bigwigs (and their Euro-oligarch pimps) look fondly at the English Model and are.mandating more "public investment in infrastructure buidlout", particularly green investment which is driven by regulatory mandate. Literally creating a dodgy new asset class with public subsidy for future rents
Spot on: Have you read my Analaysis on Carbon Credits and Biodiversity Net Gain Credits excatly on this issue - the whole thing is a scam - 3 articles on different aspects:
https://peeta462032.substack.com/p/the-offset-trap-why-uk-nature-is?r=1ceptn
https://peeta462032.substack.com/p/green-deserts-and-paper-profits-the?r=1ceptn
https://peeta462032.substack.com/p/the-beaver-vs-the-banker-why-our?r=1ceptn
“The country is, fundamentally, run on the cheap. Cheap wages, borrowed money..."
Maybe we also need to reform the monetary and financial system or build alternative exchange systems with new units of account--and take control of the allocation of our collective credit to facilitate the production and exchange of value.
The question of "ownership" also applies to the creation of money and allocation of credit.
Money nowadays is essentially credit; it is created with the click of a keyboard and "borrowed" into existence by making digital accounting entries.
But there are two main problems: credit is often misallocated for unproductive or downright destructive purposes; and there is an artificial scarcity of money because it is improperly issued on the basis of interest-bearing debt, which keeps us in a collective state of perpetual debt and contributes to unsustainable economic growth.
The monetary system has basically been designed to extract value through interest and inflation and to further concentrate wealth and power.
Money should not be created on the basis of interest-bearing debt and credit should not be misallocated for unproductive purposes.
Short-term interest-free credit should be allocated for productive purposes (not for speculation or simply consumption) within ecological limitations and material economic constraints; longer-term financing could be provided from savings (preferably as equity, not debt). Simple enough, but I'm not holding my breath...
You have to look at what has been done so far.i.e. where we started.
The more govt involvement t there has been, the worse the results, the system could be better but is working as well as could be expected given the state trying to hobble it.
Water shortages are the results of political decisions.
Thames application for a new reservoir has been rejected 4 times because the govt says there's no need.
I cannot see that the present dire fiscal situation justifies loading more debt onto the taxpayer.
IF we desire further improvements we need to look at where the best value improvements have been & that is wholly with the private water cos.
Not sure how you think you can borrow money without paying dividends.
Its interesting in all the screeching about privatised water companies that thebleft is very averse to comparing English water with Wales ot Scotland
English water can get worse than it already is – it could get as bad as nationalised Scottish Water or non-profit-community-service Welsh Water. Thames Water is an example of how bad privatised water can be but its predecessor, the municipally-owned Metropolitan Water Board put sewage in the *drinking water* on occasion. Just before being privatised South-West Water poisoned (mildly in most cases) a whole county by pouring Aluminium Sulphate into a reservoir.
Investment in the water system increased following privatisation. In fact, desiring that increase in investment was one of the reasons for privatisation. Logically we’d not, therefore, expect an increase in investment if privatisation were reversed.
The reason for this being that private sector companies have a longer investment horizon than government does. Or, perhaps in a more detailedly correct manner, than politics does. Politicians, therefore politics, look(s) to the next election. Things beyond that horizon tend not to get dealt with at all and if they are then not well.
Back when there was a wall of necessary investment arriving in that water system. Partly simply because politics hadn’t invested enough in it over the preceding decades - it was more important to pay off state workforces than dig drains. Partly because new water standards - which is righteous, a richer country should indeed have higher environmental standards, Mr. Kuznetz and all that - were arriving prompted by the EU.
Politics simply wasn’t going to provide those sums. Capitalism would - because capitalists were entirely delighted to invest now in order to receive a steady flow of utility related interest, dividends and so on over the next decade or four in return.
One of those very points of privatisation was to get the water system into the longer time horizons of the private, not political, sector and thereby increase investment in it.
In fact the British water industry is the very poster child, the real world exemplar, of why this belief is wrong.
Remember it was Labour that sold the Golden share Fatcha had put in to most privatised companies to keep native influence current.
That was the expectation when privatisation was done. My view now is that we came up with the wrong long term solution. The management certainly needed changing and, probably paying more, but it now would have been better to have imposed better regulations with enforcement. The reported £79 billion paid out in dividends plus all the debt taken on, has not increased investment in the pipes and cables that were already ageing beyond their life expectations. Sewage capacity has not been increased to meet the requirements of all new developments so that our rivers are more polluted than before. The subsequent fines merely increase costs and loan pressures. You may recall that ordinary residents were encouraged to buy shares at the outset as a means of reducing net household costs but it has not worked out that way. Instead, the fixed assets have been treated in the same way land purchase is handled with money banked without spending much on maintenance. All physical structures deteriorate in time and require an effective sinking fund to compensate for that inevitable eventual cost. Surplus assets and property were sold off to the highest bidder and the proceeds regarded as net profit. The result is that we now have less water storage than we need, cable networks cannot handle the distribution of green energy and pipes and drains need permanent replacement with endless traffic interruptions all over the country. To make matters worse, large data centres gain planning permission without government powers to insist that they generate their own power. In my view we dropped ourselves into a huge cost liability inadvertently for not thinking through likely consequences. However, when we take them back into public ownership, it must not involve buying shares back at market values. The debts and liabilities should stay with current owners who appear to have milked them for dividends that exceed the likely costs of restoration. If we do this, there must be effective ways to involve checks and balances.
