00:00Critics have described the water industry as a national scandal.
00:05The regional companies were privatised debt three.
00:09Now many are billions of pounds in debt, while their shareholders have received billions of pounds in dividend payouts.
00:17The recent financial crisis at Thames Water has brought the industry back into focus
00:22after ministers challenged a rescue plan that could have left customers carrying more of the cost.
00:30Gosh, we're talking about something called water, the most precious thing that we have.
00:35We can deal with that, most things. Obviously food, we can deal with that.
00:40But water is the thing that we need on a daily basis to sustain life, to grow food.
00:46Of course, as we know, to deal with the washing, ablutions and so on and so forth.
00:54So it's absolutely fundamental to civilisation.
00:57It's something, if you thought about it logically, should remain in the public interest.
01:02But of course, it hasn't done in recent years now. Where do we go back to for this?
01:07Well, of course, water companies start as private concerns and were nationalised way back.
01:11But if I go to Margaret Thatcher, she believed in nationalising public concerns
01:16to make them so more efficient, more effective and so on and so forth.
01:20When water was privatised in England and Wales, the promise was that private ownership would bring investment into an ageing
01:28system.
01:29Since then, companies have borrowed heavily while bills have risen and pollution has come under increasing scrutiny.
01:36Water firms say they've funded major upgrades and that more money is needed to improve services.
01:43Critics say customers are being asked to pay again for problems that have built up over decades.
01:50And of course, as we've seen in sort of recent sort of years, if not for sort of many, a
01:55couple of decades,
01:56many of these so-called public concerns or the ex-public concerns in private hands have not been good for
02:02the sort of the customers,
02:03but have been extremely good for the shareholders.
02:05Which brings us to water, which has been particularly sort of the case where, and if we look at Thames
02:11as a sort of a case study,
02:13yeah, that they're not getting the service that they were promised, but the shareholders have sort of done very well.
02:19All the sort of those equity investors who sort of bought these companies.
02:23Thames water is the clearest sign of problems facing the industry.
02:27It has debts of around £20 billion, and ministers have raised concerns about a near £10 billion rescue plan.
02:36The company is owned through a complex structure involving global investors,
02:41including pension funds, sovereign wealth funds and infrastructure funds.
02:45It says a market-led solution remains the best way forward.
02:50But campaigners and some politicians say public ownership should now be considered.
02:56The difficulty is that sort of, and again, Thames is the case in point,
02:59why doesn't sort of the government just nationalise it all?
03:02Well, the problem is that, A, there are often sort of big debts to sort of take on as a
03:07growing concern.
03:08And so often what's better to do, and of course, shareholders will know this,
03:12wait for it to go bankrupt, and then of course, effectively, you pick up the pieces.
03:15But of course, we're talking not about sort of companies that sort of trade,
03:18if they disappear, someone else will come in.
03:20These are companies which have to continue because, of course, they're providing a statutory service,
03:24and you don't sort of come along and suddenly provide water instantly.
03:28It takes sort of years and years, and of course, lots of investment.
03:32And of course, that's one of the sort of the key problems of sort of privatisation.
03:36We haven't had the sort of level of investment which is consistent with providing a sort of an effective service.
03:42So we're in a case of sort of a state of transition, and I suspect that certainly under sort of
03:47the present government,
03:48this will continue.
03:49But of course, it's hugely problematic because, of course, those people who sort of still have a stake in this
03:54company
03:55would expect to be compensated.
03:57So just taking over is not the sort of the panacea that might sort of claim to be,
04:02because, of course, this government sort of don't have the sort of the huge pots of money.
04:06Of course, they can borrow money.
04:08But of course, that's part of our problem at the moment.
04:10We are sort of over leveraged, and of course, we pay a very high rate of interest on the international
04:15money markets.
04:16So hugely problematic.
04:17And of course, in conclusion, if you want to sort of get to a better state of affairs, you wouldn't
04:22start from here.
04:23But we are where we are.
04:25And as I say, people in sort of London and any other region, but London is a particular case in
04:30point
04:30where you're serving sort of many, many millions of people who expect to have their water supply consistently sort of
04:36provided
04:37and be able to sort of to flush their toilets and hope that it's going somewhere.
04:40Thames Water is not expected to simply collapse in the way an ordinary company might,
04:46because water services must keep running.
04:49If a private rescue cannot be agreed, ministers could place it under special administration,
04:55bringing it under temporary public control while its finances are restructured.
05:00For customers in greater London and indeed across the country,
05:04the wider question is who pays for the industry's debts and upgrades,
05:09investors, taxpayers or households through future bills?
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