Labour warning: How Corbyn's nationalisation plot could wipe BILLIONS off UK industries

Posted on Sep 10 2019 - 11:47pm by admin

Critics have rounded on plans from the Labour Party and Jeremy Corbyn to bring rail companies, energy supply networks, water systems and mail delivery under public ownership. In June the nationalisation plan, set out in a report by Shadow Energy Secretary Rebecca Long-Bailey, came in the wake of the party’s £100billion scheme to take possession of the National Grid. Labour wants to take control of the Big Six energy firms – British Gas, SSE, E.ON, EDF Energy, Npower and Scottish Power – but without paying full market value for them.

The report claimed commandeering the firms would cost no more than £9billion, but on the day it was published, the market value of the “Big Six” was £140billion.

The Conservative Party claimed Labour’s nationalisation plans would cause business investment to “collapse” and the pound to “crash”.

A report last year from the Centre for Policy Studies – headed by former Tory leader Iain Duncan-Smith – estimated the cost of Labour’s renationalisation plans would be at least £176billion – representing 10 percent of the national debt or nearly £6,500 for every household.

Water UK, whose members include Scottish Water, Severn Trent Water, South West Water, Southern Water, Thames Water, United Utilities and Veolia Water, fear huge past and future investment could be put at risk, “adding up to a multi-billion pound nationalisation bill for taxpayers”.

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Jeremy Corbyn news: Industry groups have lashed out at the Labour Party’s plans (Image: GETTY)

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According to the industry body, £160billion has been invested over the past 30 years since privatisation, improving pipes, pumping stations, sewers and treatment centres, with a planned investment of £50billion from 2020 until 2025.

Sir Ian Byatt, the Director General of Ofwat, the independent financial regulator set up to oversee the water industry, said in the organisation’s 1999/2000 report investment had been “nearly £35billion since privatisation. This is approximately double the average level of expenditure in the 1980s”.

According to Ofwat, customer bills are around £120 less each year than they would have been without privatisation and tough independent regulation.

Water UK said since privatisation, water leakages have been cut by a third, customers are five times likely to suffer from supply interruptions, eight times less likely to suffer from sewer flooding, and 100 times less likely to have low water pressure.

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Jeremy Corbyn news: Labour wants to bring rail companies, energy supply networks, water systems and mail delivery under public ownership (Image: REUTERS)

Nationalisation would risk turning back the clock to the days when service and quality failures were far more common, and cash-strapped governments wouldn’t pay for the improvements needed

Water UK

But a spokesperson warned the cost of renationalising the water industry could cost as much as £90billion – even before the additional £100billion that needs to be invested over the next 10 years.

Water UK told Express.co.uk: “Privatisation of the water and sewerage industry has achieved a great deal over the last 30 years – more investment, a healthier environment, better water quality and improved service to customers.

“Nationalisation would risk turning back the clock to the days when service and quality failures were far more common, and cash-strapped governments wouldn’t pay for the improvements needed.

“Two independent reports recently put the cost of nationalising the water industry in England at up to £90billion, looking at the enterprise value rather than just the equity value.

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Jeremy Corbyn news: Industry bodies have warned Labour’s nationalisation plans could put billions of pounds at risk (Image: GETTY)

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“That’s before taking account of the extra £100billion that needs to be invested in the sector over the next decade – all adding up to a multi-billion pound nationalisation bill for taxpayers instead of spending that money on people’s real priorities such as hospitals and schools.”

National Grid fears renationalisation of the energy sectors could also put at risk billions of pounds of future investment and send customer bills soaring.

According to the industry body, power cuts are 60 percent less frequent than they were at the time of privatisation in 1990, resulting from the investment of £100billion of private capital and transmission networks since.

In the past six years, the National Grid has invested £10billion in improving the “security, integrity and carbon performance of UK energy supply markets”.

A spokesperson told Express.co.uk: “We do not believe a state-controlled network is in the best interests of consumers in terms of encouraging the necessary investment and keeping costs down, as we transition to a greener energy future.

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“The energy system is in the midst of a rapid and complex transformation, requiring billions of pounds of investment.

“National Grid is playing a key role in this historic change, which we believe can be more efficiently funded fro the private sector.”

The Energy Networks Association (ENA), which represents transmission and distribution network operators for gas and electricity in the UK and Ireland, warned Labour’s renationalisation plans would seriously threaten Britain’s “superpower” status in renewable energy.

The group said over £100billion of investment has been delivered by network companies since privatisation, with investment of £45billion forecast for the period 2013-23.

The ENA added since privatisation, customers are now experiencing 59 percent fewer power cuts, while their length has been reduced by 84 percent.

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The cost of transporting a unit of electricity has fallen by 17 percent since the mid-1990s, while customer service scores recorded by Ofgem for both electricity distribution and gas distribution currently stand at 8.7 and 8.8 out of 10 respectively.

But the ENA told Express.co.uk: “Private investment since 1990 has helped make Britain a superpower of renewable energy, delivered massive reductions in power cuts and all at less cost to the public.

“The UK’s energy networks are considered to be some of the best in the world in terms of their performance and reliability as well as being the most innovative.

“The disruption caused to the public by implementing Labour’s plans for state ownership would seriously undermine Britain’s world-leading progress in these areas, just at the point when that progress is more critical than ever.”

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