The CBI is set to release a new analysis of Labour’s renationalisation plans on Monday 14th October 2019. It estimates the upfront cost of taking the water and energy utilities, train companies and Royal Mail into public ownership at £196 billion – the equivalent, as it points out, of every penny in income tax paid by UK citizens in a year, or almost as much as the Health & Social Care and Education budgets combined.
In January last year the Centre for Policy Studies (CPS) published its own estimate, which put the minimum cost at £176 billion. (Unlike the CBI’s, our estimate included the cost of unwinding PFI deals, also promised by Labour, but did not include a value for rail rolling stock.)
John McDonnell, the Shadow Chancellor, has repeatedly stated that the figure calculated by the CPS is incorrect and that the taxpayer would not face any financial burden.
However, this new analysis from the CBI completely vindicates our original report – and highlights the fact that Labour has still not come up with a proper estimate for the additional borrowing involved in its policies, beyond a suggestion that Parliament will forcibly nationalise the companies involved at well below their market value.
The CBI’s figures also suggest that on top of the additional borrowing, Labour’s plans would involve a £9bn raid on UK savers and pension funds, and a further £36bn cost to international investors. This would have a hugely detrimental impact on investor confidence in the UK and would scare off any private investors who currently invest in UK infrastructure – a hole which would have to be plugged by the taxpayer, increasing the cost of the policy still further.
Robert Colvile, Director of the Centre for Policy Studies, said: ‘The new figures coming out of the CBI show that we were right to highlight the extraordinary scale of Labour’s renationalisation plans, and to raise the alarm about its refusal to cost them properly.
‘John McDonnell’s continued refusal to recognise the scale of additional borrowing involved in renationalisation, or to provide adequate estimates for it, is deeply worrying.’
‘It is clear to everyone that there is more to do to improve the performance of these companies. But many of the problems stem from an absence of competition, rather than the lack of public ownership. Renationalisation remains a solution in search of a problem.’