WATER TORTURE
LAST week’s National Audit Office (NAO) report on regulation of the water industry neatly described the financial doom loop in which the sector finds itself.
UK water companies are now indebted to the tune of more than £70bn (up from £0 at privatisation), well over twice the amount of equity, ie shareholder funds, that they hold. Ten out of the 16 companies are not generating enough income to cover interest on this debt, and things could get worse. As the companies’ credit ratings fall, so lenders demand ever more.