The Institute for Fiscal Studies (IFS) has reported on the “enormous cost, complexity and risk” of Labour’s re-nationalisation plans and said it is “unclear which of Labour’s stated objectives could not be achieved via changes to the current system of regulation” instead.
In a briefing note, the IFS said the proposed transfer to state hands of water, energy distribution and supply, mail, train operators and fibre broadband provision would bring at least 5% of the total UK assets currently held by private companies into public ownership, lead to an over £200 billion increase in the assets owned by the public sector and add over 310,000 to the size of the public sector workforce.
It would also bring at least £150 billion of debt onto the public balance sheet on top of shareholder compensation, which it said would run to “many tens of billions of pounds”. Contrary to the indication from Labour that shareholders could be paid less than the market price, the IFS said that would “amount to an expropriation of private property, which would leave current owners (including pension funds) out of pocket. Many of the privately held companies are foreign owned. Paying less than their full market value would risk harming the UK’s reputation and standing with other countries”.
The Institute further remarked that given the significance to the wider economy of the industries earmarked for re-nationalisation: “Reorganising the ownership and structure of these industries, while simultaneously achieving the ambitious targets that have been set (for instance the rapid decarbonisation of the electricity and gas grids), risks years of disruption.”
• Water UK called the numbers relating to water in the Labour Party’s new report on the cost of living “fantasy figures”. Chief executive Michael Roberts said: “These fantasy figures take no account of inflation, which is how real people feel the difference in their pockets. On average, customers have seen water bills going down in real terms for the last ten years, and they will keep going down over the next five years. And according to Ofwat, bills in England and Wales are £120 lower than they would have been without privatisation and regulation.
“It’s also completely untrue to state, as the Labour document does, that ‘privatisation has not meant more investment’. Investment doubled in the decade following privatisation compared to the previous ten years when the industry was in government hands, and companies have now invested around £160 billion in making our water and sewerage service one of the best in the world.”