Thames Water

[paulfromcamden]

I dunno if mergers and acquisitions are necessarily evidence of failure.

I went to North London Poly - itself formed from Northern Poly and North West Poly. Before I left it had become North London Uni. A while later it merged with Guidhall and became London Met.

Plenty of genuine 'fails' along the way - not least having a senior member of the NF as a lecturer!

 

[Seanm]

What’s Labour’s position on privatised water?
https://twitter.com/hewitson10/status/1674542779479781376?s=61&t=novyCm2QooMZoRvqeBbwZg

This does sort of suggest they're colluding with the water companies to make sure snouts remain firmly in-trough:

https://www.standard.co.uk/business/severn-trent-thames-water-nationalisation-labour-b1091238.html

'She writes: “Whilst it is clear Labour will not include nationalisation in its next manifesto, they are also not keen on entering into the election race championing the status quo. The leadership thinks there is room for improvement and, politically, there is significant pressure to ‘do something’ about utilities.”

She adds: “One idea we believe might be attractive to the Labour leadership is re-purposing utilities and utility networks into a new breed of declared social purpose companies – companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view.”

Garfield, one of a handful of female bosses of FTSE 100 companies, warns her colleagues: “The Labour leadership is aware we are soft testing various ideas but have asked us to keep it highly confidential so please don’t forward this email.”'

"Social purpose companies" is pure Blairite flimflam so I'd say it's nailed on.

Crooks, carpetbaggers.

 

[Ponty]

Agree. People on the right argue that markets are self-regulating, but if you remove the element of jeopardy, the self-regulation can’t work and it’s not a true market anymore. There need to be serious consequences for risk taking activity, otherwise it’s all upside and no downside. Why wouldn’t you take that bet, if the upside is profit and the downside is underwritten by government.

Absolutely, why wouldn’t you. I firmly believe RBS was the pivot and cast the (recent) die for failure without consequence. It was the biggest pile of poo one could possibly imagine that’s cost us all an absolute fortune. Still is and probably always will be. Should have burned to the ground IMHO.

 

[gavreid]

I went to North London Poly - itself formed from Northern Poly and North West Poly. Before I left it had become North London Uni. A while later it merged with Guidhall and became London Met.

There will be failures among universities but they no longer run to the old models - which is my point. There have been a fair few 'forced' mergers around the edges and a fair few in some difficulties. I'm not party to the inside info these days. Once they're made to operate like a company, they will fail like companies do.

 

[Jim Audiomisc]

It isn’t an argument so much as an article of faith, faith in the magic of the “invisible hand”!

i.e. "God". Give-away sign of a religuous faith system.

 

[Jim Audiomisc]

That's interesting. I wasn't aware of this. What's the law around what UK pension funds can invest in?

I'm asking because the last few company pensions I had while working in IT gave the employee a reasonably free reign on where they were invested. You couldn't pick individual funds but there were a bunch of options relating to risk and exposure to different sectors.

My current employer's scheme (in the education sector) on the other hand is woefully opaque and no one can tell me what it's invested in - or even how it's performing!

Apologies for the OT tangent.

To a large extent what a Pension can invest in is left as a decison to the people running the scheme. Some also consult members and then consider their views. Mutual types may have to do this as a requirement of how they were set up.

Mine is also 'ed biz' and does publish its overall strategy for members to feedback upon. Indeed, I know it has invested in TW! So I have skin in this game in two ways. Now pays my pension.

 

[gavreid]

https://www.uss.co.uk/news-and-view...2032021_uss-increases-thames-water-investment

 

[Jim Audiomisc]

https://www.uss.co.uk/news-and-view...2032021_uss-increases-thames-water-investment

Ta. Illustrates the problem. Although if you read the figures given and their stated meanings it isn't clear what percentage of the pension fund is invested in TW as one of its 'UK investments'.

However whatever the value, it examples that others in the UK may be dependent on TW for pensions, etc. Thus if the Government simply took over with *no* payment or support for *any* investors it would generate knock-on problems in the UK. Thus lowering the benefit of a takeover with no compensation at all.

So the reality needs some form of 'taking control' that isn't simply paying out to cover all the debts, nor, pfor nowt. Need to distinguish between offshore 'vampire' banks, etc, and UK investors depending on their type.

Government investment in TW to make it competent as a 'water supply body' with an income would make some sense - provided investment is specifically for that purpose and not all eaten by the debts. Needs some careful thought. Alas, not something I expect from a Tory Government.

 

[paulfromcamden]

https://www.uss.co.uk/news-and-view...2032021_uss-increases-thames-water-investment

Aside from "the government has been calling on pension schemes to invest more into the country’s economic recovery" I don't see anything that stipulates pension schemes are obliged by law to invest in UK companies.

Seems like a weird thing for them to say tbh - surely their main obligation is to provide a return to the pension holders, not demonstrating "a commitment to UK infrastructure" (whatever that means)?

And surely the problems with the sector were well known in Dec 2021?

I'm not saying yay! for disaster capitalism - just trying to understand what make USS special in this case.

I get that this is a bit different to, say, my SIPP (which will also be holding TW as part of a FTSE 250 tracker) but it feels like this is on the pension administrators for making a poor investment decision.

 

[gavreid]

And surely the problems with the sector were well known in Dec 2021?

It seems to be the recent inflation that has done for TW

 

[paulfromcamden]

Once they're made to operate like a company, they will fail like companies do.

