Boring times ahead

The water industry is going to come under the spotlight with an enquiry into its performance and its regulation. And about time.

As the environment secretary told the FT this morning “The whole water sector has failed. They failed the public, they failed their customers, they failed their investors and they failed the environment.” 

None of this would have been possible if the sector had been properly regulated, but it wasn’t. The mess is a blot on the nation’s reputation for competence and it is going to take years to fix.

The industry needs much stiffer regulation, much higher environmental standards, real punishment for bad management and yet it also needs far more investment.

Squaring that circle is very difficult not least because the government seems to be ruling out nationalisation as a possible solution.

So what really needs to happen is for the industry to be owned by long term investors who accept low but very ,very steady returns. That means the type of owners that have bought into the industry, taken advantage of slack regulation and bled the industry dry need to be banned in future.

The water industry is something for pension funds to invest in, not private equity, hedge funds and asset strippers.

Boring is good for the water industry, a future in the shadows would do us all good.

Jonty’s Jottings

Economics, trade and Brexit, not necessarily in that order but the dog always comes first.