Enshittification (thanks Cory Doctorow for that word!) turns out to be the perfect way to descibe what has happened to Thames Water since its privatisation. Some 30 years ago water companies were privatised. Since then they've racked up some £60 billion of debt whilst increasing the shit in our river and seaside waters.
The water companies' multi-layered corporate structures have meant they can minimise which bits of their business are subject to OFWAT regulation whilst receiving "internal dividends". Total spending on infrastructure has also failed to rise significantly.
In last Thursday's announcement Thames Water has basically said its shareholders will now not provide £750m of new equity funding, (£500m of which was due to appear 31/3/24). Basically their explanation for this failure is that their business plan, underpinning such new equity, assumed appropriate regulatory arrangements, which have not been forthcoming from OFWAT, rendering the business plan uninvestible.
Unsurpisingly the Thames Water announcement doesn't explain that the regulatory concessions they were seeking included consumer's bills rising 40%, easier capital spending requirements and more lenient regulatory penalties.
So the essence of this story is as follows. Privatising state owned monopolies doesn't lead to more investment or better management. It does lead to large payouts to private owners, poorer services to customers and more damage to the environment. And the beauty of all of this for the private owners is that, having privatised profits, if the profits/returns dry up, then the owners can simply walk away, effectively nationalising any losses.
Presumably the Conservatives are praying to the Gods of the market that Thames Water doesn't fail before the forthcoming election.
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