Corbyn threats 'could send utility companies overseas'

[Bouleversee]

is the heading of an article in The Times today. It says that Dominic Nash, a leading utilities analyst a Macquarie's, an Australian investment bank, argues that utility companies in Britain should consider moving overseas to guard against the threat of nationalisation by Labour as foreign investors would enjoy higher standards of protection than British ones in the event of expropriation by a Labour govt. Apparently, Macquarie's infrastructure investment business bought a major stake in Cadent, Britain's largest gas distribution network, from National Grid last year. Nash's note on the subject implies that foreign investors could be interested in buying more British assets as they would not have the same risk as UK investors. So we will have Mr Corbyn to thank if all our utilities end up under foreign ownership.

https://www.thetimes.co.uk/article/corb ... -rrzt0dsl8

[Dod101]

Interesting Bouleversee. I read The Times but I did not pick up on that. SSE will not be slow to respond I am sure if there is anything in it.

Dod

[Bouleversee]

I should have added that a Labour govt. would be forced to buy out foreign investors at utilities' valuations prior to May 2017 (since when they have fallen by about 30%) rather than at present depressed prices, just to make matters worse.

[Bouleversee]

There was also an article headed "Crooks set to take charge of First Utility", referring not to RDSB but to Colin Crooks who is to be appointed CEO of First Utility when RDSB completes the takeover. Apparently the supplier has about 800,000 household customers,. It set me wondering, a propos my OP in this thread, whether Shell might consider delisting from the LSE and going entirely Dutch to escape the clutches of a Labour govt. More appealing to investors but presumably they would have to charge competitive prices so how would that work out? And what counts as a foreign investor? An investor in a foreign company or do you have to reside outside the UK? If the former and if First Utility/RDSB ceased to be listed here, wouldn't we all not only buy their shares but also switch our utilities to them? Sweet dreams, about the law of unintended consequences perhaps. .

Bouleversee.

[idpickering]

An interesting thought/idea. For me this comes under my "unknown unknowns" pile, so am avoiding even thinking about such an event.

Ian.

[NeilW]

HMRC would be on the hotline to Corbyn pointing out the loss of corporation tax.

You can't lose tax. Sterling, alongside all other free floating currencies, is fundamentally a closed system. If tax isn't paid in one area, it gets paid in another area. Or the money gets saved, in which case it ultimately ends up in an account at the Bank of England - which the government owns.

Total tax take is a function of the savings desires of non-government entities. And it ends up about 90% of whatever government spends, with 10% added as additional savings. It's only really the distribution of tax that the government can alter via tax law.

[Raptor]

Moderator Message:
Although applicable to HYP Utilities this is a general untilities post and should be on a different forum. Will leave a shadow on Practical. Raptor.

[Arborbridge]

Moderator Message:
Although applicable to HYP Utilities this is a general untilities post and should be on a different forum. Will leave a shadow on Practical. Raptor.

This is a piece of moderation I can't get my head around. Why does a "general utilities post" not have relevance to the practical application of HYP. I am extremely interested if a discussion brings to light factors which impact one of the sectors in my HYP, and that is exactly what a discussion about utilities does. Whether general or about a specific company, this discussion is useful to the practical aspect of HYPing. If it were "on a different forum" one would never have come across it, and HYPers would have been less imformed.

I suspect the real reason for the objection is that there is fear of a political discussion here, but since politics and the regulatory landscape are crucial to our shareholdings, it is sometimes inevitable that political views are made in passing.

Erroneous moderation, in my view.

Arb.

[PeterGray]

I would think the likelihood of "appropriation" by a future Labour government is close to zero. What is far more likely is a toughening of the regulatory regime, and I doubt that ownership would make a much difference there. Also lets not forget that around 50% of UK water companies are already foreign owned.

[77ss]

is the heading of an article in The Times today. It says that Dominic Nash, a leading utilities analyst a Macquarie's, an Australian investment bank, argues that utility companies in Britain should consider moving overseas to guard against the threat of nationalisation by Labour as foreign investors would enjoy higher standards of protection than British ones in the event of expropriation by a Labour govt. Apparently, Macquarie's infrastructure investment business bought a major stake in Cadent, Britain's largest gas distribution network, from National Grid last year. Nash's note on the subject implies that foreign investors could be interested in buying more British assets as they would not have the same risk as UK investors. So we will have Mr Corbyn to thank if all our utilities end up under foreign ownership.

https://www.thetimes.co.uk/article/corb ... -rrzt0dsl8

An analyst for Macquarie's might just have a self-interested axe to grind (as does The Times). Take this kind of stuff with a huge pinch of salt.

As for our utilities ending up under foreign ownership, and blaming Corbyn for this, where have you been for the past 10 years or so? Just checkout, for example, the various privatised water companies:

Thames Water
Yorkshire Water
Northumbria Water
Anglian Water
Southern Water
Wessex Water

All gone.