The UK has run a real world experiment since privatisation.
England got 16 privatised water companies heavily regulated by bureaucrats.
Wales got 2 community owned not for profit companies.
Scotland got the nationalised scottish water fully run & controlled by the state.
NI retained water with local authorities.
The improvements have been in that order.
Most improved is England, then Wales, then Scotland., then NI.
There has been massive investment in England.
The water companies don’t own the infrastructure anyway. They own the operating concession, and generally get paid on a Regulated Asset Base model (although the water industry uses a different jargon)- more net assets under management means more money due to them.
So if the regulated return on RAB is higher than their financing costs – and it usually is – then they always want to invest *more* (up to their financial capacity), not less.
So generally they propose more capex, not less. But this has to be paid for by our bills, so OFWAT – the government basically – are the gatekeepers for the capex programs; they tell the water companies what has to be included, and what has to be cut to make sure bills don’t escalate too fast.
So it’s not really the water companies who aren’t fixing the sewage problem. They would happily fix it, if we agreed to monstrously jack up our water bills to make it financially worthwhile (remind you of renewables?!). It’s the government who has decided the cost/benefit analysis does not support it, and to be fair they are probably right and protecting our pockets.
But the water companies are a convenient PR shield for OFWAT and the government. And the water companies just accept it so the regulator treats them well. So no-one really dispels this notion and we get this whole bizarre debate that bears little relationship to how the industry actually operates.
Fixing the sewage problem provides lots of capex opportunities.
Prior to the privatisation of the water system, the UK had just two beaches that met EU cleanliness standards and we were dubbed the ‘dirty man of Europe’ Around the same time we were known as the ‘poor man of Europe’ and were looking for IMF handouts.
All while nationalised industries were the norm. As already pointed out, governments run things for their benefit. Money is spent where political advantage can be gained. Economics and efficiency don’t get a look in.
Nationalisation is just private equity done by politicians and civil servants.
All the things that lefties say private equity does – asset stripping, loading balance sheets with debt, and so on, will be done to the nationalised industries by government.
But for some reason the lefties will say that it is different.
There is about 100,000 km of combined sewers still in operation in the UK. (https://www.water.org.uk/news-views-publications/views/we-must-invest-our-sewers-regardless-their-age) If 20% of the whole is combined, and 12% of the whole is Victorian, then about 60% of the combined is Victorian. Digging trenches in the street costs about £100+ per metre, which is £100,000+ per kilometre, which means we're talking about a bill in the neighbourhood of £10,000,000,000+ just for the digging. Plus the indirect costs on the local economy of 100,000 km of roadworks...
The problem the water companies have is that they inherited a lot of combined sewers from the government, over the past 50 years were not allowed by the government to invest the vast sums needed to fix it, and now the goalposts have been moved by the government to say this state of affairs created and perpetuated and previously allowed by the government is now terribly shocking and totally unacceptable and illegal. OK, so we voted for the fools so they have the power to do that to us. But fixing it now is going to be hugely expensive, which means the water bills to consumers are going to skyrocket and all the roads are going to have to be dug up again, which means you, the low-information voting public are going to be very, very angry. Who does the government / socialists want you to blame? Yes, that's right. The water companies.
The problem with our privatised water system is that it's not really privatised. The government (through Ofwat) still manages it. The government still makes the rules. The private company simply operate it for them, doing what the government tell them to do. And while (as the national statistics show) this is better than purely government run, it's still a crock.
You state sewage capacities were not increased for new developments.
Thats because the state / socialists would not allow the water cos to either block the new developments nor to increase the bills to pay for it- again its the state that is the problem.
Finally, you posit rationalising without compensating the owners - in plain English that is called theft.
I know socialists atruggle with 2nd order consequences but consider that UK is increasing national debt now faster than any country bar Botswana & has higher borrowing costs than Greece or Tunisia.
Thats because lending to UK is seen as risky already.
What do you think will happen to borrowing costs when UK gets a reputation for rationalising without compensation?
Water cos can borrow to invest more cheaply than UK govt anyway
https://capx.co/the-case-for-renationalising-water-is-leaky?_hsmi=85157443
I cannot find other exmaples that private water companies working. Yes the Welsh system is corrupt and just as bad as the English - if not worse - but across Europe municiple water companies deliver far better outcomes for cost, quality of infastrucutre, cost of investment, cost of borrowing, water quality and supply resiliance and lack of debt. These provable metrics are well studied in the industry and counter your cliams. The Scottish system while not up to European averages is provably better than England and Wales. I will do some research and publish an essay on this at some time. Of course if we have proper monopoly taxing of abstraction and externalities then that will incentivse, with proper price signals for a private company to opperate - the problem is where are the examples? Ithink the clue here is municiple and democratic are key drivers of quality with proper enforcment. Private, and public, monoplies are wasteful and downright criminal.
