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Big scary numbers!

Monday, February 12, 2018 8:02
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From City AM:

Water companies have hit out at Labour after the shadow chancellor John McDonnell described the industry as a “national scandal”. Labour attacked the water industry today, saying the private sector was handing out “scandalous” amounts in dividends, which have totalled £13.5bn since 2010…

Divide £13.5 bn by eight years and by 27 million households and (say) 3 million businesses, that’s an average of about £50 a year, one-third of the cost of the TV licence. I can’t get too upset about that.

But compared to my annual water bill (rates not meter) of about £500, that seems quite a chunky dividend. Most competitive businesses pay about £1 or £2 in dividends for every £1 of turnover, not £10. If Labour were really worried about this, instead of making token gestures, they could simply cap prices at a few per cent below current levels, dividend halved, perceived problem solved.

And in the blue corner:

Michael Roberts, chief executive of industry organisation Water UK, has condemned McDonnell’s attack on the sector, saying that private companies have invested heavily in water networks and have brought down costs for consumers.

Roberts said: “It’s wrong for Labour to suggest that our water system is broken. Water companies secure capital provided by lenders and shareholders, who need water companies to make a return in order to finance significant improvements to the industry. He said that the water sector was “starved of cash” under public ownership, and that private firms have invested in reducing leakages, and have improved water quality.

Change the record, mate. Water companies were privatised nearly thirty years ago, you’ve had plenty of time to sort it out. Dividends are paid after deducting interest costs, so that’s double counting. Further, borrowing money (“to fund investment”) while continuing to pay big dividends is Carillion territory. Re-invest your current profits first, if there’s nothing left to pay dividends, then so be it.
Also from City AM:

Renters in the UK paid out £51.6bn to landlords last year, the highest rent bill on record.

The UK’s rental bill rose by £1.8bn in 2017, according to research published today by Countrywide. The estate agency group said the rise was driven by an increase in the number of renters, and rising rents; the average cost of a new let rose 2.4 per cent year-on-year to £958.

Two-thirds of that is location rent and that IS a “national scandal”, not so much that tenants are paying it, but the fact that private landlords are collecting it.

Either way, we’re not talking about £50 a year from every household, but £6,000 a year being channelled from every “asset poor” househol to a small minority of “asset rich” households.

And what does Labour have to say about this? They dared mention LVT briefly in their manifesto but beat a hasty retreat once the Homeys co-ordinated their strategy and started mis-describing it as The Garden Tax.


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