Photo by Garry Knight/Flickr
John McDonnell, the Shadow Chancellor, has said that the plan of the Labour party to bring services including energy, rail, and water under public ownership would be free of cost.
At a conference that was held in London on “alternative models of ownership,” he told the audience that Carillion’s collapse attested that privatisation had failed.
McDonnell stated that taking essential infrastructure assets out of private ownership is “an economic necessity,” and could be achieved while not bring additional costs to the taxpayers.
On BBC Radio 4’s Today programme, McDonnell stated: “It would be cost-free. You borrow to buy an asset, and when that asset is producing profits like the water industry does, that will cover your borrowing cost.”
In his speech, McDonnell also said: “The next Labour government will put democratically owned and managed public services irreversibly in the hands of workers, and of those who rely on their work.
“We will do this not only because it’s right, not only because it’s the most efficient way of running them, but also because the most important protection of our public services for the long term is for everyone to have and feel ownership of them.”
The Conservatives have since denounced the said plan, saying that it will cost billions of pounds and result to worse services. Meanwhile, the CBI, a business group, said that the cries for nationalisation “continue to miss the point.”
Neil Carberry of the CBI stated: “At a time when the UK must be seen more than ever as a great place to invest and create jobs, these proposals would simply wind the clock back on our economy.
“If Labour turns its back on good collaboration between the government and the private sector, public services, infrastructure and taxpayers will ultimately pay the price.”
John McDonnell also revealed the creation of a working group that is tasked to study how cooperatives and organisations that are owned and run by their members could be developed.
Later in the said conference, Jeremy Corbyn, the Labour leader, said that nationalising energy companies was essential in order to avoid a “climate catastrophe.”
Corbyn stated: “People have been queueing up for years to connect renewable energy to the national grid. With the national grid in public hands, we can put tackling climate change at the heart of our energy system.
“To go green, we must take control of our energy.”
However, the Centre for Policy Studies said that the suggestion of Corbyn that nationalisation was essential to encourage small-scale renewable energy “suggests that Labour will have to borrow billions more to pay for the necessary infrastructure, or else pass the cost on to consumers via their fuel bills.”
The director of the Centre for Policy Studies, Robert Colville, stated: “The shadow chancellor claims that nationalisation would be cost-free because the state would be acquiring an asset – repeatedly using the analogy of taking out a mortgage on a house. Yet who would buy a house without knowing its price?
“McDonnell dismissed our £86bn estimate of the cost of nationalising the water industry as ‘laughable’ – even when the Social Market Foundation came out with a near-identical estimate. Yet neither he nor any Labour figure has disputed the detail of a single one of our estimates.”