The true cost of water
Does Ofwat know what it's talking about in repressing price rises?
How does extracting profit at record levels help? I mean. seriously, never mind my rabid left wingery, what is the business model? Why can't we just build the best water infrastructure in the world on Keynesian principles? 10 years of capital investment from a gilts issue over a hundred years or something similarly absurdly naive?
Is nationalization the answer? And what would Ofwat do then?
How does extracting profit at record levels help? I mean. seriously, never mind my rabid left wingery, what is the business model? Why can't we just build the best water infrastructure in the world on Keynesian principles? 10 years of capital investment from a gilts issue over a hundred years or something similarly absurdly naive?
Is nationalization the answer? And what would Ofwat do then?
Comments
Of course capitalism hasn't a great record in the British water system either.
I'm afraid you've nailed it @KoF. Even with a five year political cycle, it's not enough to build a public luxury water infrastructure.
Well, quite. How many companies these days are routinely making investments that expect to pay off in 50 years?
Thank you - clicking on the word in the OP gets nowhere.
Without legislation, there's no chance. We under use legislation, to say the least, to protect the commons, the public luxury we can't not afford. As in house building (including grey water separation), insulation, regardless of sector, power. Labour has put a toe in the water, we'll see.
One of the next tranche of companies facing fines will be Welsh Water; I don't know what will happen here as it's a not-for-profit company without shareholders.
As a general rule, how does fining failing companies or organisations (eg hospitals, train companies) help them deliver a better service? It either means price hikes or reduced investment at a time when it's most needed.
Right, and you could make an argument that you'd see exactly what you see in other areas - say nuclear power.
Though in this case the capital costs are much smaller, the environmental impacts somewhat positive, and the government still manages to build some infrastructure (albeit normally PFIed).
Well we have pulled them out of trouble before.
I have no idea why you think that might help.
To get the necessary capital?
The government doesn't need to acquire a retail bank in order to borrow money to invest in infrastructure. The government creates public debt. It doesn't need a retail bank in order to do that. The government can invest in public infrastructure without the intervention of the banks.
Good to know. So why doesn't it? What would nail down a good Keynesian splurge (paid for over 50 years) that no Tory government could stop in 9 years (at least hopefully), like HS2 was stopped, beyond Birmingham where it's most needed?
I'd have thought that owning retail banking would help guarantee long finance? Feel it in me water. Good in many other ways too of course.
It wouldn't, your water is wrong, the government can borrow at lower rates than a retail bank, and retail banking doesn't make a particularly large amount of money unless its soaking its customers.
So why won't it? Why can't we have 50 year water bonds or the like? And dumb question, where would it borrow cheaper from? Pension funds? Don't retail (as opposed to, what, commercial banks?) buy bonds?
Well they weren’t after all supposed to have sorted out the problems now, were they?☹️
I'd say that the perceived lack of investment is due to the water companies being privatised and needing to pay dividends to shareholders; however Welsh Water, which is essentially a public utility, is one of the worst offenders!
That's true, but there are probably multiple causes that are in large part caused by poor regulation and - in Welsh Water's case - additional costs of supply and delivery given geography.
They had a spell of around 10+ years in private hands, and when made into a non-profit assumed a certain amount of debt from that period. On the plus side, of all the water companies it has one of the strongest credit ratings at a time when Thames/Southern etc look in danger of going under.
This has been obvious since Thatcher. There was a very good BBC 24 report comparing the two public corporations of Welsh and Scottish Water. The former's failure is that of the (devolved) Welsh Labour dominated government since 1922...
We're not paying enough for water.
As usual that is not how it was sold to us. We would be paying less and the companies would sort out the water system, new pipes fewer leeks and many more unicorns. Welsh water took over a bad situation as did Transport for Wales. They are no worse than any other provider really.
They took it over 25 years ago.
And you think there is capacity in Wales for higher water bills?
OK leaks.