I have a friend who was a bit of a financial wizard. He played the stock market and although he is a very “red and toothy”; capitalist, he invested heavily in utilities, especially water companies.
Why? Because as he told me they are massively under-regulated, and they make monopoly profits off customers who may never make a purchase. They underinvest, cheat the system, bully the regulator and as a result they pay out massive dividends and their share prices skyrocket.
They should be boring, capital intensive, low return, low dividend, but steady-as-a-rock investments at best. Instead, they were one-sided bets.
Any regulator or government should have seen that they were milking their customers and the economy was drying up and they had to invest more and pay less. Instead, they were snapped up by foreign investors who can recognize an under-regulated cash cow on sight.
Perhaps this explains the inane, inadequate and cheeky response to the ongoing scandal of an industry pumping millions of gallons of sewage directly into Britain’s rivers and seas. The industry knows it has to do something, but its response has been laughable.
It promised to fix the problem — and then promptly shot itself in the foot.
The industry says the scandal will take 10 years to fix and cost £10 billion. Fair enough. But then he said the bills would have to increase by £10 billion to pay for it. My jaw nearly hit the ground upon hearing this.
We’ve paid billions over the years for a water system that’s going to get cheap, clean water and waste disposal without polluting every river in the country.
Now they want us to pay to fix it, which means pay again to fix it. We’ve already paid them to run the proper service – if they haven’t, that’s their problem, not ours.
The industry is now acting and the reason for introducing this ridiculous scheme is quite clear. It is the government and its current regulatory pushovers. If they sign a paying customer again to fix this mess, the industry is safe.
But while this government may not have had the sense to call the industry and its regulator to a damn stand, it is clear that the next government certainly will.
It would be easy enough to present the industry with a “take it or leave it” deal. Do your job right, stop the fancy financial footwork, invest right, be who you always should have been; Boring, reliable, low risk and stable. Cut bills, stop paying huge dividends and clean up the mess you deliberately made to increase profits. Or, we’ll come for you.