Labour's renationalisation plot would cost you THOUSANDS of pounds and cripple the economy
LABOUR’S renationalisation plans will cost every household £6,500 by adding £176billion to the national debt, according to a new report. The Centre for Policy Studies estimates renationalising energy would cost £55.4billion, the water sector £86.25billion, Royal Mail £4.5billion and about £30billion for private finance initiative (PFI) nationalisation.
Totalling £176billion, it represents around 10 per cent of the national debt and would be enough to pay for 2.9 million new homes in social housing.
Researchers warned the cost could be up to £306billion unless energy sector renationalisation was restricted to transmission and distribution.
Labour leader Jeremy Corbyn urged wider nationalisation after a party manifesto pledge to renationalise some or all of the energy, water, rail and mail sectors, as well as an unknown number of PFI deals.
Chancellor Philip Hammond said the findings laid bare Labour’s “fantasy economics”.
He said: “Labour claim renationalisation won’t cost taxpayers a penny, but in fact it would mean hundreds of billions more borrowing, meaning more debt and higher taxes.
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“Once again, it’s working people who would pay the price of Labour’s reckless plans.”
Shadow chancellor John McDonnell has refused to provide cost estimates of Labour’s plans or details of how it would work in practice.
The party argues that there would be no renationalisation cost because profits from the acquired firms would cover the borrowing.
Yet it also promises to use the same profits to cut household bills by £220 and to run many of these industries in a fashion that is likely to increase their costs.
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The Cost of Nationalisation report argues it is a matter of overwhelming public concern that Labour sets out clearly how it intends to proceed.
Labour has also indicated that it would save money by refusing to pay full market price for these industries, with Mr McDonnell saying that it is “for Parliament to decide”.
But the report says this could damage the economy even more, via factors such as a business investment slump and higher borrowing costs.
Report author Daniel Mahoney said: “Labour refuses to cost renationalisation plans and it’s easy to see why.
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“It would require at least £176billion in borrowing, the equivalent of £6,500 for every household.
“This would be an expensive gamble with a huge opportunity cost.”
And he said Mr McDonnell’s claim that bills will fall by £220 “does not stand up to scrutiny”.
Mr Mahoney said: “By his own admission, any profits from the industries would end up going to pay debt interest, so how can they be used to lower the cost of bills?”
