John McDonnell slammed for refusing to cost Labour's nationalisation plans

Helen Cahill
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The Shadow Chancellor Delivers His Pre-Budget Speech
McDonnell has pledged to nationalise large parts of the UK economy (Source: Getty)

John McDonnell faced sharp criticism last night after he refused to say how much Labour's sweeping nationalisation plans would cost.

Speaking on the BBC's Andrew Marr show, the firebrand shadow chancellor said "you don't need a number" for the cost of nationalising firms because the companies' subsequent profits would pay for the initial borrowing cost incurred.

"When you take them over - OK, well, you don’t need a number because what you do is you swap shares for government bonds and that is covered by the cost of those profitable industries we take over," McDonnell said.

Read more: Labour: Use Budget to spend, not save Hammond and May's jobs

The veteran left-winger also suggested that the market value of firms could be ignored, insisting "it will be parliament who sets the price on any of those nationalisations."

Chief secretary to the Treasury Liz Truss slammed McDonnell's plans, saying that his "borrowing binge" meant Labour was not fit to form a government.

"No wonder Labour are preparing for a run on the pound," she said. "Labour's costs would spiral out of control, meaning more debt and higher taxes - with working people paying the price."

The Labour party is committed to nationalising the UK's water companies, railways, the Royal Mail and the National Grid. The total market value of the sectors and services identified for nationalisation is estimated to be around £170bn.

The Confederation of British Industry has said Corbyn's plans "will send investors running for the hills" (Source: Getty)

Alex Wild, research director at the Taxpayer's Alliance, said it was hard to know if McDonnell was "pathologically dishonest or breathtakingly ignorant".

"Not paying market rate for any shares in these companies would be theft from anyone who's had the temerity to save into a private sector pension, but this is apparently of little concern to McDonnell who can look forward to a gold-plated, taxpayer-funded pension when he retires," Wild said.

"Although perhaps the day that happens is one taxpayers should look forward to," he added.

Read more: Pension closure hands Royal Mail £106m profit boost from taxman

The Labour leadership has been in open war with businesses over the party's ambition to seize large parts of the UK economy.

Last week Jeremy Corbyn attacked the Royal Mail, saying shareholders were benefiting while the company increased prices and eroded the working conditions of its employees.

The Royal Mail hit back in a series of tweets. The company said it had invested £1.5bn in its business since it was privatised in 2013 and claimed it suffered from underinvestment when it was under state ownership.

"We paid higher interest rates on loans from the government than we do now to private sector institutions," Royal Mail said.

Mark Littlewood, director general of the Institute of Economic Affairs, told City A.M.: "Nationalised industries are a substantial burden on the taxpayer and historically have provided terrible services. Bringing utilities back into public ownership is unlikely to bring any lasting benefits to consumers but will cost a huge amount of taxpayers’ money."

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