The Institute for Fiscal Studies (IFS), a respected independent economic research organisation, has published a damning report on the Labour Party’s nationalisation policy.
Labour’s policy, outlined in their 2019 election manifesto, proposes a government takeover of Royal Mail, water companies, energy distribution and supply, train operators and fibre broadband provision.
In its analysis of the plans, the IFS contradicts Labour’s claim that industries such as water could be taken over cheaply, saying that the overall nationalisation bill would be “many tens of billions of pounds”. The IFS points out that it would be “important to provide compensation to current owners at the appropriate market price…. To pay less would amount to an expropriation of private property, which would leave current owners (including pension funds) out of pocket”.
At a time when water companies are pressing ahead with ambitious plans to achieve net zero carbon by 2030, the IFS suggests that nationalisation could get in the way of important environment work. The report says: “Reorganising the ownership and structure of these industries through nationalisations could come at the risk of creating disruptions and upheaval that also makes it harder to meet [decarbonisation] goals”.
Overall, the IFS strongly questions the case for nationalising the industries mentioned in Labour’s manifesto, saying: “Given their importance, and the enormous cost, complexity and risk involved in bringing them into public ownership the key question must be what is it that can be so much more readily achieved through a transfer of ownership that cannot be achieved through altering the current regulatory framework. These are, after all, all industries subject to significant regulatory control and it is unclear which of Labour’s stated objectives could not be achieved via changes to the current system of regulation”.
Commenting on the IFS nationalisation report, Water UK Chief Executive Michael Roberts said:
“The evidence against nationalisation keeps stacking up. Whether it’s the impact on pensions – including hitting more than 4 million public sector workers – or the damaging disruption it would cause to decarbonisation efforts, the nationalisation of the water industry would be bad for customers, bad for the environment and bad for the economy.”