Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

A sadly predictable way to increase corporate profits

I always thought the the return from shares was higher than say deposit accounts because it carried risk; things may not turn out well and you may suffer a loss.

It seems that Thames Water have found a way to avoid this fundamental rule of capitalism.

“At the beginning of a five-year period, there are always a small number of potentially significant costs and revenues that can be clearly identified, but not quantified,” said Stuart Siddall, Thames Water’s chief financial officer.

“Either the company or Ofwat can seek an adjustment, upwards or downwards, once the actual costs and revenues are known.

“That is what we are doing now.”
BBC News Website 12 August 2013: Thames Water price rise bid criticised by consumer body

Ah, so the risk associated with the company not being able to quantify costs must be met not by the shareholders, but by customers.

This is an idea that could totally revitalise the corporate sector! Risk free investment plus high returns!

It is stupid, it is immoral. Anyone who subscribed at privatisation or subsequently bought Thames Water shares knew (or should have known) that Thames Water was a company with a probably clapped out Victorian infrastructure, and with stronger environmental regulation on the way. They took the risk at the time and since then they have been taking the rewards. Now the risks are beginning to crystallise they have to take the hit.

Sometimes I really don’t think that “British Capitalism” is working.

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One thought on “A sadly predictable way to increase corporate profits

  1. G Hope on said:

    A recent report says that household energy use has fallen by 25 percent in the last 6 years.
    For normal companies this would have resulted in a loss of revenue and profit, instead households are paying more for less and profits are still rolling in.
    Another predictable way to maintain corporate profits.
    It appears to matter not how little we use , profits will be maintained.

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