As we all know there’s a considerable call for more regulation of the English water companies. Even, a call for considerably more regulation of the English water companies. What all too few are willing to acknowledge is that it’s the current regulation of the English water companies causing at least one of the problems.

So, Thames Water requires refinancing. Ho hum, the sort of thing that does happen in capitalism. The sort of thing that is dealt well with by capitalism - need more capital, who you gonna call? The capitalists, obviously.

But even The Guardian has noted the problem here:

Investors have also expressed interest in taking a new stake in the business, which is needed to secure its finances in the longer term. However, they are still trying to find out what terms they might win from the beleaguered company, the UK government and the water regulator, Ofwat, if they provide billions of new equity funding.

As we’ve pointed out before OfWat is sitting there, opposable digits in fundament and mind in neutral:

That’s from OfWat, the regulator.

Until prices, therefore cashflows, for the next 5 year period are known there is no possibility of even examining, let alone solving, the financial structure. Therefore no solution is possible until that publication date. Everything said before that date is pure vapidity.

Which does give us an interesting insight into Thames Water’s problems, no? Capitalism and markets might well be able to solve this problem if it weren’t for having to wait for the bureaucracy….

The expected publication date is Dec 19th. Nothing can or will be done until then.

Of course, something useful could be done. A phone call along the lines of “Thumbs out, Mateys, and publish” would bring forward the ability to create a solution. But that would be to ask a bureaucracy to actually aid in solving a problem caused by that very bureaucracy. That’s not how this brave new world of mission oriented - with strict conditionality - high investment governance works, is it?

Tim Worstall