Conservative response to Labour's renationalisation conference

Commenting on Labour’s “Alternative Models of Ownership” conference, Liz Truss, Chief Secretary to the Treasury, said:

“Independent reports show Labour’s renationalisation plan will cost taxpayers billions and lead to worse services for people.

“Labour would put politicians in charge of running everything from the phone lines to electricity supply, meaning people have nowhere to turn when things go wrong. That didn’t work last time and won’t work this time.

“We focus on what works, and that means having the right mix of public, private and voluntary sectors providing services. This allows more choice, competition and innovation, so people have higher-quality services at lower cost to them.” 

Notes to Editors

• 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 that Labour’s renationalisation programme would have an upfront cost of at least £176 billion. That means more wasted on debt interest and less spent on our vital public services (The Cost of Nationalisation, 21 January 2018, link).

• Meanwhile another independent research group has found that Labour’s plan to renationalise the water industry could cost £90 billion. In a report released last week the Social Market Foundation found that if a future labour government wanted to buy the English water industry at fair market prices they would pay between £87 and £90 billion to acquire water firms currently owned by shareholders an investors, including pension funds (Mirror, 5 February 2018, link).

• Renationalising energy would put investment at risk and mean higher prices leaving ordinary families worse off. Energy network costs are now 17 per cent lower than at the time of privatisation. Investment in the electricity networks is higher on average than before privatisation and there are also record levels of customer satisfaction with local electricity and gas distribution networks. Services have improved with power cuts on local electricity networks almost halving since 2002 (Hansard, WA 109821, 1 November 2017, link; Ofgem, 27 February 2009, link).

• Renationalising the water industry would leave families stuck with higher bills. Water bills are 30 per cent lower since privatisation in 1989 than they otherwise would have been and there has been £130 billion of investment. At the same time, Ofwat and Defra have overseen major improvements in water quality and service quality. Average bills fell by 1 per cent in real terms between 2010 and 2015, are expected to have fallen by 5 per cent between 2015 and 2020 and will continue to fall to 2025 (National Audit Office, 14 October 2015, link; Guardian, 17 May 2017, link).

• Privatisation of the telecoms industry has meant lower prices and an end to long waiting list for telephones.  James Foreman-Peck, Professor at Cardiff Business School said: ‘the privatised telecom industry seemed to deliver; prices came down, waiting lists for telephone vanished in the early 1980s and never reappeared, most faults were cleared quickly, and even public telephones began to work’ (BBC News, 3 December 2004, link).

• Since Autumn Budget 2017, Labour have been asked 34 times how they would afford their borrowing binge – and failed to answer every time. John McDonnell said instead: ‘That’s why we have iPads and advisers.’ (Today, 23 November 2017; The Andrew Marr Show, 19 November 2017; Paterson on Sunday, 3 December 2017; Good Morning Britain, 2 January 2018; The Andrew Marr Show, 21 January 2018).