Comment by rayiner
13 hours ago
I'm curious. You complain about "profits," but do you know how much money private investors put into the water companies to begin with? Because the alternative to privatization was the government issuing bonds to get that money. Are these profits more or less than the interest to bondholders you'd otherwise be paying?
Here in the U.S., almost all water utilities are operated by the government. We have a more than trillion dollar investment shortfall that taxpayers will have to cover: https://nawc.org/water-industry/infrastructure-investment/. It's not a problem with our government either. Both countries just have a lot of infrastructure built in the post-war era that is nearing end-of-life. And it just costs a lot more to replace that infrastructure than people think it should cost.
Our subdivision had a community-owned water/sewer system built in the early 20th century that was failing. The county government came in and tore it all out and connected everyone to the public system back in 2014. The county imposed a charge of $32,000 per house, which was added to everyone's county tax bill to be paid over 20 years (with interest). That was just the cost of hooking one subdivision up to the existing water/sewer plants. The existing public system ended less than half a mile away.
The BBC said (https://www.bbc.com/news/articles/cw4478wnjdpo) that in 30 years, private water and sewerage companies in England and Wales have extracted over 86 billion pounds (~USD $115 billion), while investing very little.
Meanwhile, consumer water rates in those areas increased by as much as 50% in the past year alone.
What is the number? It is a huge red flag if you see an article that cites a profits number without citing a number for capital invested. You literally cannot reach a conclusion either way without comparing the two numbers.
EDIT: The UK water regulator has the capital investment data here: https://www.ofwat.gov.uk/publication/long-term-data-series-o.... What does it say?
> You literally cannot reach a conclusion either way without comparing the two numbers.
You certainly can reach a conclusion, and the GP did.
What you can't do is to compute the rate on return on their investment. But as a user of a water system, why do I care about that?
5 replies →
The UK has an economic and corruption problem, not a water problem. In fact, it's probably got too much of all 3.
> Are these profits more or less than the interest to bondholders you'd otherwise be paying?
Apparently rather more
"Earlier this year, Corporate Watch calculated that £2 billion a year could be saved – or £80 per household – if the water supply was in public ownership. The government can borrow much cheaper than the companies and there would be no private shareholders demanding their dividends"
The research is cited in the document if you would like to critique
https://corporatewatch.org/the-severn-trent-takeover-corpora...
The frustration I have with this is that the money is there, today but our culture in the US does not understand the value of proper taxation to fund infrastructure and social services in the US.
We waste billions of tax dollars on frivolous pursuits, misaligned incentives and defense contractors rather than investing in communities and infrastructure, and that’s just at the federal level. Plenty of states and localities follow these same patterns then turn around and say they have no money for proper maintenance of civic infrastructure while being bilked by private companies
At least as of the last time I did the math (pre Trudeau), the U.S. had higher non-defense expenditures per person than Canada. We have low taxes, but that’s not because we don’t spend money. It’s because we pay for government expenditures with debt instead of tax dollars.
Even the Economist and FT are underwhelmed by the performance of many of England's privatized water utilities:
https://www.ft.com/content/bda390bc-8cc4-4fa4-9a90-36af08651...
https://www.economist.com/leaders/2023/07/05/the-real-proble...