The Labour leader Jeremy Corbyn pledged to bring many sectors back under public ownership as part of a huge plan for re-nationalisation, included in that plan was the railways, postal service (sold due to pressure from a European Union directive), energy and water.
An analysis by the Centre for Policy Studies found that proposals to bring the railways, postal service, energy and water industries under public ownership would lead to “upfront costs” of a minimum of £176 billion. This would represent around 10 % of the national debt, or nearly £6,500 for every household. It is even larger than the annual budget of the NHS.
The report states: “This £176billion calculation assumes that Labour restricted its renationalisation of the energy sector merely to the transmission and distribution networks. In the event of a wider renationalisation of the energy sector, as urged by Jeremy Corbyn, the final total could be up to £306bn.”
The think tank conducted the research, because Labour had refused to cost their drastic spending plans.
Labour’s John McDonnell, the Shadow Chancellor, continues to refuse to provide any estimates of how much it would cost – or details of how it would work in practice.
Daniel Mahoney, Head of Economic Research at CPS said:
“Labour refuses to cost its plans for renationalisation, and it’s easy to see why. It would require at least £176bn in borrowing, the equivalent of £6500 for every household. This would be an expensive gamble with a huge opportunity cost.
“John McDonnell’s claim that bills will fall by £220 after nationalisation does not stand up to scrutiny. By his own admission, any profits from the industries would end up going to pay debt interest, so how can they be used to lower the cost of bills? And this does not account for the fact that these industries will, in all likelihood, become less efficient.
“It is also deeply concerning that Corbyn and McDonnell appear to be planning to seize assets below their commercial value. If Labour pursued this, business confidence would slump, confidence in the government would plummet and pension funds – which are big investors in the utilities sector – would end up particularly badly off.”