I would add that monopolies tend to be bureaucratic preferring standard practice throughout but which tends towards laziness and suppression of innovation. Even with all the separate privatised companies, they still have a monopoly status within their administrative areas. That does not represent competition for improving services.
You are correct that monopolies can use bureaucracy & rules to stifle competition, the worst exemplars of that practice are the various arms of the state, far exceeding the worst in the orivate sector.
Local monopolies -Thats because the state set it up that way - as operating concessions.
Do you have a cunning plan for companies to compete by having separate pipes in the same area?
The real world evidence of capital invested, sewage treatment worls completed, CSO overflows monitored & pipes replaced show that the most improved or the most efficient use of the sums spent had been in the 16 English water companies.
If you were correct, the welsh & scottish water cos would be outperforming england, instead they pollute far more, are very bureaucratic & indulge in waste more.
Again you need to look at the results of the UKs 4 methods experiment & adopt the best performer, not the worst.
Thank you again for your further explanation. Firstly, I do acknowledge that any utility does require a bureaucracy to run it and they will vary in effectiveness depending upon the quality of management whether private or state controlled. I live in an area controlled by Thames Water.which makes me aware of their pipework problems and untreated sewage discharge into the River Thames. I used to coach rowing and sculling in my spare time to a local school which meant stopping crews for instruction on a bend near a discharge from a sewage works. On an ordinary Sunday morning there was often a distinct smell of coffee and, after heavy rain, all sorts of unmentionable objects forming pungent islands drifting around the discharge. It appeared to me that the problem developed when one sewage works was sold for development and the sewage pumped over the hill to the next with insufficient capacity. I could be wrong. On water, there is a national grid delivering water from distant reservoirs or artesian sources and Thames Water distributes that, subject to regular hosepipe bans. There used to be a network of hilltop covered water storage chambers and water towers with many sold off for other purposes. I appreciate they are difficult to keep clean. As I see the matter, we have three problems. Not enough reservoirs in distant parts of the UK, not enough surplus local storage for drought conditions and an aging network of pipes subject to more breakages probably not able to cope with major developments or higher pressure. It seems to me that only a government can collectively finance such costs and there shouldn't be any payment of dividends to private shareholders. That requires an army of bureaucrats and engineers to run it like a professional civil service and, frankly, I do not know how best to run it or regulate it. I am not happy about what I see at present.
I thank you for taking the time to offer your considered response and I am not offended in the least. Indeed my family will be highly amused at me being described as a left wing socialist. The main issue I had as a surveyor was the tedious issue of dealing with pedantic old style beurocrats with little incentive to accelerate answers I deemed to be urgent. They were clearly routine to them as one might expect. The new management turned out to be very much the same but with a different emphasis. My interest was always in finding solutions that worked for my clients, irrespective of politics. You are right about the huge cost we face to bring the system into a fully sustainable state and so it comes back to the basis of needing a full assessment of what is needed now and in the future taking into account development plans and treatment works. If you are correct, it would not matter who owns the operating companies. What I see now is a system that is not working in favour of the users and I cannot see that the present finances justify sending 'profits' to remote shareholders when debt is visibly out of hand. The water shortages strongly suggest the need for more reservoir storage or desalinisation plant. That may well be a liability the government has to finance for all of us and a workable national set of rules must be found. My concern spreads to the other utilities and services as well.
The scottish system polluted far more than the English one as we already know and is massively in debt without having done the improvements that the 16 English Co's have managed:
https://top-of-the-poops.org/company/scottish-water
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Scottish Water simply does not monitor the overflows of many of its CSO, - so the numbers here are artificially low, the real situation is far worse.
Of the 702 CSO locations we know about for Scottish Water, 452 of them have ZERO reporting"
Your assertionss about European comparators appear to be statements of faith which the industry does not agree with( Although I note youve given up on the comparisons of the 4 UK systems)
https://www.water.org.uk/news-views-publications/news/new-research-shows-water-companies-england-and-wales-outperform
What you appear unable to process is that the European systems did not have the backlog to deal with that the UK Water cos inherited as their politicians had kept investing and their systems were younger.
Instead of considering abstracts of how you'd like the world to behave it would be better to look at the real world examples in front of us.
Then remember that with the catastrophic fiscal cliff approaching there will have to be drastic cuts either before or after another IMF bailout of an insolvent UK.
The money won't be there for nice to haves, we may have to admit that Fearghal Sharkey's campaign to have drinking water quality rivers is unattainable without an economy as vibrant as Singapores.
Explains very well, how wealth transfer happens.
Oh look! A squirrel.