New research published today by the Centre for Policy Studies estimates that the cost of Labour’s renationalisation plans would be at least £176bn. This would represent around 10 per cent of the national debt, or nearly £6,500 for every household. It would be enough to pay for central government’s contribution to the cost of 2.9 million new homes in social housing.
Labour’s 2017 manifesto, and its subsequent policy announcements, have committed the party to the renationalisation of some or all of the energy, water, rail and mail sectors, as well as an unknown number of PFI deals.
Analysis by the CPS estimates the costs of these renationalisations as: over £55.4bn for energy, £86.25bn for the water sector, £4.5bn for Royal Mail, and £30bn for PFI nationalisation (although this estimate is particularly uncertain).
This £176billion calculation assumes that Labour restricted its renationalisation of the energy sector merely to the transmission and distribution networks. In the event of a wider renationalisation of the energy sector, as urged by Jeremy Corbyn, the final total could be up to £306bn.
John McDonnell, the Shadow Chancellor, has refused to provide any estimates of how much Labour’s nationalisation plans would cost – or details of how they would work in practice.
Labour has tried to argue that there would in fact be no cost to renationalisation, because the profits from the firms acquired would cover the borrowing. Yet it has also promised to use the same profits to cut household bills by £220 per household – and to run many of these industries in a fashion that is likely to increase their costs.
‘The Cost of Nationalisation’ argues that it is a matter of overwhelming public concern that Labour set out clearly how it intends to proceed with renationalisation – not least because, so long as Labour refuses to put a cost on renationalisation, it is impossible to know how much the debt interest payments would be.