This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/nils-pratley-on-finance/2018/jun/05/water-company-fat-cats-give-labour-a-soft-target-for-nationalisation-talk
The article has changed 3 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Water company fat cats give Labour a soft target for nationalisation talk | Water company fat cats give Labour a soft target for nationalisation talk |
| (about 1 month later) | |
| The GMB union makes a fair point about pay at the top of the privately owned English water industry. When a few individuals can collect almost £2.5m a year for running local monopolies, remuneration committees have spent too much time looking at consultants’ spreadsheets and too little employing common sense. | The GMB union makes a fair point about pay at the top of the privately owned English water industry. When a few individuals can collect almost £2.5m a year for running local monopolies, remuneration committees have spent too much time looking at consultants’ spreadsheets and too little employing common sense. |
| Yes, these businesses are large, important and must spend serious sums on new infrastructure every year. Yet a regional water company is also running a public service in which the price of the product is set by the regulator and customers cannot choose a different supplier. Those factors call for restraint, or at least a more direct tie between incentive pay and the level of service that is provided. | Yes, these businesses are large, important and must spend serious sums on new infrastructure every year. Yet a regional water company is also running a public service in which the price of the product is set by the regulator and customers cannot choose a different supplier. Those factors call for restraint, or at least a more direct tie between incentive pay and the level of service that is provided. |
| Even the environment secretary, Michael Gove, made a similar point in an exchange of letters with Jonson Cox, the chairman of regulator Ofwat, earlier this year. We await the companies’ response in their business plans for next year but don’t hold your breath if you’re expecting radical reform. To pick on Liv Garfield, chief executive of Severn Trent, only about a third of her annual bonus last year of £616,000 related directly to customers’ experience. Some of the profit-related measures involved hitting targets where benefits are shared with customers, it could be argued, but her LTIP plan, which paid her £975,000 last year, looks as purely financial as any other FTSE 100 company’s. | Even the environment secretary, Michael Gove, made a similar point in an exchange of letters with Jonson Cox, the chairman of regulator Ofwat, earlier this year. We await the companies’ response in their business plans for next year but don’t hold your breath if you’re expecting radical reform. To pick on Liv Garfield, chief executive of Severn Trent, only about a third of her annual bonus last year of £616,000 related directly to customers’ experience. Some of the profit-related measures involved hitting targets where benefits are shared with customers, it could be argued, but her LTIP plan, which paid her £975,000 last year, looks as purely financial as any other FTSE 100 company’s. |
| Water bosses' £58m pay over last five years a 'national scandal' | Water bosses' £58m pay over last five years a 'national scandal' |
| As the nationalisation debate heats up, pay has become a blind spot for water companies. The likes of Thames, Yorkshire and Anglian are dismantling their Cayman Islands subsidiaries to try to defuse the charge of financial engineering. Some of the worst offenders are also reducing their debt levels, partly under pressure from Ofwat and partly because they recognise the mood has turned against extreme financial leverage. But boardroom rewards, unless the companies are about to surprise us, remain stuck at levels that are a gift to the nationalisation lobby. Shareholders and owners, unless they wish to continue to present Labour’s front-bench with an open goal, ought to wake up. | As the nationalisation debate heats up, pay has become a blind spot for water companies. The likes of Thames, Yorkshire and Anglian are dismantling their Cayman Islands subsidiaries to try to defuse the charge of financial engineering. Some of the worst offenders are also reducing their debt levels, partly under pressure from Ofwat and partly because they recognise the mood has turned against extreme financial leverage. But boardroom rewards, unless the companies are about to surprise us, remain stuck at levels that are a gift to the nationalisation lobby. Shareholders and owners, unless they wish to continue to present Labour’s front-bench with an open goal, ought to wake up. |