Completely agree that the running education as a business is problematic. In my workplace the need to chase fee revenue has had multiple suboptimal consequences...

 

[paulfromcamden]

It seems to be the recent inflation that has done for TW

Agreed. But Macquarie's asset stripping was well publicised at the time. Here's a report from 2017. It's been a disaster waiting to happen for years.

The Australian bank Macquarie has left Thames Water with an extra £2bn debt burden, a BBC investigation shows.

The £2bn was borrowed by Thames Water in 2007 and 2010 but used for the benefit of the bank and its investors, which owned and controlled the UK's biggest privatised water company.

https://www.bbc.co.uk/news/business-41152516

I'm still curious to know what demonstrating a commitment to UK infrastructure is all about. Was USS guided towards or pressured into buying into TW?

 

[droodzilla]

Hope this won't affect the USS pension scheme too much. They've only just agreed to reconsider the reduction in benefits they imposed on members, based on a flawed valuation of the scheme during the pandemic.

 

[gavreid]

Was USS guided towards or pressured into buying into TW?

That's how I read it. They were being encouraged to take a higher fraction of stocks and shares if I remember correctly. Anyway too big to fail will apply.

 

[paulfromcamden]

Hope this won't affect the USS pension scheme too much. They've only just agreed to reconsider the reduction in benefits they imposed on members, based on a flawed valuation of the scheme during the pandemic.

I hope so too.

I saw a report that they may be looking at a £1bn write-off if a rescue package/bailout isn't agreed. USS total portfolio is £82bn.

 

[paulfromcamden]

That's how I read it. They were being encouraged to take a higher fraction of stocks and shares if I remember correctly. Anyway too big to fail will apply.

Does make you wonder. This FT report caught my eye last week.

Hunt aims to channel more pension investments into UK companies
Chancellor to use keynote speech to outline how British retirement funds could put more money into riskier assets.

Options to be set out in several government consultations include regulatory changes to encourage UK pension funds to invest more in riskier but potentially high-growth British assets ... Hunt’s plans come amid intensifying concern that British companies are increasingly falling into foreign ownership, in part due to a lack of investment by UK pension funds.

https://www.ft.com/content/8639ccab-ec49-4cd4-a01b-06b87bd9e485

 

[droodzilla]

I hope so too.

I saw a report that they may be looking at a £1bn write-off if a rescue package/bailout isn't agreed. USS total portfolio is £82bn.

Ouch! Yes, that was my impression based on reading that a typical investment is £0.1-1.0 billion, and a total of £82 billion.

Fingers crossed - based on previous experience, USS will look for any excuse to reduce benefits and/or increase contributions.

 

[Jim Audiomisc]

Aside from "the government has been calling on pension schemes to invest more into the country’s economic recovery" I don't see anything that stipulates pension schemes are obliged by law to invest in UK companies.

Seems like a weird thing for them to say tbh - surely their main obligation is to provide a return to the pension holders, not demonstrating "a commitment to UK infrastructure" (whatever that means)?

And surely the problems with the sector were well known in Dec 2021?

I'm not saying yay! for disaster capitalism - just trying to understand what make USS special in this case.

I get that this is a bit different to, say, my SIPP (which will also be holding TW as part of a FTSE 250 tracker) but it feels like this is on the pension administrators for making a poor investment decision.

The issue isn't USS being a 'pension fund'. It is that causing them to loose out will then have negative impact on the *UK* economy. Overseas bankers and the ultra-wealthy aren't our problem. Our concern is that damage to UK pension funds will cost us all if we accept that cost like dumb bunnies.

Pensions are generally required to go for the demonstrated steady return on investment. It is for UK *Governent* and regulators to check and ensure that companies are doing what is required, and ensure they report accurately and honestly.

That the companies have ducked and dived and got away with it is a matter of Government failure in terms of regulation.

 

[Seanm]

This does sort of suggest they're colluding with the water companies to make sure snouts remain firmly in-trough:

https://www.standard.co.uk/business/severn-trent-thames-water-nationalisation-labour-b1091238.html

'She writes: “Whilst it is clear Labour will not include nationalisation in its next manifesto, they are also not keen on entering into the election race championing the status quo. The leadership thinks there is room for improvement and, politically, there is significant pressure to ‘do something’ about utilities.”

She adds: “One idea we believe might be attractive to the Labour leadership is re-purposing utilities and utility networks into a new breed of declared social purpose companies – companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view.”

Garfield, one of a handful of female bosses of FTSE 100 companies, warns her colleagues: “The Labour leadership is aware we are soft testing various ideas but have asked us to keep it highly confidential so please don’t forward this email.”'

"Social purpose companies" is pure Blairite flimflam so I'd say it's nailed on.

Crooks, carpetbaggers.

LOL at the Guardian’s reporting of Labour’s back door dealings with water bosses:

https://www.theguardian.com/busines...arfield-thames-water-labour-renationalisation

Unsurprising given the involvement of idiotic Blairite Will Hutton.

 

[Jim Audiomisc]

I suspect other funds will be in a similar - or worse - position. Some of them may be far smaller than USS and hit much harder. Againg, why I am making the point about this needing to be taken into account by Government. In essence, we need the hit to be directed to those abroad who engineered the 'vampire' for them to suck their own gains.

Thus having a National control of WT *not* a total Nationalisation+ownership that sticks us all with all of the cost as the Vampire overseas laughs on their way off with fat wallets.