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The real problem with Britain’s water companies (www.economist.com)

submitted 2 years ago by theinspectorst@kbin.social to c/uk_politics@feddit.uk

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Blame financial blunders and timid regulation, not privatisation

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[–] theinspectorst@kbin.social 0 points 2 years ago (1 children)

Now it is time to spend more. The costs will fall on consumers: one way or another, if Britons want cleaner water they will have to pay for it. Private investors will demand a higher return on any funds they put in, especially if the water companies’ scope to borrow is limited.

But talk of nationalisation is a distraction—and a poor use of scarce public funds. Whether water companies are owned by the state or remain in private hands, a fierce watchdog will be needed to keep the industry in line. Indeed, elected politicians would probably be even more reluctant than arms-length regulators to spend taxpayers’ money or raise bills to pay for necessary investment. Those regulators will, at least, now have the cautionary tale of Ofwat’s failings to guide them.

[–] snacks@feddit.uk 0 points 2 years ago (1 children)

Playing devils advocate, a heavy handed regulator would be what nationalisation means in practice. The private sector and privatisation has meant enormous taxpayer recovery, so we should be entitled to either own or regulate hard. And actually the incentive for having private ownership with weak regulation is the only reason it was privatised, so the shareholder who has zero say in how the company is run in the same manner as the taxpayer, is very happy to invest knowing full well that they get dividends regardless.

[–] theinspectorst@kbin.social 1 points 2 years ago

I think the argument of the article is:

Privatisation + weak regulation = underinvestment, as private owners don't have the incentive to spend the money to invest for the long-term.
Nationalisation = underinvestment, as putting politicians in charge means they'll be too sensitive to the impact on voters of charging them (either via taxes or water bills) for investment in the infrastructure.
Privatisation + strong regulation = needed investment, as strong regulators can be more demanding of water companies but can do so at arm's length from politicians.