Tag Archives: dividend

Sewage-dumping water company pays dividend bigger than its profits. What?

Clean water: but in United Utilities’ catchment area, the money seems to be as dirty as Lake Windermere.

This should be self-explanatory.

But does the payout make any sense to anybody at all?

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We’ve been told lies about Thames Water’s profits – and the cost of cleaning the sewage

This is now proved true: in a bid to save privatised water firms’ profits, the Tory government is asking them to spend less money on cleaning our water than is needed to do the job. You will drink dirty water; it will make you sick.

Earlier today, This Site reported that Thames Water – the privatised water firm that is in danger of collapse – has not paid any dividends to shareholders in six years.

That was the best information available to This Writer at the time.

However, new information has come to light:

Economist Richard Murphy has examined the finances of all the privatised water companies, and has come back with several conclusions:

  • Their operating profit margin is a staggeringly-high 35 per cent. From this, we may conclude that there is no reason for Thames Water to be in danger of insolvency.
  • Every single penny they have made in profit has been paid out to shareholders in dividends. None was reinvested in infrastructure or equipment (borrowing paid for equipment and the infrastructure was ignored). So Tories like those on the BBC’s Politics Live on June 28 were wrong when they said money has been invested in improving infrastructure. We can’t say they were lying because they may have been misinformed, but someone definitely lied to them.

Mr Murphy’s conclusion on this is stark: “The public is being fleeced by these companies who are simply treating the fact that the English consumer has had no choice as to who to buy water from as a means to extract profit from them.

But that’s not all!

  • The industry has made investments – £77bn on equipment, the rest on other financial investments. This has been funded mostly by borrowing, with £13bn coming from shareholders. This means the claim (when water was privatised) that private capital would fund water after privatisation was nonsense gibberish; it is being funded by borrowing.
  • Mr Murphy’s figures show £13bn invested by shareholders, who have received £25bn in dividends, meaning that for every pound they have put into the industry, they have received nearly two pounds in return.

Finally:

  • It is clear that the water companies are environmentally insolvent. This means their business structures are not sustainable in terms of reducing pollution and if they are made to put in the necessary money to do so, they will go bankrupt.

What this means, of course is that the water firms have been polluting the UK’s waterways to a staggering extent. I’ll republish the part of Mr Murphy’s thread that covers this, so you have it straight from the horse’s mouth:

In simple language: because they decided to take their massively-overinflated profits for themselves rather than invest them in improving the sewage system, the water companies and their shareholders have created a problem that will cost £260 billion to solve – and if they are made to shell out that money now, they will all go out of business.

The government is therefore asking them to pay slightly more than one-fifth of that amount – but as a result, your water supply will be polluted by the sewage and other rubbish that the water companies have pumped into the ecosystem.

This means the Conservative government – and you need to bear it in mind if you have a Tory MP – has said that it is happy for you to be made ill by polluted or infected water, in order to allow privatised water firms to continue making a profit.

The answer to all this, of course, is re-nationalisation.

Ah, but the government says this is too expensive, because of the cost of buying out the shareholders!

Is it, though?

Mr Murphy says no compensation should be offered to shareholders at all, because they have behaved in an irresponsible way that means it will cost more money to fix the problems they have created than they originally paid to own their parts of these firms.

He adds that providers of loans to the water firms may have to take a hit as well, because they made bad decisions in lending to these companies.

The Tories in government are unlikely to accept this because, even though it is in line with a basic principle of business that if you invest in something unprofitable, you lose money, it diverges from their strategy in privatising water in the first place: that the profits would go to private shareholders and it is the losses that will be paid for by the public and customers.

Mr Murphy makes another excellent suggestion – which is that, because the water industry will need to be supported with borrowed funds, it should issue water bonds to the public via ISAs. You could save in a way that ensures we get clean water in the future.

I appreciate that this is a lot of information but it is very important information that could affect your health, and that of your family and children in the future.

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Should water firms charge an extra 40% to tackle the sewage crisis?

