Pro-public ownership Professor David Hall, of the Public Services International Research Unit (PSIRU) at University of Greenwich, said public ownership of water companies would save £2.5bn a year, with every household about £113 a year better off.
In an article for campaigner, We Own It, Hall (pictured) rejected the order of shareholder compensation claims put forward by the likes of the CBI (£196bn for water, energy, trains and Royal Mail). PSIRU estimated the cost of compensation would be £49.7bn, based on returning to water and energy shareholders the money they had actually invested in the companies, rather than paying "market values" – and that “nationalisation would pay for itself in less than seven years”.
Hall also sought to dispel two “myths” regarding the harm to UK pensioners and utility employees, arguing: “UK pension funds own only 8.5% of the water sector, and 2% of the energy grid companies: about 5% overall. So 95% of the benefit of higher compensation would go to other investors, which is a very inefficient way of helping UK pensioners.”
He went on: “PSIRU research shows, however, that only 0.1% of the shares in the water and energy companies are held by employees. That would still be significant for those employees themselves, but, under rulings from HMRC, their shareholdings have to be treated as an employment benefit. So they can and must, by law, be treated differently from other shareholders.”
Hall said PSIRU had also examined the potential risk of legal action under bilateral international investment treaties (BITSs) and the Energy Charter Treaty (ECT) over compensation for the nationalisation of water and energy companies. A number of national newspapers and broadcasters have reported water companies are among the nationalisation targets that have transferred the ownership of their British operations to offshore companies to protect themselves against Labour’s plan for renationalisation. International treaties with tax havens such as Hong Kong, Luxembourg, Switzerland and Singapore guard against the government being able to buy back firms without paying the market value.
Hall argued the potential for using BITs or the ECT is limited to investors who hold about 20% of the companies, rather than the larger proportions cited in reports. “Moreover, BITs (or ECT) processes are costly, take years, are uncertain in outcome, and are currently facing strong political opposition across the world, including in Germany.”