LEAVE the Conservative Party and save your country!

rjsterry

All valid criticism; if only he hadn't been elected leader of the party .

And in response to Labour's lead in the polls, the leading Conservatives decide that what is needed is poncing about giving "wide-ranging" interviews and organising photo shoots of their wives and kitchens.

rick_chasey

So why do the utilities that happen to be natural monopolies generate such enormous returns and pay so much in dividend whilst investment they put in is materially lower than it needs to be? Since 1989 water companies paid more back to their shareholders c.£150bn in dividend than they did invest in improved water for the public c.£120bn. Furthermore, they accrued (from zero) half of that dividend in debt - £53bn. Ie private investors are stripping out future value for their own pocket.

I’ve seen with my own eyes the number of financial engineers moving to utilities to squeeze that out. Utliltiies really ought not be paying big bucks for financial engineers. That shows a mismatch of interests.


Nationalisation is no panacea but the fact the issue is being raised is illustrative that the current system is not delivering what it ought to.

That quote that kicked it all off was in reference to the probation service that should never have been privatised and the mistake cost the govt around half a billion and the east coast rail line which I’ve had the misfortune to use a lot has been nationalised twice in my lifetime since it’s such a shitshow the rest of the time.

What is the pro-privatisation argument against the obvious conflicts of interest natural monopolies create?

rjsterry

Here's a thought: maybe public or private ownership isn't the primary issue. Governments are just as capable of under-investing in infrastructure (British Rail) and taking a narrow, short term view as private companies.

rick_chasey

rjsterry wrote:

Here's a thought: maybe public or private ownership isn't the primary issue. Governments are just as capable of under-investing in infrastructure (British Rail) and taking a narrow, short term view as private companies.

Natural monopolies are tricky to get right.

Stevo_666

Rick Chasey wrote:

So why do the utilities that happen to be natural monopolies generate such enormous returns and pay so much in dividend whilst investment they put in is materially lower than it needs to be? Since 1989 water companies paid more back to their shareholders c.£150bn in dividend than they did invest in improved water for the public c.£120bn. Furthermore, they accrued (from zero) half of that dividend in debt - £53bn. Ie private investors are stripping out future value for their own pocket.

I’ve seen with my own eyes the number of financial engineers moving to utilities to squeeze that out. Utliltiies really ought not be paying big bucks for financial engineers. That shows a mismatch of interests.


Nationalisation is no panacea but the fact the issue is being raised is illustrative that the current system is not delivering what it ought to.

That quote that kicked it all off was in reference to the probation service that should never have been privatised and the mistake cost the govt around half a billion and the east coast rail line which I’ve had the misfortune to use a lot has been nationalised twice in my lifetime since it’s such a shitshow the rest of the time.

What is the pro-privatisation argument against the obvious conflicts of interest natural monopolies create?

As you say, natural monopolies are difficult to get right. And I note that you haven't put forward a 'third way'.

The link below explains lot about why water companies need to make a profit. Natural monopolies thsy may be in their area but they still have an incentive to perform for the reasons given, including the ability to raise funds to invest:
https://www.ofwat.gov.uk/nonhouseholds/your-water-company/profits-and-dividends/

I'd like to see your source for the figures you quote, but on taking them after face value, any company tends to finance with a mixture of equity and debt as part of their normal working capital and investment needs. Can you show me that the borrowing is directly attributable to paying dividends? Unlikely.

Also as the link shows they are regulated by a government body. Better to have private sector with some incentive to perform and govt oversight to prevent monopoly abuse, than public sector with no real incentive and unlikely to punish themselves.

Note also the impovements in leakage and reduction in bills in the link due to investment by water companies.

Finally as a water customer I pay less than 2 quid a day for all my families water needs. Now you may say I'm boasting, but that really isn't expensive

Now that is dealing with natural monopolies. The larger part of what was denationalised was not in that situation, and the case for nationalisation there is much weaker. But I can see why you picked water companies to try to make your case.

rick_chasey

They’re from an FT article here https://www.ft.com/content/434d2f62-78b ... 18c0ea0201

I’m all for people making a profit. But when *dividend* is more than investment and they’re *still* borrowing money, I smell something fishy. The debt is cheap as they know it’ll be bailed out, so financiers can make a quick buck.

Essentials which are often natural monopolies need much stricter rules on behaviour.

Nationalisation leaves utilities stuck with inefficient costs and a host of other problems, but free marketers ought to offer up a solution for improved competition and not instead an argument about making profits.

Doing so rather illustrates the whole problem.

They have broadly run out of things to privatise as the entire justice system debacle demonstrates. Probation has been renationalised at a not immaterial cost and private prisons have materially worse conditions, suicides and reoffending rates. They do not serve the public well enough.

rick_chasey

In fact, this discussion brings up the main problem I have with the current argument from the right.

They spend too much time arguing for *profits* and virtually no time arguing for *competition*.

I don't begrudge anyone if they are successful in their work. That's what it's all about and good for them.

But I have absolutely no truck with leaders who sit there and protect big firms who have dominant positions in their market and have little or no competition.

