Bluffing the bluffers
Yesterday the annual figures for foreign direct investment in the UK came out, and got not very much coverage. But they show that foreign firms invested 6% less in the UK over the last year and that brings the total drop since Brexit to 30%.
A country like the UK which desperately needs foreign firms to invest here to improve productivity and employ people cannot afford such losses.
Unfortunately some firms that come here also seem determined to rip money out of the country and do nothing in return, the UK can not afford that either.
So today Thames Water is claiming that its ageing water network poses a ‘risk to public safety’ and needs £19 billion of investment. That the threat to water supply is real, rotting main pipes mean basement flats across the capital are at risk of flooding and there could even be an outbreak of poisoning as treatment plants are old and under strain.
This is, of course, total tosh. Thames is desperately trying to keep from going bust and it is therefore pressurising its regulator Ofwat to allow it to increase bills. The questions this raises are immense.
If things are that bad why didn’t Thames invest more earlier?
If things are that bad why didn’t Ofwat make Thames invest more earlier?
Why the hell should Thames customers pay more when the company has been hollowed out by its foreign owners for decades?
Why the hell didn’t Ofwat stop Thames being hollowed out by its foreign owners for decades?
And perhaps most importantly if the current management of Thames has suddenly discovered things are this bad why are they still in a job, getting bonuses and pretending that only they can steer the company to safety?
In the real world Thames Water’s attempt to game the regulator would lead to its destruction. If things are that bad it should be put in emergency measures, taken over by Ofwat, allowed to fail and real managers brought in. Its lenders should lose their money, its shareholders should too.
Either Thames has overplayed its hand or it really does have the whole country over a barrel. No country can afford to mess with its water supplies, water is far too important, and cheap safe and reliable water is not only essential for life, it is also the bare minimum required to attract foreign companies to the UK.
Thames must be assuming that a new Labour government will put up with this blackmail, just like the last one has.
It would send just the right message to the world if instead they called the company’s bluff.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media
Cf Northern Rock?