Latest news with #publicownership
The Guardian
2 days ago
- Business
- The Guardian
Public ownership of England's water companies could cost close to zero, says thinktank
Ministers could bring water companies into public ownership for minimal cost through a process designed to safeguard vital public services when the companies running them are failing, a thinktank report has argued. According to the report by Common Wealth, ministers could use a process known as special administration to take over a company like Thames Water and, rather than transfer it to another private company, keep it under permanent public ownership. Writing for the thinktank, Ewan McGaughey, professor of law at King's College London, said that while a figure of £99bn was commonly cited as the cost of taking over the industry in England, this was based on an estimate from a thinktank paid for by water companies. According to McGaughey, the estimates use a metric known as regulatory capital value, designed by the industry regulator Ofwat for calculating maximum dividends. This takes the assumed value of companies in 1990 and adds on capital investment per year and inflation but, the report said, takes no account of real market values. The actual market value of water companies, the report argued, seems to be lower, with the US private equity company KKR offering a £4bn injection of equity to take over Thames Water, when its supposed regulatory capital value is nearer £20bn. It goes on to say that when debt levels of water companies are taken into account, for example Thames Water is about £20bn in debt, it would be possible for the government to argue that their appropriate value in law was notably less, even close to zero. This would be based not just on debt, but also on the amount of money needed for infrastructure repairs and the scale of dividends already paid to shareholders. While polling shows strong public support for the general idea of nationalised water suppliers, and the idea is liked by some Labour MPs, government officials say regulatory capital value is the standard measure for the companies' value, and that nationalisation would need the state to plug the gap left by billions more pounds of private investment that would vanish. But according to McGaughey, who specialises in corporate law and insolvency, the rules setting out special administration would allow this to be used to remove licences from any water company deemed to show serious poor performance, something he argues in the report could be justified with every English water company over the dumping of sewage into waterways alone. Once this was done, shareholders and secured creditors such as bondholders would be given 'appropriate value' for their stakes, with McGaughey saying this would, in effect, be nothing. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion While special administration is usually carried out to find a new private owner, McGaughey said there was 'nothing in the law to require that the new owner is private'. He added: 'On the contrary, the duty of the special administrator is to the public, and it's in the public interest to consider public ownership. There would be a case for judicial review if the secretary of state did not consider public ownership.' Such a move, McGaughey added, would be likely to see bondholders take legal action. However, he said, this happened in the past when Railtrack and Northern Rock were put into special administration without any compensation for investors, and the investors lost. 'The government just needs to stop being so timid,' he said. The Department for Environment, Food and Rural Affairs said: 'The government has no plans to nationalise water companies. It will cost billions of pounds and take years to unpick the current ownership model, during which time underinvestment in infrastructure and sewage pollution would only get worse.'
Telegraph
6 days ago
- Business
- Telegraph
Britain is now too poor for even virtue-signalling socialism
We have told the private equity barons to get lost, and might take Thames Water back into public ownership. We have renationalised the railways, slashing fares and buying some new rolling stock at the same time. And we have pumped plenty of fresh 'investment' into the steel industry as we save it from the ravages of free market capitalism. In some alternative universe, Britain's Labour Government would be indulging in some high-profile virtue signalling this week. In this one, unfortunately, a very different narrative is unfolding. It turns out that we are now too poor for even socialism – we have already run out of 'other people's money'. This should have been the week for a Labour Government with a huge majority to indulge its Big State instincts. It is surely clear to everyone that Thames Water is now broken, and it will inevitably require some form of bail-out from the Government if the taps and the sewers in the capital are to keep operating. Whichever bright spark at Ofwat who decided to impose a massive fine on Thames Water only last week, and whichever civil servant who approved it, must be feeling a little sheepish now that the private equity giant KKR has pulled out of rescue talks. The Government might be expected to step in with a plan to take it into state ownership. The problem is the Treasury doesn't have the money, either to service its debts or to repair the pipes. Instead, it is scrabbling around for some other form of refinancing. Likewise, last week the Government should have been celebrating the return of South West Railways to public ownership. We should have expected some razzmatazz, with red flags fluttering on the platforms of Poole and Dorchester, free tea handed out in a Marx mug, and some flashy Tik Toks about the 'People's Railway'. It didn't happen. Instead, the very first 'public train' you could catch was a rail replacement bus running from Waterloo to Woking. True, there was a quickly repainted 'Great British Railways' logo, but that was where the budget ran out. As relaunches go, it was about as flat as a glass of warm prosecco on the delayed train to Cornwall. Meanwhile, the Government may soon be forced to take what remains of British Steel into public ownership as its Chinese owners grow tired of its mounting losses. But the Government doesn't have the cash to spend. Add it all up, and one point is clear: the UK is now too poor for virtue-signalling socialism. That national debt is close to hitting 100 per cent of GDP, and will almost certainly punch through that crucial barrier over the summer. Taxes are running at a 70-year high, but the budget deficit keeps getting wider and wider, with the Chancellor racking up an extra £20 billion of debt in April alone. Receipts are falling with entrepreneurs and nom-doms fleeing the country, and the growth the Starmer administration promised has failed to materialise. Mrs Thatcher once famously observed that: 'the problem with socialism is that eventually you run out of other people's money'. Unfortunately for Sir Keir Starmer's Government, the money had already mostly run out before it took office, and what little was left in the kitty was immediately frittered away on higher public sector wages. We can all argue about whether it is better for the water industry, the railways, or steel manufacturing to be in the public or the private sector. And yet we could probably all agree on this point: Britain's crumbling infrastructure, and its shrinking manufacturing base, need more money spent on them. This should have been the perfect month to demonstrate what the public sector can do. Unfortunately, Britain is too poor to afford it any more – and until that changes, the virtue-signalling will have to remain on hold.
