CBI says Labour renationalisation policy would cost £196bn
The up-front cost of the Labour Party's renationalisation proposals for water and energy utilities is estimated to be £196 billion, according to new analysis by the CBI.
This cost of renationalisation is equivalent to taking every penny of income tax paid by UK citizens in a single year - and also as much as the annual spend on the Health and Social Care budget (£141 billion) and Education budget (£69 billion) combined.
Renationalisation would also have an ongoing impact (from maintenance and running costs and investment in future infrastructure needs), as well as a heavy impact on the UK’s public finances.
Britain’s largest business group 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. 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.
Under Labour’s plans, savers and pensioners could also suffer an estimated £9 billion loss to their holdings, which translates into £327 for every household in the country.
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.”
This analysis defines nationalisation as the acquisition of the following:
- The nine water and sewerage regional monopolies and the seven water only companies in England
- National Grid, the electricity transmission networks, the distribution network operators and gas distribution networks in England, Scotland and Wales
- The rail rolling stock
- Royal Mail
To estimate the market value of each of the private companies in the water and energy sectors, the latest value of the asset base is taken and multiplied by a mark-up of 30% based on historical takeovers and market to asset ratios of publicly listed companies.
- @One Alliance's Dale Evans is the new ICG chair Dale Evans, managing director of Anglian Water's @one Alliance, has been named as the new chair of the Infrastructure... Read More >
- Bridgewater to join Welsh Water as finance director Dŵr Cymru Welsh Water has announced that Peter Bridgewater will join the company this summer as finance director.... Read More >
- Galliford Try benefits from repeat AMP work Galliford Try says its construction division is maintaining its position as a key infrastructure supplier to the UK... Read More >
- Reaching net carbon zero In summer 2019, the water industry committed to reach net carbon zero by 2030. This is a very ambitious aim and... Read More >
- Rewarding excellence WWT content director Alec Peachey looks ahead to next year's Water Industry Awards. Read More >
- Refining water quality management As part of our Utility of the Future campaign, Nadine Buddoo looks at why maintaining water quality is a fundamental... Read More >
- AMP7: putting the customer centre stage 2020 marks the beginnings of a new chapter for clients and contractors in the water industry with the start of AMP7, the... Read More >
- The price of water As part of our Utility of the Future campaign, Robin Hackett looks at whether low water bills can be maintained long term Read More >