You pay for their bad decisions: the privatised, profit-driven water firms have had more than 30 years to fund the restoration of the UK’s crumbling sewage system but instead they have given £72 billion to investors and pumped our effluent into the environment. Now they want to increase our bills by almost half to fix the problem they have created. But where will the money really go?

It looks like the UK’s privatised water firms are trying to sell us down the river again.

They want to add an extra 40 per cent to our bills, saying that’s what it will cost to clean up the sewage crisis they have caused by neglecting the UK’s crumbling system of sewage pipes.

Here’s a report about it, broadcast early in the morning of Wednesday, June 28, 2023:

It’s true that Thames Water boss Sarah Bentley has quit her job, that was worth £1.6 million a year to her, even before she got anywhere near the bonus she received (that she has already given back amid anger over the firm’s poor performance over sewage):

We don’t know how much her bonus totalled but last year she received £496,000.

Unlike many of the water firms, it turns out that this was much more than Thames Water shareholders received – they haven’t had a payout in six years, possibly because the business seems about to go down the pan:

Thames Water is an unusual case, though; since privatisation in the late 1980s, water companies have paid out £72 billion to shareholders.

Should this money have been invested in restoring the crumbling system? Has such investment been watered down to give a fast return to investors?

Panellists on the BBC’s Politics Live thrashed their way through these murky waters in two debates, when it seemed the Tory panellists, Bob Seely and Johnny Mercer, knew why this disaster has happened, but the left-wingers had the solution to it. See for yourself:

The funding system certainly seems to be sending our money down the drain.

But isn’t that because water is not appropriate for privatisation and is, as Mr McKenna suggested, a racket?


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Why are private rail firms paying shareholders so much profit when they’re so far in debt?

Mick Lynch: he knows what he’s talking about. What a pity his interviewers can’t say the same.

Have a gander at this video clip, courtesy of the TUC – if you can get past the bizarre behaviour of the interviewers.

To me, it seems a very strange way of running a business.

If a firm is making a loss, it seems very strange behaviour for a national government to subsidise it – especially if it is still handing over huge amounts in dividends to shareholders.

That money should be covering the firm’s losses, shouldn’t it?

No wonder Mick Lynch’s union members haven’t had a pay rise in four years – and I’m willing to bet it was a pittance then!

Some might say low wages are better than being unemployed – but if these firms are being parasitised by fatcat investors, then by rights, they should be closed down and the bosses (and the investors) prosecuted for misuse of public funds.

Or so it seems to me.

Perhaps the government believes that the railways must continue running – but in that case, the obvious answer presents itself. It’s one that Mr Lynch himself points out the government has used.

Re-nationalisation.

Then there would be no shareholders to take dividends that should be invested.

Am I mistaken?


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Union condemns Department for Transport over privatised rail firm dividends

Scam: rail firms (for clarity, the train in the picture is not run by one of the companies in the story) are being protected from the consequences of strike action with public money that is being used to pay shareholders. Meanwhile, workers’ pay demands are ignored and services cancelled.

Tory priorities.

It seems the Conservative government has happily green-lit the payment of £82 million in dividend payments to shareholders in two privatised rail companies, while refusing to accept the pay demands of thousands of people who actually work on the railways:

From the article:

Transport Secretary Mark Harper has allowed two private rail companies to be paid £82 million in dividends in 2022.

This is the despite the fact both companies are part of a major industrial dispute where hundreds of millions of pounds has been used to indemnify them against lost revenue from strike action.

FirstRail Holdings Ltd, the holding company for five FirstGroup franchises, and Govia Thameslink Railways, which runs the biggest franchise in Britain, have recently reported dividend payments of £65 million and £16.9 million respectively in their annual accounts for 2022.

Two of First Rail Holdings Ltd’s franchises, Avanti West Coast and Transpennine Express, have been the subject of public and political controversy after cancelling hundreds of services. In spite of this, the government has renewed or extended contracts for Avanti West Coast and may shortly do the same for Transpennine Express.

Govia won a contract to carry on running the Thameslink, Southern and Great Northern franchise from the government in October 2022 despite its sister company LSER being stripped of the Southeastern franchise for concealing public money.

