Water owners failing Britain: Put our public utilities back on public markets, says ALEX BRUMMER
Among Rachel Reeves’ favourite themes is to ask why UK pension funds can’t be more like Canadian and Aussie counterparts by investing in Britain. The Chancellor has a point.UK pension funds have fled Britain and own just 4 per cent of the listed stocks in London. Managers use tax reliefs, ultimately funded by higher-rate taxpayers, to lavish cash on Wall Street, in the Pacific... anything but Britain.Residents of Sussex and Kent, including a family friend living in Tunbridge Wells, likely will have a very different view of ownership of South East Water.Negligence of those at its top by governments and Ofwat (possibly the most useless regulator in the UK) means water and sewage services – except for a handful of listed companies – operate a highly financialised, debt-fuelled model.Consumers are treated as cannon fodder. Up to 30,000 homes in East Grinstead, Tunbridge Wells and other havens of genteel living continue to be, or have been, without water supply since the weekend. Wash out: Britain's water and sewage services – except for a handful of listed companies – operate a highly financialised, debt-fuelled modelA friend visiting Tunbridge Wells found himself caught in a terrible traffic tie-up. It was caused by ordinary citizens queuing for cartons of bottled water.A text from a Tunbridge Wells acquaintance reports she has no water, her kids’ schools are closed and doctors and hospitals are in trouble.It turns out that South East Water’s largest investors are the Utilities Trust of Australia, a Canadian pensions outfit and our home-grown NatWest pension fund.It is never that simple. An infographic of the ownership structure is enough to make one dizzy. The principle is broadly the same as in other financialised ownership models. Big rewards for directors and dividends (and interest payments) to the owners alongside gross underinvestment. South East boss David Hinton earned £405,000 in 2024 and £515,000 last year, including a substantial bonus.As consumers suffer discoloured water and unexplained cessation of supply notices, dividends and interest payments flow overseas.Ofwat says it is conducting a probe of this and previous disruptions. But one doesn’t need an investigation to know that the company has a rotten leakage record and cash – which should be devoted to renewing pipes and sewage treatment – is draining out of the back door.The sooner our utilities are returned to the public markets, where they cannot escape transparency and accountability, the better it will be for everyone.Green wasteMaybe Energy Secretary Ed Miliband should take a close look at BP before committing great dollops of taxpayer money to his gold-plated green ambitions.In the latest writedown of its now abandoned swerve towards a low-carbon future, BP has revealed a hit of up to £3.7billion on its green assets. Together with previous impairments, the cost of former chief executive Bernard Looney’s attempt to embrace the climate change zeitgeist has now reached £15billion. As a longstanding shareholder, I find it irritating beyond belief, but understand equities are a risk asset.One wouldn’t want to see hard-earned tax revenues wasted in the same way.The current standard at Shell, which demands the comparable returns for zero carbon assets as fossil fuels, is a sensible approach, rooted in market values.It is not entirely clear who the puppet master at BP is at present with a temporary chief executive in Carol Howle in charge. Some of the radical decisions taken, such as the sale of Castrol, bear the fingerprints of chairman Albert Manifold.He has adopted the same kind of interventionalist stand as Archie Norman at Marks & Spencer, until he felt ready to cut chief executive Stuart Machin some slack.Pru choiceFilling the chairman’s seat at Asia and Africa-focused UK insurer Prudential has been tricky. The group has now settled on veteran HSBC hand Douglas Flint, who is moving on from fund manager Aberdeen.Predecessors Paul Manduca and Shriti Vadera, who he replaces, sensibly opted to maintain a London listing, out of the direct line of fire from Beijing.May it continue!DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