| As it is, Labour’s nationalisation plan is gloriously vague since the shadow chancellor, John McDonnell, hasn’t yet explained which model of public ownership he prefers (there are many to choose from) or how he would tackle investors’ (including pension funds’ and employees’) legal claims for compensation if he attempts nationalisation at less than market value. Nor is it possible to tell if Labour’s boast that bills would fall after nationalisation by £100 per household is just achieved by shoving the difference into general taxation. | As it is, Labour’s nationalisation plan is gloriously vague since the shadow chancellor, John McDonnell, hasn’t yet explained which model of public ownership he prefers (there are many to choose from) or how he would tackle investors’ (including pension funds’ and employees’) legal claims for compensation if he attempts nationalisation at less than market value. Nor is it possible to tell if Labour’s boast that bills would fall after nationalisation by £100 per household is just achieved by shoving the difference into general taxation. |
| The GMB, note, also ignored such detailed questions as it launched its campaign for public ownership of the English water industry. It is simpler, from where it stands, to point to excesses in the boardroom, on which (almost) everyone can agree. The water companies, if they want to prepare properly for a nationalisation debate that is not going away, need to shape up on pay and stop offering such a soft target. | The GMB, note, also ignored such detailed questions as it launched its campaign for public ownership of the English water industry. It is simpler, from where it stands, to point to excesses in the boardroom, on which (almost) everyone can agree. The water companies, if they want to prepare properly for a nationalisation debate that is not going away, need to shape up on pay and stop offering such a soft target. |
| Why couldn’t the Treasury wait a while for RBS sale? | Why couldn’t the Treasury wait a while for RBS sale? |
| Here we go, then, the big sale of Royal Bank of Scotland has begun, or rather re-started, since a small slice went in 2015. Some 925m shares, of 7.7% of the total, will be sold overnight and the state’s stake will be cut to 62.4%. | Here we go, then, the big sale of Royal Bank of Scotland has begun, or rather re-started, since a small slice went in 2015. Some 925m shares, of 7.7% of the total, will be sold overnight and the state’s stake will be cut to 62.4%. |
| The chancellor, Philip Hammond, has got one thing right: he has ignored any thought of mounting a flashy sale of shares to retail investors complete with loyalty bonuses. His predecessor, George Osborne, was tempted by that idea when he was disposing of shares in Lloyds Banking Group, but eventually thought better of it. Quite right too: the Treasury’s sole job is to get the best possible price for the public purse, which inevitably means selling to City institutions in a competitive market process. | The chancellor, Philip Hammond, has got one thing right: he has ignored any thought of mounting a flashy sale of shares to retail investors complete with loyalty bonuses. His predecessor, George Osborne, was tempted by that idea when he was disposing of shares in Lloyds Banking Group, but eventually thought better of it. Quite right too: the Treasury’s sole job is to get the best possible price for the public purse, which inevitably means selling to City institutions in a competitive market process. |
| The Treasury’s timing, though, looks odd. Banks’ share prices across Europe have been upset by the political confusion in Italy. Even RBS’ finance director, Ewen Stevenson, said last week that now is probably not the “optimum” time for the government to start selling stock. Indeed so. RBS was within pennies of 300p a fortnight ago, which would have been a neat hurdle to clear, but closed last night at 280.4p. | The Treasury’s timing, though, looks odd. Banks’ share prices across Europe have been upset by the political confusion in Italy. Even RBS’ finance director, Ewen Stevenson, said last week that now is probably not the “optimum” time for the government to start selling stock. Indeed so. RBS was within pennies of 300p a fortnight ago, which would have been a neat hurdle to clear, but closed last night at 280.4p. |
| Perfect timing is impossible, of course, and the break-even price in any case is about 500p. But the Treasury, advised by UK Government Investments, could still have waited a few weeks to see if the Italian influence on the bank stocks fades fully. The government wants to get on with the job – but, really, where was the harm in waiting a fortnight? | Perfect timing is impossible, of course, and the break-even price in any case is about 500p. But the Treasury, advised by UK Government Investments, could still have waited a few weeks to see if the Italian influence on the bank stocks fades fully. The government wants to get on with the job – but, really, where was the harm in waiting a fortnight? |
| Utilities | Utilities |
| Nils Pratley on finance | Nils Pratley on finance |
| Severn Trent | Severn Trent |
| Privatisation | Privatisation |
| Water | Water |
| Trade unions | Trade unions |
| Economic policy | Economic policy |
| Royal Bank of Scotland | Royal Bank of Scotland |
| news | news |
| Share on Facebook | Share on Facebook |
| Share on Twitter | Share on Twitter |
| Share via Email | Share via Email |
| Share on LinkedIn | Share on LinkedIn |
| Share on Pinterest | Share on Pinterest |
| Share on WhatsApp | Share on WhatsApp |
| Share on Messenger | Share on Messenger |
| Reuse this content | Reuse this content |