The DfT allowed Go-Ahead Group to conduct its own internal inquiry into the failings at LSER and renewed Govia’s contract for the Thameslink franchise in spite of the fact that the two companies shared many of the same management personnel.

All these franchises have benefited from indemnification worth hundreds of millions of pounds in taxpayers’ money by the DfT to cover the costs of lost passenger revenue during the ongoing dispute.

RMT General Secretary Mick Lynch said: “The DfT is now little more than a representative of big business, geared to turning tax revenue into shareholder dividends.

“If you’re a private train operator, it doesn’t matter whether your problem is unpredictable passenger revenue, costly train leases or industrial action, the Secretary of State is there to help, opening the public purse and emptying it into shareholders’ pockets.

“This system is not operating in the interests of passengers, railway workers or the taxpayer.

“It is clear that only full public ownership of train operation in this country can save our railways from being looted by this gang of unaccountable spivs.”

Here’s an English-language explanation of what can only be described as a Tory-run scam:

It would be cheaper to bring rail back under public ownership all around – and that includes paying rail workers what they demand.

The RMT has no strike days currently planned after the government put a new pay offer on the table – but that doesn’t mean its workers will accept any such offer as fair.

Meanwhile, the government has been ring-fencing the failing rail operators against strike action – using public money. That’s your money.

It would be better to let the privateers fail, take the railways back into public ownership at low cost and pay the workers. The Tories aren’t doing it because they want to keep workers poor and pay the idle rich who do nothing for their wealth.


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Johnson’s sanctions hesitation lets Russians make $423 million AFTER invasion of Ukraine

Let the money flow, says Johnson: it’s all going into the pockets of his Russian friends – at a time when Western governments are supposed to be cutting off the flow of money into Russia.

File this under: evidence that Boris Johnson is an asset of the Russian government.

Four Russian-born oligarchs have raked in $423 million in dividends on shares in Russian companies on the UK stock exchange, after the UK imposed sanctions on Russian firms.

How were Roman Abramovich, Alexander Abramov, Aleksandr Frolov and Alexander Nesis able to have the payouts from Evraz and Polymetal? Simple.

Those firms weren’t on Boris Johnson’s list of those to be sanctioned.

In total, the four named billionaires have received $4.5billion (£3.4billion) in payouts from the FTSE100-listed Russian commodities giants since the Tory government of the day failed to act decisively on them after Russia annexed the Crimea in 2014.

None of the four billionaires have been sanctioned either.

It seems Boris Johnson – and his government – deliberately pretended to be imposing heavy sanctions while doing nothing of the sort… wouldn’t you agree?

Source: Oligarchs take £3bn in dividends from Britain | This is Money

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UK government spending watchdog confirms what we already knew: There really is NO BREXIT DIVIDEND

The Leave campaign infamously claimed Brexit would result in a £350m a week dividend for the UK.

This is not news.

We’ve been saying this ever since the stupid ‘Brexit bus’, with its lie that £350 million per week would become available for the NHS, was first rolled out.

And the Institute for Fiscal Studies made it clear that there is no ‘Brexit dividend’, exactly one month ago – as reported by This Site here.

It isn’t even news that known liar Theresa May has used the Leave campaign’s lying ‘Brexit dividend’ claim to lie to the country again. What else are we to expect from a liar?

The Government’s official and independent spending watchdog has confirmed that there will be no “brexit dividend” for the UK, despite the claims of ministers.

Theresa May said last month that the extra £20bn a year pledged to fund the health service would be partially paid for by UK money no longer being sent to the European Union.

That claim was universally slammed by economists as grossly misleading, since the Government’s own projections suggest Brexit is already weakening the public finances, rather than strengthening them and that any fiscal gains from zero EU payments will be wiped out by feebler tax revenues.

The Government has also already earmarked much of those net £13.3bn a year EU budget payments for other major spending items such as support for farmers and science.

