Why Britain’s Water Companies are Going Bankrupt

This video was featured by Ground News last week saw perhaps the most fashionable event on England's social calendar, the Oxford Cambridge Boat Regatta, unfortunately for everyone involved the race itself was overshadowed by a government warning that the winning team should not jump into the

water

as is customary because

water

at that temperature has dangerously high levels of ecoli. This is another symptom of chronic underinvestment in Britain's water system, which has been in a near-permanent state of crisis since its privatization in 1989 and is reaching fever pitch. As the UK's largest water supplier, TS Water is currently flirting with

bankrupt

cy, so in this video we will explain why the UK privatized its water in the first place, what went wrong and why this put Sunak in a situation. difficult before you start, if you have.

Not yet, consider subscribing and ringing the bell to stay informed and receive notifications when we post new videos. To understand this history, you have to go back to 1989, when the Thatcher government decided to privatize the water system in England. and Wales this was quite neoliberal even by Thatcher's standards. The only other country with a similar privatized water system is Chile and that was implemented in the 80s by an army as part of what is now known as the neoliberal experiment when General Pet hired a group of American economists, known Like the Chicago boys, they used Chile basically as a laboratory for neoliberal policies.

Still, there were at least three reasons why most countries haven't privatized water first. It is not a politically popular move, so the UK is the only Democratic country that Actually, it was very unpopular when Thatcher did it in the UK and polls showed that a substantial majority of Britons were opposed, but she did it. anyway. The second water is what is known in economics as a common-use resource, which basically means that it is scarce and it is very difficult to prevent people and

companies

from consuming it. This means that some people may consume it in excess to the detriment of the general good.

Most economists accept that, because of this common pool, resources have to be at least regulated by the government, if not completely nationalized. Like other utilities, water tends toward monopoly, this is basically because wherever you live there is usually only one water system supplying the area, meaning consumers can't compare prices and put pressure on their water supplier. water to provide better service, even if a competitor wants to do it. come and build a whole new alternative water system, this wouldn't really work because A it would be ridiculously expensive and B the existing water system has probably already been built along the best routes, so given all this why would Thatcher privatized the water anyway?

It was partly because she was ideologically committed to neoliberalism, but also because the British water system needed an enormous amount of investment that the British state simply did not believe it could afford at the time and, to be fair to Thatcher at the moment, privatization originally seemed to have worked. Tens of billions of pounds were invested in the system and the private sector did a good job of improving the efficiency and quality of Britain's water supply, which is now one of the cleanest in the world. Unfortunately, everything started to fail. went wrong in the late 90s and the system has been in a state of crisis since then, there were basically two reasons for this: first, despite the government's attempts to simulate market pressures, the water

companies

still have big monopolies if you live in London, for example.

They source water from T and this became evident in 1995 when Yorkshire's poor water management meant that they were basically unable to cope with a mild drought and had to resort to sending tankers of water to affected areas and impose unprecedented restrictions on supply. a massive story in the media at the time because its water deficiencies had no negative effect on its stock prices or profits because well, it's a monopoly. Secondly, the regulation that accompanied privatization, including most notably the introduction of the UK water regulator, did not work. It has always been torn between trying to keep consumer costs down while ensuring returns strong enough to make water companies attractive. 90 and not a single large reservoir has been built in England for 30 years.

Similarly, between 2002 and 2018, Scottish water, which remains publicly owned, invested on average almost 35% more per household than its English equivalent, according to researchers at the University of Greenwich, while this underinvestment helped. keeping bills low England's water system is now in urgent need of repair which will cost approximately £100 billion over the next 5 years. England now has one of the leakiest water systems in Europe, with 20% of all water lost through leaks compared to just 5% in Germany Chronic underinvestment is also why companies Water companies have recently resorted to dumping unprecedented amounts of raw sewage into the UK's lakes and rivers because England's outdated sewage system is regularly overflowing at the same time as water companies were allowed to borrow sums. absurd amounts of money, this was nominally about financing investments and keeping bills down in the short term, but much of the money simply went directly to shareholders.

Pockets shareholders have received over 7 billion in dividends since privatization and still receive billions each year despite the dire need for investment. The most glaring example of this was and is T's Water, which was bought by a dubious Australian conglomerate called Maeri in 2006, who quadrupled T's Water's debt load from about 3 billion to almost 11 billion in 2017, despite of this cash injection. T's Water is still a disaster, maybe. because anyway approximately 3 billion PS went to shareholders as a dividend because more than half of this debt was linked to inflation. Rising prices and interest rates in recent years basically forced the company to negotiate a restructuring.

Basically, T Water is trying to convince its investors of a combination. of Angone pension funds and Asian sovereign wealth funds to give them a little more time and a little more money to put things right, at the same time as both investors and TS Water are trying to convince Ofwat to sweeten the deal. deal accepting Ste ER price. Unfortunately, because T's water is in a pickle, investors have apparently decided they'd rather cut their losses rather than give it more money, leaving the government in a bind even if investors take more losses: T's water is still will need money for the necessary investments at some point, which would mean higher bills for its 16 million customers.

The government will not want this so soon before the election, but the obvious alternative, nationalization, would seem like a tacit solution. admit failure and simply pass the cost on to the government whose finances are already under strain. When we researched this topic, we found that it was really important to balance the different opinions on this topic. Fortunately, we were able to easily compare opinions thanks to our sponsor's news. a website and app developed by a former NASA engineer with the mission of providing readers with an objective, simple, data-driven way to read the news. Each story comes with a quick visual breakdown of the factuality of political bias and the ownership of the reporting sources, all backed by ratings out of three.

Independent news monitoring organizations, for example, take this story about the temporary water crisis we discussed today immediately; You can see that the story had nine outlets reporting on it, but of those, 50% went to the right and none to the left, each story also comes with a detailed view. From bias distribution factuality scores and even ownership-specific information, you can also skim through some of the headlines to get a more detailed understanding of how reporting might change based on political bias. I especially like their blind spots feed, which shows stories underreported by either of them. The Political Side of the Spectrum Terrestrial news is a very useful tool for our current media landscape and I cannot recommend it enough.

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