Conservative response to John McDonnell’s speech at Labour conference

Responding, Philip Hammond MP, Chancellor of the Exchequer, said:

“John McDonnell showed yet again that Labour don’t know how to handle the economy and have no idea what their plans would cost.

“Labour’s plan to put politicians in charge of crucial industries means there would be nowhere to turn when things go wrong. They aren’t fit to govern and, just like last time, it’s working people who would pay the price.

“Only the Conservatives are getting on with the job of building an economy that works for everyone, taking action to improve services and to keep costs low for you and your family.”

ENDS

Notes to Editors

Labour’s plans for renationalisation have failed before and would fail again.

• ·         Labour would put politicians and their union paymasters in charge of the water industry. ‘Our plans propose that the RWA boards will be made up of councillors from local councils in the region, plus 3 trade union representatives, and 3 representatives of community, consumer and environmental bodies’ (The Labour Party, Clear Water, accessed 24 September 2018, link).

• ·         Labour would nationalise without giving full compensation. ‘Parliament may seek to make deductions for compensation on the basis of: pension fund deficits; asset stripping since privatisation; and state subsidies given to the privatised water companies since privatisation’ (The Labour Party, Clear Water, accessed 24 September 2018, link).

• ·         Labour think Transport for London (TfL) is a good financial model. ‘The new public companies’ financial management will be modelled on Transport for London (TfL). They will continue to be almost completely self-financing from user charges and debt, raised subject to an authorised limit based on recurring annual income and cash available to pay financing costs, with occasional government grants for specific projects in the public interest’(The Labour Party, Clear Water, accessed 24 September 2018, link).

• Transport for London (TfL) is planning for a £1 billion deficit next year (The Guardian, 12 February 2018, link).

Renationalisation would cost billions – meaning taxes would go up and borrowing would spiral.

• ·         Independent research shows that Labour’s renationalisation plans would cost hundreds of billions meaning more borrowing and higher taxes. The Centre for Policy Studies found renationalisation would have an upfront cost of at least £176 billion and the Social Market Foundation found the cost of water renationalisation would be £90 billion, meaning more wasted on debt interest (The Cost of Nationalisation, 21 January 2018, link; The Cost of nationalising the water industry in England, 5 February 2018, link).

• ·         John McDonnell has admitted his £500 billion spending splurge doesn’t go far enough. John McDonnell has said he was ‘embarrassed about how mediocre’ Labour’s £500 billion spending is and that it was ‘just a first step’ (The Sun, 12 September 2018, link).

Placing key services in the private sector has led to better services and lower prices for families…

• ·         Placing key services in the private sector has led to more investment and improvements in infrastructure. Investment in water and energy doubled following privatisation and there has been over £200 billion of investment in these two sectors since. Power cuts have halved and consumers are five times less likely to suffer from water supply interruptions (World Bank Group, May 1997, link).

• ·         Placing key services in the private sector has led to lower prices for families. Following privatisation energy network costs have fallen and improvements in efficiency have been made by water companies and BT which means prices are lower than they otherwise would have been. Families have also benefited from lower flight prices due improving efficiency in the major airports (Competition and Markets Authority, 16 May 2016, link).

• ·         Placing key services in the private sector has led to better services. Complaints against train companies are down 75 per cent, complaints against Royal Mail are down 20 per cent, and more than 90 per cent of customers are satisfied with the service they receive from their water company (ORR Data portal. Assuming 1996-97 as the year of privatisation; Ofcom, 30 November 2016, link).