Doesn't sound too terrible to me.

From The Guardian:

England's privatised water firms paid £57bn in dividends since 1991

In the past 10 years, the companies have paid out £17bn in dividends and directors’ pay has soared...  According to the analysis by David Hall and Karol Yearwood of the public services international research unit of Greenwich University, the nine privatised companies in England have amassed debts of £48bn over the past three decades – almost as much as the sum paid out to shareholders. The debt cost them £1.3bn in interest last year.

As outrageous as the directors' salaries are, they are robbing their shareholders and not the customer. Whether it's dividends or interest doesn't really matter, it's a legal rather than economic distinction in the context of a utility company with a 100% captive customer base, steady income and known costs. And as far as I am aware, most of the interest payments goes to the parent company, they do it to save a bit of tax.

Dividends and interest work out at about £55 per person per year, assuming 2 people per household and an average water bill of £500 a year, the dividends and interest are over 20% of your water bill.

In relative terms, compared to competitive businesses, this is a staggering amount. For example, Tesco has sales of just under £7 per share and paid dividends of 9p per share (from here) i.e. it paid out just over 1% of its sales in dividends.

But in absolute terms, £1 per week per person is not a lot of money. A sensible government would just impose a lower price cap (£450 instead of £500) while imposing the same standards and costs, so that the owners can only collect £5 from each customer in dividends and interest.

The Neo-liberals will argue that the £55 per person "tax" is worth paying, because bills are lower (or quality and reliability better) than they would have been if water was still nationalised. In other words, foreigners (who own a large chunk of English water companies) are better at running our country than we are. This might or might not be true (I suspect it isn't) but it's difficult to make a fair comparison.

Chris Grayling is very good at his job.

"Nonsense!" shouts the crowd, "He has the reverse Midas touch and turns everything to shit."

I used to think this, up to and including messing up the railway franchises and the ferry contract with the company that owned no ferries, but after reading about his latest debacle (the botched 'privatisation' of probation services), the penny has dropped.

He is clearly bad at privatising things - but his job description isn't 'privatise things well', it is 'privatise things badly', and he is very good at that, a 100% track record so far. And anybody with half a brain must know that you cannot 'privatise' core functions of the state, like probation services, or indeed HM Land Registry.

That is the only rational explanation, people wail about the shocking cost to the taxpayer, but from the point of view of the contractors, the lawyers, the consultants and other middlemen, those are corresponding huge gains.

I assume that with all these things, the recipients make large donations to the Conservative Party and/or offer cost non-exec directorships to senior Conservative politicians, which is the object of the exercise from the point of view of Chris Grayling (and whichever Prime Ministers appointed him/didn't sack him).

Royal Mail's Guaranteed Next Day Taking The Piss Service

Yet again, I have fallen victim to this scam, which will no doubt befall thousands of other people today.

It was a low value item (rear Mazda badge for a fiver) which I need sharpish, and as I have to take today off work anyway, I paid the £7.45 for "Guaranteed next day delivery" i.e. today.

It is a small parcel, so it would have fitted through the letter box, and just in case it doesn't, there's a big sign at the side of our front porch that is not visible from the pavement saying "Please leave parcels here", which other delivery services take literally.

Not the fucking Royal Mail, oh no, they wait until your back is turned for two seconds, sprint up to the front door and instead of knocking or ringing, shove a card through saying "Sorry we missed you, hope you don't mind taking another hour off tomorrow morning to drive to the sorting office and pick it up yourself!"

Apparently they wanted me to sign for it. So this is the Trade Misdescription from Hell. I didn't pay extra to be messed about like this, I paid extra for "next day delivery", which in the ordinary meaning of the words means, er, today.

If you compare the Royal Mail's shitty behaviour with the competing private delivery companies who apply common sense, you can only assume this arrogance is a hangover from the days when there was a state monopoly on parcel delivery and they could pretty much do what they wanted.

They did this to our neighbours recently. Even more bizarrely, their postcard said that the parcel was at house number 99. There is no house number 99 on our road.

"Nationalisation vs privatisation: the public view"

Here's what DBC Reed linked to in the comments to the previous post on the topic (click pics for links):



It's not as revealing as the previous one we looked at:



Discussion here.

Suffice to say, any serious debate about whether something should be run by the government or private businesses doesn't include waffle about the private sector being more efficient or 'customer focussed', they usually are.

The government is pretty crap at running all but the most simple things, agreed.

But would you really want competing private police forces, or competing private land registries?

Some things have to be run by the government. In a proper democracy, we, the people, decides what counts as a crime and what doesn't, and the police are paid to reduce those crimes as much as possible. Not crap like arresting Twitter trolls. That's yer 'customer focus' right there. Would you want one land registry showing you as owning your home but a competing land registry showing that it belongs to somebody else? How would that work?

The other limit of the private sector is where something - if privatised - would lead to blatant rent seeking. Clearly, we can't have competing private land registries, but what if the Tories had really gone mad and privatised it as a monopoly instead? That business would effectively be able to collect Land Value Tax by charging people 'annual renewal fees' and staff would be bribed into transferring titles.

As (I think) Sobers said, there are some things that are better off in the private sector, even monopolies like water - on the proviso that a government regulator imposes serious price caps, quality and environmental standards etc (or in my view, let's them charge as much as they like and tax them at swingeing rates). This applies to all the natural monopolies on the first list (railways and water).

Health and schools are not natural monopolies or the natural preserve of government but there's too much opportunity for rent-seeking. I see no good economic reason for the government to be involved in delivering letters, broadcasting, generating electricity, telephony, banking or airlines. Bus companies are borderline, private companies are fine for long distance but in larger towns they have to be co-ordinated.

Reader's Letter Of The Day

From The Metro, page 18, short and sweet:

Linda, you ask why MPs aren't fussed about the privatisation of public services - they're on the boards of the companies that get given public services to run.

Vanessa, London.

I don't know why this is front page news, though:

Young women who copy the lavish spending of their celebrity idols are spiralling into uncontrollable debt at twice the rate of men their age.

High-spenders aged 18 to 24 mimicking the likes of twice-bankrupt Kerry Katona are most likely to live way beyond their means, official figures show.

Reader's Letter Of The Day

From The Metro (17 June, page 14):

Why are our privatisation-obsessed politicians so happy for our assets to be sold off to state-owned companies from other countries?

Richard, London.

Genius. I wish I'd thought of that.