I guess renting the water supply is cheaper in the short run and more expensive in the long run.
Is that really the case though?
Nationalisation would of course be supported by debt (just like any public investment), so it would only be a matter of comparing the interest rates to the cost of renting. Well most private companies are supported by debt (as they should), so part of the cost is directly paying for the companies’ debt. The state will always have lower interest rates (Since the BoE base rate shot up to 5% in the last 2 years you might have to take into account the maturity of different obligations but this would settle as debt gets refinanced), and taking the first company outlined, “Wessex Waters”, their financial report show a cost of debt of 5.2% for 22-23, with a debt-to-equity ratio of about 4 if my maths are good.
What this means is that for Wessex Waters, even if we completely ignored profit margin in the form of dividends (5.4% yield), overhead cost of private business (extremely high leadership salaries, bonus, lobbying…etc) and the fact that interest rates are only gonna rise, it would still be profitable in the very short term to nationalise the company.
Don’t be mistaken, what’s opposing nationalisation and public ownership is and always has been purely ideological (market is more efficient, national debt is somehow a problem), there is absolutely no financial argument against it.
BONUS: Because if I had to skim Wessex Waters strategic report, might aswell chop up some of the Chairman’s foreword:
The high quality of our customer service was again recognised, […] however, we were extremely disappointed that we failed to maintain our record on environmental performance.
Our financial health has always been, and remains, robust.
I thank the Lord Jesus for his constant grace and guidance and pray that we will be able to rise to the challenges we face.
Same with homes, renting can provide lower monthly payments vs a mortgage. But with a mortgage you own the home and eventually you’ll have no monthly payment, whereas renting means you’ll always pay and the landlord has the final say in matters.
But with a mortgage you own the home
Do you? Or do you start owning it after paying off the mortgage?
At least you can’t get kicked out or have your rent raised for arbitrary reasons. Some renters are basically moving every year.
Ya, the house is in the persons name. But if they struggle to keep up with payments, it can become the banks home.