[dspp]

t is also worth checking out who actually owns the energy utilities. Most of them are already non-UK. regards, dspp

[Alaric]

t is also worth checking out who actually owns the energy utilities. Most of them are already non-UK.

The Labour proposals would show a little more economic literacy if they made a distinction between companies still quoted on the UK Stock market and those where the UK utility part was a subdivision of a wider non-UK company. The extent to which a Corbyn government still desired overseas investment in the UK would determine whether it felt courageous enough to only offer confiscatory terms to non-UK investors to buy out their UK utility interests.

[dspp]

Moderator Message:
It was not me that moved this thread over here, but since I'm the mod on the receiving end I am happy to explain.

Basically you've posed an entirely reasonable issue regarding the utilities sector. Indeed I'm one who put my own 2c forwards as a comment. However they way you've posed it and the point(s) you make are not best served by the narrow focus of HYP-Practical. Hence the HYP mods moved it over here where I am quite happy for you and others to discuss as much as you like. And over here you can discuss relevant politics as much as you like (politely, and if relevant). I do not think the HYP mods were worried about it becoming political by-the-way, but maybe they were.

Someone will have pretty much every single FTSE-350 company in something they call a HYP. That does not mean everybody should post everything in HYP Practical. Please have patience with the HYP mods as they try to keep things reasonably sorted. Sometimes you may end up here

regards, dspp

[johnhemming]

Seconded. How are we to make an investment decision that will succeed or fail based on Government policy, if we cannot discuss the relevant policy positions and prospects of the parties and people seeking power? It is a joke.

I look at TMF through the link that gives recent posts:
/search.php?search_id=newposts

Hence it makes no practical difference to me where any particular topic is filed. However, I can understand that the moderators are trying to keep some structure.

[Bouleversee]

If you didn't hear it already, you might like to hear the repeat of tonight's Any Questions when the renationalisation of utilities was discussed or otherwise find it via I-player, as I am going to have to do as I only caught the tail end of the discussion.

[absolutezero]

If you didn't hear it already, you might like to hear the repeat of tonight's Any Questions when the renationalisation of utilities was discussed or otherwise find it via I-player, as I am going to have to do as I only caught the tail end of the discussion.

What was the general gist of the discussion? I find BBC news rather tiresome these days.

[Bouleversee]

If you didn't hear it already, you might like to hear the repeat of tonight's Any Questions when the renationalisation of utilities was discussed or otherwise find it via I-player, as I am going to have to do as I only caught the tail end of the discussion.

What was the general gist of the discussion? I find BBC news rather tiresome these days.

What one would expect from a discussion about the possible renationalisation of the utilities. The Labour spokesman said it was right the people should own and run them. The others said it would be the State not the people, that it would cost billions and would make things worse rather than better.

[Bouleversee]

An article in The Times today about the political pressure on National Grid (https://www.thetimes.co.uk/article/powe ... -rmfq3dq8p), which referred to the Macquarie analyst's recommendation to the utilities to go offshore, included the following:

"Ofgem, the energy regulator, has warned that it is about to get tougher. It is due to unveil its proposed framework on Wednesday for the next "price control", when it sets the revenues the networks can earn. It is likely to slash the cost of equity allowed for companies such as National Grid and could moot a shorter price control than the existing eight-year system, increasing the perceived risk." What does the beginning of the last sentence mean?

[absolutezero]

If you didn't hear it already, you might like to hear the repeat of tonight's Any Questions when the renationalisation of utilities was discussed or otherwise find it via I-player, as I am going to have to do as I only caught the tail end of the discussion.

What was the general gist of the discussion? I find BBC news rather tiresome these days.

What one would expect from a discussion about the possible renationalisation of the utilities. The Labour spokesman said it was right the people should own and run them. The others said it would be the State not the people, that it would cost billions and would make things worse rather than better.

And therein lies the problem.
'We owned Lloyds and RBS after the financial crisis' said the people.
Incorrect. The State owned them.
I fear people don't get the difference between so-called 'public ownership' and 'the people' owning it.

[dspp]

An article in The Times today about the political pressure on National Grid (https://www.thetimes.co.uk/article/powe ... -rmfq3dq8p), which referred to the Macquarie analyst's recommendation to the utilities to go offshore, included the following:

"Ofgem, the energy regulator, has warned that it is about to get tougher. It is due to unveil its proposed framework on Wednesday for the next "price control", when it sets the revenues the networks can earn. It is likely to slash the cost of equity allowed for companies such as National Grid and could moot a shorter price control than the existing eight-year system, increasing the perceived risk." What does the beginning of the last sentence mean?

BV,
It means it might set the price control framework for (say) 4-years not 8-years. That increases the political risk for investors, but decreases it for the senior management team at Ofgem, i.e. they are signalling to Corbyn that they will cooperate and can they please keep their jobs. Moi, cynical, que ?
- dspp