SIR – Re my letter ‘Privatisation mistakes’, (Letters, December 9), I hadn’t meant to end in a command, (“Now take power”). It should have read “Now take power...” as I hadn’t intended to spell out obvious faults with energy privatisation, but to leave that to readers themselves.
Take gas for example. Prices go up and so do profits at customers’ expense. Why? One reason given is to pay (generous) dividends “to attract investment funds”. If there is regulation in this sector – and we don’t hear of it – it should insist on using the cheapest source of finance: debt, as does Ofwat in the water industry.
How can paying generous dividends to shareholders attract debt?
Pre-tax profits are necessary to pay interest on debt. Dividends to “investors” need be higher as they demand higher (post-tax) returns on their equity, or shares. Using debt reduces tax payable.
Where is regulation? Why no limit to investors’ returns as Americans sensibly require of their essential services?
Are our politicians and their financial advisers incompetent or just out to rip us off? (Surely bankers would never do that. Would they?)
John Hall, Pennithorne Avenue, Baildon
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