And on Tuesday the Office for Budget Responsibility, established in 2010 to provide authoritative and independent fiscal forecasts for the Government, confirmed that no Brexit boost for the public finances is expected.

“Our provisional analysis suggests Brexit is more likely to weaken than strengthen the public finances overall,” the OBR said in its latest Fiscal Sustainability Report.

Source: ‘Brexit dividend’ for health service a myth, Government’s official spending watchdog confirms | The Independent

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Theresa May’s 70th birthday present for the NHS: A big, fat funding LIE

Unconvincing: Theresa May couldn’t make her announcement seem realistic, even under the friendly interrogation of Andrew Marr.

UK prime minister Theresa May has said the National Health Service in England is to receive a funding boost of £20 billion a year by 2023, with money from a so-called ‘Brexit dividend’ and a rise in taxes.

She said: “There will be that Brexit dividend. We will have that sum of money that is available from the European Union.”

There’s only one problem: Like most things she says, her promise is a big, fat lie.

For a start, there is no Brexit dividend.

If you’re a Tory, or a Leave supporter, this may be hard to accept at face value. Let’s have an educated opinion on it – from Paul Johnson, director of the financial think tank, the Institute of Fiscal Studies:

Here he is on the BBC’s Daily Politics, explaining the facts to a reluctant Sarah Smith:

There is no Brexit dividend; Theresa May lied. Are you happy with that?

The Patients’ Association isn’t. It responded, “A giant sticking-plaster is still a sticking-plaster.”

The IFS itself said the NHS needed an increase of more than four per cent per year to modernise; any less would be treading water. It is getting 3.4 per cent.

Here’s another thing: Theresa May has said there must be “efficiencies” alongside the new money. Why? The NHS has already been pared to the bone and there is no more efficiency to be squeezed out of it. In fact, the reason extra funding is required is that her government’s ruthless cuts and introduction of profit-grubbing into the UK’s healthcare system has made it more inefficient.

And she has refused to say which taxes will rise to pay for her mythical spending splurge – possibly because this is the only part of the announcement that might actually come true; the promise of more and better service hides the threat to take more money from a population that has already been squeezed hard over the last eight years.

Mrs May said only, “We will be contributing more as a country.” As a resident of Wales, I find this extremely disturbing as the funding increase is said to be for the NHS in England only.

I see no reason why the other parts of the UK – Scotland, Wales and Northern Ireland (what will the DUP think of this?) should pay for funding increases that will not benefit them.

So why make this rash, and completely false, claim?

Simple: Theresa May needs to talk up the benefits of Brexit.

Her EU Withdrawal Bill is returning to the House of Lords for further consideration over the next few days, after Mrs May lied to her colleagues in the Parliamentary Conservative Party in order to prevent a rebellion that would have harmed her as a credible prime minister.

Without any factual benefits to talk up, she has latched onto the biggest lie told during the EU referendum campaign – that, after leaving the European Union, the UK would be able to spend £350 million more, every week, on the NHS.

Her current offer is even more – £394 million a week – but that doesn’t really matter because she is lying.

She has invented a fake boost to the National Health Service in just one part of the UK in the long term, to generate a short-term lift for her government and to hide an increase in taxes – most likely for the poor majority of the population, rather than the obscenely rich minority in whose interest she governs.

It is not a birthday present for the NHS – it is the foretelling of a further theft from us.

This announcement, like Mrs May herself, is nothing but a mealy-mouthed con.


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Peter Oborne is right to support the 50p tax rate

140127oborne

… but wrong about many, many other matters.

The Torygraph‘s chief political commentator was right to come out as a supporter of Ed Balls’s pledge to raise the top tax rate back to 50p in the pound.

He was right to say it was “profoundly shaming and offensive” for Conservative voters – especially those who are not super-rich – when George Osborne lowered the top rate to 45p, two years ago.

He was right when he wrote that “to make the rich richer at the same time as making the poor poorer – what George Osborne has been doing – is simply squalid, immoral and disgusting.

“Any decent human being must surely feel sick in the stomach that he is taking this action at the same time as cutting the amount of tax paid by people earning more than £150,000.”

