The Labour Party’s water and electricity nationalisation plans could cost up to £141.65 billion, according to a right wing thinktank.
A study assessing the opposition’s nationalisation plans, carried out by the Centre for Policy Studies (CPS), estimates that bringing the energy sector back into public ownership would cost £55.4 billion. This figure is based on the costs of nationalising the transmission and distribution networks, which Labour pledged in last year’s general election manifesto to bring back into public ownership.
Renationalising the water companies would cost an additional £86.25 billion, according to the report.
Combined with the costs of bringing back the Royal Mail and private finance initiative contracts into public ownership, the combined bill for Labour’s pledges would be £176 billion, equivalent to around 10 per cent of the UK’s national debt.
The CPS says this figure also equates to nearly 20 years of UK defence equipment budgets or the cost of building 2.93 million council houses.
Nationalisation of the entire energy industry, including the big six suppliers, would cost £185 billion. Adding on the suppliers, the total nationalisation bill would be £306 billion, according to the CPS.
And the report concludes, renationalisation would deliver few benefits to UK consumers.
It says UK household energy bills are around the average for western Europe and lower than in Germany and Ireland where state intervention is much greater.
It says: “There is little evidence to suggest that consumers have anything to gain.
“Nationalisation would further increase state intervention and squeeze out the remaining market mechanisms in place, leading to even worse outcomes for customers.”
Instead, the report recommends consumers would benefit more from greater competition in both energy and water.
Responding to the CPS report, Michael Roberts, chief executive of Water UK, said: “The report paints a very stark picture of what it could take to nationalise water companies in England, and the massive risks which that could pose to the economy and taxpayers.
“It points to a world where future water investment struggles to compete with health, housing or education for taxpayers’ money. Private water companies over recent decades have invested £150 billion in better services and a cleaner environment, after years of being starved of cash under public ownership. It’s difficult to imagine anyone wanting to return to those days.”