Labour fought the last election on promises to implement a mass programme of nationalisation, which included the energy, water, rail and mail sectors including some PFI deals. But it doesn’t end there! In official documents entitled Alternative Models of Ownership they also want to add infrastructure projects, telecommunications and the digital economy as they believe these would function better outside of private ownership.
What Labour has of course not calculated is how much this will cost us, and if they have privately, they certainly are not going to tell us. Why not? Because based on commercial values the upfront costs associated with these pledges are extremely alarming. It would mean a £176bn bill for the taxpayer, which is equivalent to 10.1 per cent of the national debt, or nearly £6,500 for each household.
And these estimates only relate to upfront capital costs, so what about all the pension liabilities? As for the energy market, they are only talking about transmission and distribution networks. If Corbyn and his comrades went further and took hold of the whole industry, the overall cost could rise to a staggering £300billion.
To put this is all into perspective and the potential opportunities lost, £176bn could be used to build 2.93m council houses or fund defence equipment for 19 years.
By locking out private capital from these sectors, there would be an increase in the competition for capital in the public sector, which could lead to some of the industries being neglected, which is what happened historically.
The upfront costs of Labour’s nationalization programme is important to understand because their current plan is to pay below the commercial price of assets; they believe it is for Parliament to set the price. The natural consequence of this of course will be only to dampen business confidence and theoretically lead to job losses, not to say undermining foreign investment, which is critical to our economy.
While the costs and risks to nationalisation are apparent, Labour is presenting us with no ideas of how consumers will gain. Id be the first to admit that these industries are not without their faults but nationalisation is the wrong solution.