Well, yes, it’s the capitalists who have the capital, d’ye see?

Good to find someone else finally admitting the basics about the water companies:

A sample size of one is small, obviously. But Welsh Water is a reminder that it is too simplistic to think all the sector’s woes can be cured simply by changing the ownership. Boring factors such as access to capital, operational efficiency, technical skill, management accountability and regulatory rigour also tend to matter.

Access to capital. Well, yes, but it’s the capitalists who have the capital, d’ye see?

Which is why water privatisation happened - we were involved in the process, we do know this stuff.

In theory government could have invested in the water works. In reality they didn’t. There was always some union somewhere to pay off, some necessity to spend to win a byelection, that sort of thing. Only when the water companies were privatised was there the necessary flood of capital into the sector. Investment soared after privatisation - the very point and purpose of privatising in the first place.

And, to be simplistic, even simple, about it if more capital is what you want then you’ve got to go where the capital is - the capitalists.

That those capitalists, the shareholders, in Thames Water seem to have lost their money is just one of those things. The effective deployment of capital is, after all, what the system is about.

As and when there is any further change to the system this basic problem will still exist. Where is the capital to come from to continue to upgrade the system? Sure, sure, it’s possible to say government can borrow cheaper and all that. But we have tried this before and government simply didn’t borrow and invest. As proven by the manner that investment, as above, soared after privatisation.

So, what’s the proof that we’ll not get the same result again? A water system with insufficient investment simply because politics always finds other things, more electorally significant, to spend the cash upon?

Tim Worstall