I have never been one for negative campaigning but I have found it very hard to ignore some of the extraordinary rhetoric coming from Brighton last week. The headlines sounded so exciting: to cheers from Labour members – ‘we’re bringing them back’ – referring to nationalisation of everything from the Royal Mail to water and energy companies and the railways.
But we need to think about what this really means. As someone who grew up in the 1960s and the 1970s, those implications are all too real. Nationalised industries were a shambolic drain on public finances. I’m not saying every utility company or rail operator is perfect but I remember how dreadful their nationalised predecessors were. And of course, ‘bringing them back’ not only means bringing them back under Government control but also back into the responsibility of the Exchequer, the tax-payer-funded public purse.
Not much was being said in Brighton about the cost. Sometimes the figures do need to be stated. New analysis shows that the promises made by Labour since the launch of their manifesto would cost the taxpayer an eye-watering £312 billion. If the national debt increased by this much we would have to spend at least £7 billion more on debt repayments every single year – the equivalent of 81,000 nurses, 69,000 teachers and 66,000 police officers. And that’s according to the Office for Budget Responsibility by the way.
I am not an expert on the Royal Mail or the railways but I do have first-hand knowledge of the way that water companies have worked since privatisation. In that time we have seen around £120 billion invested in water and sewerage infrastructure. That means the replacement of rusting and leaky pipes and modernising ancient and polluting sewage systems, all of which suffered from chronic under-investment in the years of public ownership. Since privatisation, investment has been financed by an inflow of cash from around the world. This has included international sovereign wealth funds and pension funds who like our regulated utility sector because it offers a secure if not very high yielding return on investment. If nationalisation happened under a future Labour Government there would be a flight of capital from our economy. The cost of nationalising just Thames Water alone would be around £12 billion. The damage done to our economy by the drying up of investment from our own capital markets and from abroad would be incalculable.
And consider this. Every year the nationalised industries would have to go cap in hand to the Chancellor of the day and bid for Government money (your money) for infrastructure investment. They would be firmly told to get in the queue behind the NHS, pensions, welfare and other public service spending. As Margaret Thatcher once said, ‘The problem with socialism is that you eventually run out of other people’s money.’