Correct me if I'm wrong

Apparently the PM has sent his business advisor, a retired banker, to help facilitate the negotiations between OFWAT and Thames Water, and its numerous holding companies.

Thames is in danger of going bust, which considering it is a monopoly supplier of water, without which no one can live, it a pretty damning indictment of its management and the owners.

But the management and the owners are playing hard ball. The owners will put more money into the company, but only if OFWAT agrees to hike bills for millions of customers, while lowering environmental standards so Thames isn’t fined as much for pumping raw sewage into our rivers and seas, and only if shareholders still get paid dividends.

What Rishi Sunak’s banking mate has to do at these meetings is beyond me. Thames is a private company, in a free market economy, with certain standards to maintain.

If it can’t make a profit, its shareholders don’t get paid, full stop. If it cannot repay its debts its lenders lose their money, full stop.

There seems to be some concern that the government, by which we mean the tax payer, will become liable for the debts. I am not sure why, we are not liable for Sainsbury’s debts or JLR’s, but if we are then that means not only is Thames broke but it has managed to go broke even when there was an implicit guarantee to its lenders that the state would underwrite their losses.

Since the state is apparently already liable for these debts, nationalising the company shouldn’t make much difference.

The real and only reason that these talks are dragging on at all is that the Tory government is embarrassed and ashamed that a keystone privatisation has come to this. It will fight to stop re-nationalising Thames just to save face whatever the cost to the taxpayer and Thames’ owners know that.

Sending your personal advisor to chair meetings is therefore an appalling sign of weakness and an admission that Thames can push for more and that they will get it.

I thought capitalism didn’t work like this. That free of the dead hand of government it would thrive or die and if it failed another company would emerge to do it better.

But apparently not, the government is so scared it is helping Thames get round OFWAT, pollute our rivers, force up our bills and still pay dividends.

All to save face before a general election.

Any responsible government would cut Thames adrift, let it go bust and pick up the pieces.

Then either run it as a profitable state owned industry or privatise it again but this time with rules in place to stop it being squeezed dry by foreign shareholders.

Or did I misunderstand Thatcherism all these years? Surely privatisation isn’t just a way to privatise profit and keep the taxpayer liable for the losses and debts?

Thames Water is the answer.

Jonty’s Jottings

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

By Jonty Bloom Media