Rachel Reeves has said Labour will not seek to renationalise energy or water if the party gains power at the next election.
The shadow chancellor made the statement whilst setting out the party’s plans to boost economic growth during an interview on Radio 4’s Today programme on Monday morning (25 July).
Reeves said “to be spending billions of pounds on nationalising things, that just doesn’t stack up against our fiscal rules.”
In Labour’s manifesto for the last general election in 2019, the party’s leader at the time, Jeremy Corbyn, pledged to take “rail, mail, water and energy” all back into public ownership.
In the case of energy, Labour said this would include the supply arms of big energy companies, as well as both national and local energy networks, which would be replaced by a national energy agency and a series of regional system operators respectively.
Reeves said the party has “scrapped” the 2019 manifesto, which had “secured our worst result since 1935,” adding: “That is not the starting point.”
The shadow chancellor also emphasised the importance of the net zero drive to boosting growth and productivity: “It’s why I’ve set out Labour’s climate investment pledge – a commitment of £28 billion a year – to leverage private sector money, recognising that the path to net zero creates huge opportunities for a country like Britain to be global leaders in some of the industries of the future, whether that’s in hydrogen, floating offshore wind, battery storage for electricity.”
Her comments came as the TUC released a report renewing calls for energy suppliers to be taken into public ownership to reduce energy bills for struggling households, speed up energy efficiency improvements in homes and cut carbon emissions faster.
The group of trade unions claimed this could be done at a cost of just £2.85 billion, saying this equates to less than a quarter of the £12 billion of financial assistance the government has pledged to provide this year to help with soaring energy bills and only slightly more than the £2.7 billion cost of supplier failures since last summer.
The report said the retail market has swung between “an oligopoly of the Big Six with excessive profits and mistreatment of consumers, or over-crowded and loss-making with no margins,” adding: “It is not at all clear that a privatised, profit-seeking market structure can find a stable balance between these two extremes.”
The TUC also called for restructuring of energy tariffs, with “regressive” standing charges being abolished, households receiving a “free energy allowance” to meet their basic needs, and charges being raised beyond a high-usage threshold so that “very profligate” consumers instead pay more per unit. At a minimum, the report said regressive levies, including for the recovery of Supplier of Last Resort costs, should not be loaded onto standing charges.
The report said poorer households should additionally be offered a social tariff capping their energy costs at 5% of their income. It said this could be funded through money returned from Contracts for Difference when energy prices or cross-subsidy from other customers, noting: “Such a measure was recommended by some large energy companies before the gas price crisis.”