Proper free market Tories ought to be subsidising new rivals to increase the competition. Their tax attitude towards havens benefits the biggest and punishes the smallest.

Healthy competition is what makes a market.

You do wonder if there is some conflict of interest if your MP's pension has a big allocation to UK and US large caps....

rolf_f

Surrey Commuter wrote:

Other than Grayling, Bojo has to be the worse possible PM. A part of me would find it fascinating.

Indeed. The Tories seem to be actually going for a target to claim the three worst Prime Ministers in British history over the timescale of a single Government. That'll take some beating.

tangled_metal

Labour never lasts more than two leaders. Usually one popular one then a second who loses it. Mind you that's the usual tory habit. Thatcher then major then Blair then brown. Actually that's a longer fun from the tories!

If you're a Leftie who thinks blairite politics were tory lite.

kingstongraham

Rolf F wrote:

Surrey Commuter wrote:

Other than Grayling, Bojo has to be the worse possible PM. A part of me would find it fascinating.

Indeed. The Tories seem to be actually going for a target to claim the three worst Prime Ministers in British history over the timescale of a single Government. That'll take some beating.

If anything is likely to increase the chances of Corbyn being prime minister after next, it is PM Johnson. Cameron, May, Johnson, Corbyn. That is quite a sequence.

tangled_metal

Who would be after Corbyn? Mcdonnell? Put Len McC into the HoL and he could feasibly be the pm after Corbyn.

kingstongraham

Tangled Metal wrote:

Who would be after Corbyn? Mcdonnell? Put Len McC into the HoL and he could feasibly be the pm after Corbyn.

Jacob Rees-Mogg's son.

Stevo_666

Rick Chasey wrote:

They’re from an FT article here https://www.ft.com/content/434d2f62-78b ... 18c0ea0201

I’m all for people making a profit. But when *dividend* is more than investment and they’re *still* borrowing money, I smell something fishy. The debt is cheap as they know it’ll be bailed out, so financiers can make a quick buck.

Essentials which are often natural monopolies need much stricter rules on behaviour.

Nationalisation leaves utilities stuck with inefficient costs and a host of other problems, but free marketers ought to offer up a solution for improved competition and not instead an argument about making profits.

Doing so rather illustrates the whole problem.

They have broadly run out of things to privatise as the entire justice system debacle demonstrates. Probation has been renationalised at a not immaterial cost and private prisons have materially worse conditions, suicides and reoffending rates. They do not serve the public well enough.

I'm not convinced that there is some shady club of asset stripping capitalists at work ravaging the water companies assets. Have a look at the pretty diverse ownership of these companies which is readily available on the net.

Also where is there a rule that say investment must be higher than dividends, irrespective of sector or circumstances? More likely these companies have invested what they need to deliver and the remaining funds can be used for dividends. I notice you haven't made a direct link between the borrowing and the dividends, but as mentioned, borrowing is a sensible part of financing business operations, especially when cheap.

As for sustainability re: financial model, you mention the stats over a 30 year period, so seems like it has stood the test of time. Also if you read the OFWAT link, they ave rules around limiting dividends so that there is no impact on the companies ability to finance their operations. What is your issue here?

You may have a point if water companies were routinely going bust/getting bailed or or massively over-charging their customers, but I can't see anything that indicates that. Especially as their prices are regulated. So if they are making profits then it's likely down to sensible cost management.

You mention more regulation (unsurprisingly) - what aspects of the OFWAT regime are inadequate in your view?

And as mentioned you are forgetting about the majority of business sectors for whom natural monopoly is irrelevant. Comments/thoughts?

So in summary, you can't point to any specific problem (just 'something fishy'), nor can you suggest a better solution. So that tells me what we have is probably not a bad way. Also if you can think of a way to deal with natural monopoly situations, let us know.

tangled_metal

KingstonGraham wrote:

Tangled Metal wrote:

Who would be after Corbyn? Mcdonnell? Put Len McC into the HoL and he could feasibly be the pm after Corbyn.

Jacob Rees-Mogg's son.

Rather have Len McC!

pblakeney

Looks like the original premise of this thread has been taken very literally by the party members.

rick_chasey

PBlakeney wrote:

Looks like the original premise of this thread has been taken very literally by the party members.

Hah.
Small reminder.

In the last 22 years the Tories have had a majority in just two of them and in that time they managed to project their own party problems onto the whole nation and throw the U.K. into it’s most ruinous political game in 80 years.

surrey_commuter

interesting times. The Tories are famous for sticking together to win elections. Without that incentive they really do look to broad a church. By the time they take JC seriously will it be too late?

rjsterry

Surrey Commuter wrote:

interesting times. The Tories are famous for sticking together to win elections. Without that incentive they really do look to broad a church. By the time they take JC seriously will it be too late?

