Reported Labour Party plans to pay owners below the market price to renationalise utilities would strip up to £100bn out of savings and pensions to make no difference to the cost borne by households for a full market price payment according to a report by consultant, NERA.
The report, commissioned by Water UK, showed that compensating shareholders to renationalise the water industry, energy networks and Royal Mail at the net asset value, rather than at the fair market price, would cost taxpayers £143bn but cost households £50bn in lost savings and pension funds.
Taking those industries into public ownership with compensation going only to debtholders, with nothing for shareholders, would, NERA calculated, cost taxpayers £97bn with savers and pension holders losing £97bn. In both instances the total cost to households would be about £193bn.
NERA estimated that compensation at regulated capital value would pay £149bn to investors and debtholders and cost savers and pension holders £45bn.
NERA forecast that compensation at below the market value would carry a “contagion” of about £5.3bn to government gilts due to a perceived political risk associated with those investments.
Water UK said recent research findings from the Global Infrastructure Investor Association showed that at least 67 UK pension funds with investment in the English water industry would be affected, including more than 4m members of public sector schemes and 1.8m in private sector schemes.
Water UK cited a recent opinion poll by ComRes, as showing that 53% of respondents were against denationalisation of water with 27% backing it following the revelations of the impact on pensions.