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Renationalisation costs would equal total taxes collected in a year from taxpayers, as well as a year of Health and Social Care spending, at £141bn and education, or £69bn in total, according to the UK-based think tank.
Labour’s plans to renationalise British utility services such as water and energy, as well as trains and the Royal Mail could cost roughly £196bn, the Confederation of British Industries said on Monday.
Debt could jump 10.7 percent if businesses were brought under national control and costs £2bn a year to service, the group said, adding that it would raise debt to 1960 levels. Labour’s plans would also slash £9bn from pensions, or £327 per houshold, CBI figures revealed.
CBI chief economist Rain Newton-Smith called the costs “eye-watering”, adding that they didn’t include the “maintenance and development of the infrastructure”, among others.
Ms Newton-Smith added: “Firms want politicians to invest in major infrastructure projects rather than undermine confidence in our economy and waste time, energy and public money in a renationalisation project with no clear benefits.
Opinion on the report remains divided, with pundits on both sides of the debate hitting out at whether the report remained impartial.
Dr Prem Sikka, University of Sheffield professor of accounting and emeritus professor of accounting at the University of Essex blasted the report as “crazy” whilst pointing out that “it kept quiet about bank bailouts”.
He said that the report “assumes Labour will pay 30 [percent] premium to buy companies” and “ignores that profits and absence of subsidies will services the debt”, adding that the report ignores that a Labour government would stop “profiteering”.
Tory London Assembly member for Hammersmith and Fulham, Kensington and Chelsea, and the City of Westminster hit back, stating the “horrendous” Labour nationalisation costs were “laid bare” by the CBI.
But Jonathan Portes, professor of economics at King’s College London, slammed CBI’s argument as “economically illiterate, self-contradictory rubbish”, and accused the CBI of producing an “inflated price tag” by assuming the UK government would pay at or above market value for companies.
Dr Portes also slammed Ms Rain Newton-Smith for claiming that shareholders and pensioners “would lose because government would pay below market value”.
But Robert Colvile, director for the Centre for Policy think tank, said that the CBI report “completely vindicates” a similar exercise the CPS had published despite having a higher baseline cost.
Mr Colvile said that when he became the CPS director in 2017, he was “endlessly frustrated” by Labour refusing to provide cost estimates on its nationalisation plans
Mr Colvile adde: “In the ensuing 18 months, Labour still haven’t come up with their own figures – something we urged them to do in our report. And they still haven’t disputed a single one of our individual estimates.
Labour under party and opposition leader Jeremy Corbyn have recommitted to nationalising essential sectors of the UK economy, including transport rolling stock, the Royal Mail, electricity, water and gas, among others, as one of its primary goals. The Momentum-controlled National Executive Committee (NEC) has begun reevaluating changes to the party’s constitution, amended under then-Prime Minister Tony Blair, which excluded commitments to Clause IV enshrining “common ownership of the means of production, distribution and exchange”.
The news comes after Christian Schulz of Citibank said that the economy would fair better under a Labour-led coalition government rather than a no-deal Brexit Conservative one, which would have a “5 per cent bigger” forecast. Despite supporting a second EU referendum vote closely aligned with the EU Single Market and Customs Union, Labour plans to invest £250b over 10 years, including nationalising utilities and transport.
