Labour’s renationalisation plans would cost around £196 billion, according to new analysis by the Confederation of British Industry.
The estimate takes into account up-front costs of Labour’s plans for water and energy as well as the train companies and Royal Mail. Figures for the individual industries have not been set out.
The CBI points out that the cost is equivalent to taking every penny of income tax paid by UK citizens in a single year.
It estimates there could be a 10.7% increase in debt from bringing industries into government ownership, raising debt to levels not seen since the 1960s. Servicing this debt is expected to cost around £2 billion per year. It points out that, while the government’s assets would increase, and there would be the potential for revenue generated by these utilities, the confidence of international investors in the UK would be severely hit should Labour refuse to pay full market value for the industries.
Rain Newton-Smith, CBI chief economist, said: “The price tag for Labour’s renationalisation plans is beyond eye-watering – close to £200 billion. And that’s only the starting point. It doesn’t take into account the maintenance and development of the infrastructure, the trickle down hit to pension pots and savings accounts, or the impact on the country’s public finances.
“There are so many other genuine priorities for public spending right now, from investing in our young people to the transition to low carbon economy and connecting our cities and communities. These issues are what keep businesses up at night and what they want to see the government get on with addressing.
“Firms want politicians to invest in major infrastructure projects rather than undermine confidence in our economy and waste time, energy and public money in a renationalisation project with no clear benefits.
“Investment in skills, infrastructure and innovation is how we will enable firms to grow, create jobs, and raise living standards in communities across the country – not by returning to failed, ideological economics that would make millions of people poorer in their old age.”
Water UK chief executive Michael Roberts said: “This important work by the CBI makes an iron-clad case against nationalisation, and is part of an ever-growing body of evidence showing what a bad idea it is. Privatisation of the water and sewerage industry has achieved a great deal over the last 30 years – nearly £160 billion of investment, a healthier environment, better water quality and improved service to customers.
“Customers are now 5 times less likely to suffer from supply interruptions, 8 times less likely to suffer from sewer flooding, and 100 times less likely to have low water pressure than they were when the industry was in government hands. Nationalisation would risk turning back the clock to the days when service and quality failures were far more common, and cash-strapped governments wouldn’t pay for the improvements needed.”
David Smith, chief executive of Energy Networks Association, said: “At a time of climate emergency, Labour’s plans for state ownership will not only hit the public hard in the pocket but also cause completely unnecessary delay to meeting our climate targets. Thanks to the networks’ relentless focus on innovation and customer service, we have one of the cleanest and most reliable energy systems in the world. Rather than wasting time and resource we don’t have on state ownership, we should keep our attention firmly on delivering a Net Zero energy system the public needs”.