To that, let’s add a point about the kind of people who are benefiting from the lower tax rate – the kind of people who take home around £1 million a year in basic pay, who are promised bonuses of up to twice those yearly salaries, and who caused the financial crisis that has allowed Osborne to pursue his policy of impoverishing the poor.

That’s right: George Osborne’s 45p tax rate is a £100,000 extra bonus, every year – in gratitude for all their help, one must presume – for bankers.

Oborne is also right to say that Labour’s decision in the 1970s, to impose a top tax rate of 83p in the pound, was a huge mistake – for whatever reasons. It genuinely drove people out of the country, whereas at 50p they just grumble and threaten to go.

All of the above being said, Oborne continues to espouse some utterly wrong-headed nonsense. He claims that “the Conservative Party is not an interest group which represents only the very rich” when all of its actions since getting into office in 2010 demonstrate ample proof that a minority group representing only the very rich is exactly what it is.

Oborne actually puts in print: “The Coalition government has devoted a great deal of effort to lowering the living standards of the poor. I support this project.”

It’s great to see a Tory voter actually admitting this, but imbecilic behaviour for a columnist who (one presumes) wants people to respect his point of view.

He goes on: “I believe that Gordon Brown’s welfare state forced some people into a life of dependency… There have been many people on welfare who need much more of an incentive to return to work.”

Wrong, wrong, wrong.

The reason many people are without jobs and claiming benefit is, there are almost five jobseekers for every job. This is a situation created by the Tory-led government in order to keep wages low; with so many people clamouring for jobs, people who do have work but are on the bottom rung of the employment ladder can’t ask for a raise – they would be jettisoned and replaced by a jobseeker (most likely on lower basic pay than the original holder of the job).

Nobody was forced into a life of dependency by Gordon Brown; the vast majority of unemployed people genuinely want to improve their situation with a job that allows them to avoid claiming benefits – and it is good that the Labour Party, if returned to office next year, will work hard to bring the Living Wage into force for all working people.

You see, Mr Oborne and his ilk conveniently forget that the vast majority of people whose living standards have been hit by the Tory war on the poor are in work. They are so poorly-paid by George Osborne’s corporate friends that they have to claim tax credits – or, as I like to call them, Employer Subsidy – and housing benefit – otherwise known as Landlord Subsidy.

That’s improper use of our tax money. We should not be subsidising fat corporates with our hard-earned taxes, so they can deliver ever more swollen dividends to their shareholders; and we should not be subsidising greedy landlords who charge multiples of what their properties are worth to tenants who have nowhere else to go if they want to keep their pittance-paying job.

It is valid to criticise Gordon Brown for allowing this to happen, but who knows? Maybe this figurehead of neoliberal New Labour was using tax credits as a stop-gap, intending to persuade corporate bosses round to the Living Wage in good time. We’ll never know for sure.

There remains a strong argument that government schemes to get people into work should have checks and balances. As underwriters of these schemes, we taxpayers need assurances that the firms taking part will not abuse their position of power, using jobseekers until the government subsidy runs out and then ditching good workers for more of the unemployed in order to keep the cash coming. That is not a worthwhile use of our cash.

We also need assurances that participants won’t drop out, just because life on the dole is easier. I was the victim of several personal attacks last week when I came out in support of Labour’s compulsory job guarantee, because they hated its use of sanctions. I think those sanctions are necessary; there should be a penalty for dropping out without a good reason.

In a properly-run scheme, those sanctions should never be put into effect, though. That means that any government job scheme needs to be driven, not by targets but by results.

Look at the Welsh Ambulance Service. Targets imposed by the Welsh Government mean that ambulances are supposed to arrive at the scene of an emergency within eight minutes – even if they are 20 minutes’ fast drive away, on the wrong side of a busy city like Cardiff, when they get the call. This means the Welsh Ambulance Service faces constant attack for failure to meet targets.

But what kind of results does the service achieve? Are huge numbers of Welsh patients dying, or failing to receive timely treatment because an ambulance arrives a minute or so after its target time? No. There will, of course, be some such occasions but those will most likely be the result of many contributory factors.