Yes. They've blown it. Odds of Stevo's £3 backfiring spectacularly are looking pretty strong. I don't think he'll get a decisive win, but his opposition are likely to be diminished to the point that he can cobble together a workable coalition.

schlepcycling

KingstonGraham wrote:

Tangled Metal wrote:

Who would be after Corbyn? Mcdonnell? Put Len McC into the HoL and he could feasibly be the pm after Corbyn.

Jacob Rees-Mogg's son.

Sixtus for PM

Stevo_666

rjsterry wrote:

Surrey Commuter wrote:

interesting times. The Tories are famous for sticking together to win elections. Without that incentive they really do look to broad a church. By the time they take JC seriously will it be too late?

Yes. They've blown it. Odds of Stevo's £3 backfiring spectacularly are looking pretty strong. I don't think he'll get a decisive win, but his opposition are likely to be diminished to the point that he can cobble together a workable coalition.

My £3 has kept them out for quite a while and given me masses of entertainment value since I started the other thread back in 2015

Let's see what happens next, it's all very unpredictable. On the basis that we hope for the best and plan for the worst, it might be worth having your contingency plans in place just in case, as I never guaranteed I could hep you by keeping them out for a generation - that would probably require a short spell of New Old Labour being in power so that people remember just how shyte socialism is...

Jez mon

The only GE that Corbyn has contested resulted in Conservative losses and Labour gains. I'm not sure your £3 helped at all Stevo?

Stevo_666

Jez mon wrote:

The only GE that Corbyn has contested resulted in Conservative losses and Labour gains. I'm not sure your £3 helped at all Stevo?

We've had this conversation before. Did Corbyn get into Number 10? If the answer is no, job done.

orraloon

Judging by the increasingly strident Con party communications to us 'members', they are both sh!tting themselves and appear to have gone full on hard core Brexit, ignoring the views and opinions of the considerable element of the Con party who are not xenophobic f-wits. Tears, end, will.

Stevo_666

orraloon wrote:

Judging by the increasingly strident Con party communications to us 'members', they are both sh!tting themselves and appear to have gone full on hard core Brexit, ignoring the views and opinions of the considerable element of the Con party who are not xenophobic f-wits. Tears, end, will.

£25 well spent I'm sure. Mine was £3. I suppose you get what you pay for

orraloon

£2.09 per month. How much is that in skinny lattes?

rjsterry

Stevo 666 wrote:

rjsterry wrote:

Surrey Commuter wrote:

interesting times. The Tories are famous for sticking together to win elections. Without that incentive they really do look to broad a church. By the time they take JC seriously will it be too late?

Yes. They've blown it. Odds of Stevo's £3 backfiring spectacularly are looking pretty strong. I don't think he'll get a decisive win, but his opposition are likely to be diminished to the point that he can cobble together a workable coalition.

My £3 has kept them out for quite a while and given me masses of entertainment value since I started the other thread back in 2015

Let's see what happens next, it's all very unpredictable. On the basis that we hope for the best and plan for the worst, it might be worth having your contingency plans in place just in case, as I never guaranteed I could hep you by keeping them out for a generation - that would probably require a short spell of New Old Labour being in power so that people remember just how shyte socialism is...

Brexit is eroding Labour support as well; just not as quickly as it is the Conservatives. I think we are in for more instability with no one party in control. That there are Conservative MPs suggrsting some sort of pact with the party that wants to destroy them just shows how desperate things are getting.

kingstongraham

Stevo 666 wrote:

Jez mon wrote:

The only GE that Corbyn has contested resulted in Conservative losses and Labour gains. I'm not sure your £3 helped at all Stevo?

We've had this conversation before. Did Corbyn get into Number 10? If the answer is no, job done.

Without your £3 it's unlikely May would have risked a 2017 GE, so no benefit from it yet.

morstar

KingstonGraham wrote:

Stevo 666 wrote:

Jez mon wrote:

The only GE that Corbyn has contested resulted in Conservative losses and Labour gains. I'm not sure your £3 helped at all Stevo?

We've had this conversation before. Did Corbyn get into Number 10? If the answer is no, job done.

Without your £3 it's unlikely May would have risked a 2017 GE, so no benefit from it yet.

I'd actually disagree. We've managed to not leave Europe courtesy of May giving away her majority on the perceived weakness of Corbyn led Labour.

kingstongraham

morstar wrote:

KingstonGraham wrote:

Stevo 666 wrote:

Jez mon wrote:

The only GE that Corbyn has contested resulted in Conservative losses and Labour gains. I'm not sure your £3 helped at all Stevo?

We've had this conversation before. Did Corbyn get into Number 10? If the answer is no, job done.

Without your £3 it's unlikely May would have risked a 2017 GE, so no benefit from it yet.

I'd actually disagree. We've managed to not leave Europe courtesy of May giving away her majority on the perceived weakness of Corbyn led Labour.

It's still to be decided if that is a benefit or not. It depends on whether and how we do leave.

tangled_metal

Didn't the last GE result in tories losing s so many seats they needed to be propped up with the DUP? I don't see that as a victory somehow. Might be the fact the DUP leader (and some of her party) come across as loons.

I guess we'll never agree over the merits of not of the last GE Stevo.