Telegraph
03-06-2025
- Business
- Telegraph
What my train journey from hell tells us about the state of Britain
First world problems? Sure. But ORR data show just 68 per cent of trains between January and March this year ran on time. Delays are a feature, not a bug, of Britain's railways. The Tōkaidō Shinkansen, which connects Tokyo and Osaka, has a 99.5 per cent on-time performance rate. For Brits dependent on Avanti West Coast, 58 per cent of trains will be late. The Left would have you believe that the real issue plaguing our railways is grubby corporations putting profit before customers – even though reintroduction of the profit motive to the railways led to massive investment and a doubling of passenger journeys between 1997 and 2019. The disenchanted public, meanwhile, want lower fares, and assume nationalisation will deliver them, which it won't when our maxed-out government is already paying over half of the running costs of the passenger railway. Labour clearly has no strategy, other than bringing the railways back into public ownership because unions – who will soon realise the DfT's magic money tree has been chopped down – have nagged them for years about it. It's the same with water companies. Simple answers – nationalise, jail greedy directors, force shareholders to repay dividends – offered by those blithely unaware that the only way to improve water is to make consumers or taxpayers fund it. Private enterprise can only invest if they can charge consumers more to recoup the cost; the alternative is higher taxes – and water or rail being put into the queue behind the NHS, housing, net zero, the NHS, schools, the NHS, migrant hotels, the NHS, welfare... though perhaps just ahead of defence and prisons. We'll get another reservoir by 2120, if lucky. 'Anything that's a human right ought to be nationalised', sniffed some Green Party clown on Monday, though he hushed up when it was pointed out our supermarkets function rather well, providing cheap food in abundance. Unlike, for instance, the Soviet collectivisation which triggered mass famine. But such airhead attitudes are characteristic of a political class that believes the private sector ravages whilst the public is starved when the opposite is true. Whoever is in charge, the lazy assumption that there is some solution to our malaise that doesn't involve trade-offs or genuinely tough choices, remain the same. Rather than put deep thought into how we modernise our Victorian water network or outdated railways, they go for the crowd-pleasing re-nationalisation. We see this on a bigger scale with Reform. They're seen as the panacea, the party that can put everything from high taxes to crumbling public services and our defective immigration system back on track. But for now their USP is simply that they're not LibLabCon. Their policies, such as they are, border on risible. 'The risk is that we hear much more about sizeable getting nothing like the same amount of specificity about the big cuts to spending on public services that would be needed for the plan to be implementable,' the IFS quietly cautioned after Nigel Farage's big speech last week. Sadly, no one seems to be listening, in any party. They're too busy imagining more ways to spend, regulate and ban, secretly hoping they won't be the ones in power when the music finally stops.
The Guardian
01-06-2025
- Business
- The Guardian
Insourcing is essential for rail nationalisation
Sarah Nankivell is correct when she says that rail nationalisation must succeed (A great prize, but a great risk: why we all need the nationalised South Western Railway to work, 28 May). While the nationalisation of South Western Railway and the government's commitment to a publicly owned Great British Railways are welcome first steps, this is not the end of the line. The continued outsourcing of essential services – such as track and train improvements, cleaning, security and elements of station staffing – perpetuates a two-tier workforce and undermines the goals of public ownership. These outsourced roles often come with poverty wages, a lack of sick pay and inadequate pension provisions, disproportionately affecting workers from black and minority ethnic communities. Outsourcing also drains public funds. According to RMT analysis, outsourcing and subcontracting firms extract about £400m annually in profits from rail contracts. This is money that could be reinvested into the railway system to improve services and reduce fares. There is growing support for an alternative to outsourcing supported by Labour's pledge to preside over the 'biggest wave of insourcing for a generation'. The Welsh government has already begun to insource rail services, while the London mayor, Sadiq Khan, is actively considering insourcing thousands of tube cleaners. For rail nationalisation to succeed, integrating and insourcing all aspects of our railways into public hands must be the DempseyRMT general secretary I do not believe for an instant that renationalising the train operating companies will either make the trains run better or reduce ticket prices. The performance of my local company, Northern, which has been in the public sector for a good while now, is proof of that ('New dawn': first train service renationalised under Labour begins, 25 May). But it is worth calling out the Conservative party claims that private ownership has kept costs down for the lie that it is. Before privatisation in 1994, British Rail received a taxpayer subsidy of under £1bn. And it was falling. Post-privatisation, this soared to over £5bn at one point and is today still far higher than in 1994, even though, according to the Department for Transport's own figures, rail fares had risen by about a fifth in real terms by 2017, delivering an additional 'hidden subsidy' of £2bn per year because of the higher prices travellers are paying. The challenge now is achieving financial stability for the rail network in a post-pandemic world where fewer commuters are buying season tickets and fewer business trips are being made in favour of web-based virtual meetings. At least the dividends and grotesque executive salaries siphoned out of the industry by the private sector over the past 30 years will be available to help balance the WhitehouseBarnsley, South Yorkshire
Reuters
30-05-2025
- Business
- Reuters
UK government says it has sold its last remaining NatWest stock
LONDON, May 30 (Reuters) - The British government said on Friday it had sold its remaining shares in NatWest Group , ending almost 17 years of public ownership. "Nearly two decades ago, the then Government stepped in to protect millions of savers and businesses from the consequences of the collapse of RBS," finance minister Rachel Reeves said in a statement. "That was the right decision then to secure the economy and NatWest's return to private ownership turns the page on a significant chapter in this country's history."