So: Results-driven schemes will put people into jobs and improve the economy; there is no need to impoverish the poor; the very rich never deserved their tax cut; and Ed Balls is right to want to re-impose the 50p rate.

The Conservatives are wrong to attack poor people; there is no need to impose further cuts on social security as part of Osborne’s failed austerity policy; and these things show very clearly that the Tories are a minority-interest party supporting only the extremely rich.

In the end, I find myself agreeing with one more comment by Mr Oborne; Ed Balls really has “given ordinary, decent people a serious reason for voting Labour at the coming election”.

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Social mobility? The Coalition’s flag should be the ‘Old School Tie’

It's not what you know - it's who: This is the only ticket to upward social mobility in David Cameron's Britain - an Eton tie.

It’s not what you know – it’s who: This is the only ticket to upward social mobility in David Cameron’s Britain – an Eton tie.

Congratulations to Alan Milburn for completely destroying the Coalition government’s ‘Making work Pay’ policy.

It was always critically flawed, of course – how could it not be? It was based on the idea of reducing the money available to people on benefits, in order to make the amount taken home by working people seem like more.

Meanwhile, the real winners were company bosses and shareholders for whom the line ‘Making Work Pay’ is a complete misnomer. A shareholder takes home dividends after investing in a company. Such a person doesn’t do any work for that money at all!

Mr Milburn’s study focuses on working parents, according to the BBC’s report. This makes sense because social mobility is historically based on a child managing to achieve more than a parent.

For decades, Britons have been able to say, proudly, that each generation has been better-off than the last; now, the Conservative-led Coalition has reversed that trend. Working parents simply don’t earn enough to escape poverty and two-thirds of poor children are now from families in which at least one adult has a job.

Falling earnings and rising prices mean the situation is likely to worsen – and what the report doesn’t say (but we can infer), is that this is an intended consequence of government policy. David Cameron will not be thanking Mr Milburn for pointing this out.

Mr Milburn has recommended diverting money currently used to provide universal benefits to pensioners, so that the richest senior citizens would lose their free TV licences and winter fuel allowances, in order to relieve the burden on the poorest families.

But Mr Cameron, who knows that pensioners are more likely to vote than younger people (including working parents), won’t accept that. A spokesman told the BBC those benefits will be safeguarded until after the 2015 general election – in order, we can infer, to ensure that pensioners will vote Conservative.

At least this admission makes Cameron’s reasoning clear!

Some have chosen to lay the blame on Education. That’s right – with a capital ‘E’. Apparently, although Tony Blair was right to put the emphasis on education back in 1997, people just haven’t been interested in taking it up, along with the massive opportunities it offers to attain a comfortable life.

That just doesn’t ring true. Look at Yr Obdt Srvt. I left school with nine GCE ‘O’ Levels and three ‘A’ levels, went on to get a degree and then went beyond that to get a post-graduate qualification in Journalism (making me one of the few news reporters, these days, to have one).

I have never received more than poverty wages – even when I was editing a newspaper. But the effect I have on my surroundings is completely disproportionate to the money I have received – I recently wrote that when I left my last full-time newspaper job, that paper lost £300,000 per year as a result (according to my sources). This very site is currently rated 16th most influential political blog in the UK.

Yet I am as poor as a church mouse!

So Education is not the culprit – and putting teachers on performance-related pay is to chase Education up a blind alley. How would Special Needs teachers benefit from such a system? All pupils have a range of abilities and no two are the same, so how can performance-related pay ever be judged fairly? Suppose a teacher correctly realises that some pupils will never achieve academic excellence but that their talents lie in practical pursuits – should that teacher lose pay for trying to get the best result possible for those pupils? Of course not.

Once again we see government policy following the ‘divide and conquer’ pattern. ‘Take from the needy and give to the greedy’, as the slogan states.

And the flag of the conquering elite is the ‘Old School Tie’.

You’re on very shaky ground in Cameron’s Britain – if you weren’t at Eton.