Beware of financial ghouls: Royal Mail is in danger of becoming the next Thames Water, warns ALEX BRUMMER

[TrueBlueTerrier]

https://www.thisismoney.co.uk/money/com ... UMMER.html

Thames Water will be back in the spotlight today when a court is due to rule on whether an emergency £3billion loan from creditors should be allowed to proceed.

An alternative is that the utility company is forced into a special administration regime – renationalisation by another name.

Britain’s biggest water supplier has become a byword for mismanagement with its terrible record on sewage dumping, burst water mains and disruptive roadworks as it replaces Victorian-era pipes.

Despite the hostility, Thames is dissatisfied with a regulatory ruling that will allow it to increase prices to consumers by more than 35 per cent by 2030, and wants more. Average annual bills are due to start rising by one-third to £639 per household from April.

Current levels of government borrowing and debt mean the Treasury is less than enamoured by the prospect of Thames arriving on the national balance sheet. Labour’s return of railway franchises to state ownership is burden enough.

Thames is in deep difficulty because it has been plundered by financial players seeking to extract short-term gains at the expense of consumers, the environment and investment.

It also has been disadvantaged by a regulator, Ofwat, which saw the dangers of overseas financial ownership and tax avoidance too late.

The Treasury, Department of Business and the rest of the Government singularly have failed to understand the danger to the public finances of allowing the ownership of utilities to fall into rapacious financial hands.

Yet a bailout led by Elliott Management and others is infinitely better than putting the company back under state control where it could fester for months, if not years.

All of this is acutely relevant at present. The sale of the listed International Distribution Services (IDS), owner of the Royal Mail, to Czech billionaire Daniel Kretinsky is regarded in Whitehall as benign with Business Secretary Jonathan Reynolds signing it off.

The financial implosion at Thames Water began in a similarly unthreatening way.

Aussie infrastructure investor Macquarie was the winning bidder in an auction for Thames Water’s German utility owner, RWE. It placed a mountain of debt on to Thames Water’s balance sheet. The high cost of servicing that debt and paying dividends starved Thames of investment and put in place a labyrinthine financial superstructure, which is tricky to disentangle.

Royal Mail ownership is being transferred to Kretinsky’s EP Group with the help of £3billion of high-cost loans from overseas banks, adding to an existing debt burden of £2billion.

Unions have been bought off with promises of no redundancies and generous pay deals. Even with disposals, the leverage will leave precious resources for much needed investment in delivery services.

The Royal Mail is in danger of becoming the next Thames Water. Keir Starmer’s government is repeating the same colossal error as a previous Labour regime, which stood by as the nation’s biggest water supplier fell victim to financial ghouls.

[Londonsburning]

Such a predictable modern capatilism trope it's almost laughable these days. RM is finished and it's blatantly happened for benefit of the tiny minority of (already disgracefully wealthy,) to the detriment of the masses.

[tramssirhc]

Renationalisation is the answer. The CWU is barely able to utter the word. In fact Martin Walsh thinks renationalisation is the worst idea for workers.

[Mr Rush]

Renationalisation is the answer.

It's the answer to a question that should never have arisen in the first place. I propose an alternative: Cableisation. Vince Cable must have the business foisted upon him so that he can suffer the consequences of his decision.

[tramssirhc]

Renationalisation is the answer.

It's the answer to a question that should never have arisen in the first place. I propose an alternative: Cableisation. Vince Cable must have the business foisted upon him so that he can suffer the consequences of his decision.

Blair, Mandelson, Prescott, Johnson. They were all at it too.

[Londonsburning]

Renationalisation is the answer.

It's the answer to a question that should never have arisen in the first place. I propose an alternative: Cableisation. Vince Cable must have the business foisted upon him so that he can suffer the consequences of his decision.

Blair, Mandelson, Prescott, Johnson. They were all at it too.

You forgot to add all the Tories before and since Chris. Opposite sides of the same coin

[tramssirhc]

Renationalisation is the answer.

It's the answer to a question that should never have arisen in the first place. I propose an alternative: Cableisation. Vince Cable must have the business foisted upon him so that he can suffer the consequences of his decision.

Blair, Mandelson, Prescott, Johnson. They were all at it too.

You forgot to add all the Tories before and since Chris. Opposite sides of the same coin

The Tories weren't ever brave enough to privatise it. It all starts with New Labour.

[Londonsburning]

Renationalisation is the answer.

It's the answer to a question that should never have arisen in the first place. I propose an alternative: Cableisation. Vince Cable must have the business foisted upon him so that he can suffer the consequences of his decision.

Blair, Mandelson, Prescott, Johnson. They were all at it too.

You forgot to add all the Tories before and since Chris. Opposite sides of the same coin

The Tories weren't ever brave enough to privatise it. It all starts with New Labour.

14 years of austerity has kind of f****d any New Labour shenanigans tbh

[Mr Rush]

Tory rebels thwart Royal Mail sell-off

Michael Heseltine's plans to privatise the Post Office were doomed last night after he failed to win the support of about a dozen Tory backbench rebels for an 11th-hour compromise proposal.
[...]
Each Tory MP in turn was invited to say if he would accept the compromise. Nicholas Winterton, the MP for Macclesfield, said: ``The view of those present was that this was not acceptable and there was a strong feeling that the Post Office should remain within the public sector.
[...]
Kenneth Clarke, the Chancellor, who will also report to the Cabinet, yesterday bemoaned the loss of nerve over privatisation. He said Britain led the world by successfully selling state assets, but privatisation had been "given a bad name'' by water industry managers who had awarded themselves high salaries.

[robking]

Alex Brummer is trying to compare chalk with cheese.
Thames Water has got massive capital expenditure liabilities, What's Royal Mail spending cash for? a few thousand customer collection lockers maybe which will quickly pay for themselves because postmen will spend far less time taking stuff to the lockers than they currently do taking parcels to loads of different front doors and RM can reduce the number of staff.
What else? More electric vans, lorries? they're probably all going to be going that way in the long run anyway.
Thames Water has to replace thousands of leaking pipes, deal with sewerage spills, find more reservoirs and sewerage works for a growing population and deal with climate change.
There's just no comparison.