Labour's plans to nationalise core industries would add at least £176bn to the UK's national debt, the equivalent of £6,500 per household, a new study suggests.
According to the free-market Centre for Policy Studies (CPS), nationalising the energy and water sectors would cost £55.4bn and £86.25bn respectively, while the price tag attached to bringing Royal Mail back into public hands would be £4.5bn. The cost of nationalising private finance initiative (PFI) contracts, which have come under scrutiny following the collapse of Carillion, would be £30bn.
The energy figure only takes into account transmission and distribution networks. If Labour nationalised the whole sector, as championed by Jeremy Corbyn, the total cost rises to £306bn. The UK is currently straddling a national debt of £1.76 trillion.
Shadow Chancellor John McDonnell has previously justified his plans by saying the companies' subsequent profits would pay for the costs of nationalisation. However, he has also promised to use the same profits to cut household bills by £220 per year.
When challenged about the CPS report on the BBC's Andrew Marr show today, McDonnell said the thinktank was “almost a department of the Conservative party” and “hardly independent”.
Reiterating his commitment to bringing PFI contracts back into public hands, McDonnell said: “It will be cheaper now to bring the special purpose vehicles into public ownership, parliament will determine the price, we can renegotiate the terms of the debt that there is now and make it cheaper. That’s what many people do in their own lives, they go out and renegotiate their mortgage, and that’s what we’ll do on this.”
Chief secretary to the Treasury Liz Truss said on Peston on Sunday she did not want to see Britain return to the 1970s. "The taxpayer ended up paying for losses made by nationalised companies, which ended up raising our tax bills. We don't want to go back to those days."
Chancellor Philip Hammond tweeted that the report laid bare Labour's "fantasy economics".