Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1091378

McDonnell promises 'cost free' nationalisation from Labour

Labour shadow chancellor John McDonnell has claimed the party could mount a 'cost free' re-nationalisation of water, energy and rail services if it won the next election.

 

This prompted an angry response from Water UK, trade body for the water companies. Its chief executive Michael Roberts: 'It’s wrong for Labour to suggest that our water system is broken. Water companies secure capital provided by lenders and shareholders, who need water companies to make a return in order to finance significant improvements to the industry.

He added: 'Under public ownership, the water sector in England was starved of cash and standards were poor. Private companies have instead invested heavily to reduce leakage, improve drinking water quality, and protect the environment – and they continue to invest £8 billion each year in even better services.

'In real terms, bills are roughly where they were 20 years ago and will be falling over the next few years,' Roberts claimed.

In his speech Corbyn attacked what he called the clear failures of privatisation and outsourcing of public services.

'From Carillion’s collapse and the private sector’s chronic inability to run the East Coast Mainline to the exorbitant costs of PFI and the hopeless inability of G4S even to handle basic security at the London Olympics the same story is repeated again and again; costly, inefficient, secretive.

'Unaccountable corporate featherbedding, lubricated by revolving door appointments between Whitehall, Westminster and private boardrooms as service standards and the pay and conditions of public service workers are driven down. This obsessive drive to outsource and privatise has been tried and tested to destruction,' he said.

Corbyn used research by the Transnational Institute identifying 835 examples of privatisation being reversed around the world to argue that Labour was on the side of a popular revolt in defence of state-run public services.

'There are very good reasons for what’s taking place,' he said. 'The neoliberal ideology that drove the privatisation frenzy forgot a key lesson that’s understood even by conventional neoclassical economics; that where there are natural monopolies, markets fail.'

Sign in / register to view full article on one page

23 comments so far. Why not have your say?

Kernel_Panic

Feb 12, 2018 at 11:00

A politician's promise.....

report this

Andrew Stevenson

Feb 12, 2018 at 14:04

I remember very well when politicians wanted to raise more money, electricity prices would be put up when that hadn't been any change in the costs of generating that electricity. It was simply another form of tax, and regressive at that.

report this

Andrew Stevenson

Feb 12, 2018 at 14:04

I remember very well when politicians wanted to raise more money, electricity prices would be put up when that hadn't been any change in the costs of generating that electricity. It was simply another form of tax, and regressive at that.

report this

Tom Mozy

Feb 12, 2018 at 14:56

The problem is that they dont produce profits under government ownership. Commi's never learn.

report this

DJC1362

Feb 12, 2018 at 16:22

The deeper Momentum get a foot hold in Labour the less likley they are of ever winning power so this is just pie in the sky rubbish from the left

report this

magic beans

Feb 12, 2018 at 16:43

Berlin and Paris have both reversed the privatisation of the water supply. Claimed it was the beastly EU that made them do it in the first place but did not stop Germany insisting on the Greeks selling their water though.

I currently pay £77/mnth to SWW aka Pennon group who just load up SWW with debt and then pay themselves handsomely for it.

Cant happen soon enough for me.

report this

martin verlaine

Feb 12, 2018 at 16:53

How is this cost free? . Unless you issue zero coupon Gilts to the shareholders there is going to be a cost to the Exchequer in terms of interest ( likely to be at least 5% by the time BOE has raised rates to protect the pound and the economy is in recession etc etc) I do not disagree Water is not a good candidate for private ownership ( also live in the SWW area ) but it is the concept of Red Momentum driven Labour that is all wrong. Gold plated pensions for all Employees of the newly privatized firms will see the deficit balloon massively and self perpetuate the economic doom. Trouble is nobody can see this who is 18 and likes that nice man Corbyn Last one out of the country please turn out the lights

report this

magic beans

Feb 12, 2018 at 17:06

If you read the detail that was uncovered re Germany France Italy Spain et al it was the ten year bond price +2 that guaranteed the profits. The German cities simply nullified the contract on the grounds that the water companies were blatantly profiteering as they claimed the R+2 formula was not generating enough profit. A bit similar to the East Coast rail franchise fiddling that going on here.

report this

Alan Tonks

Feb 12, 2018 at 17:55

NOT THE FEW BUT THE INSANE

Well if Labour do form the next Government with Peter the Painter Corbyn, it will prove one thing at the very least.

The lunatics will be well and truly running the asylum, after all we have enough loonies running around in this one.

report this

bill bullick

Feb 12, 2018 at 21:16

That which no one owns, no one will care for [Aristotle] . McDonnell and Corbyn are not only economically illiterate, but delusional.

report this

Anonymous 1 needed this 'off the record'

Feb 12, 2018 at 21:45

Better to have the utilities run halfway effectively and make money and pay dividends to society. Otherwise they will be run by useless politicians in the most ineffective and inefficient way possible wasting all our money as taxpayers. Natural monopolies need to be regulated - as indeed do all sectors - not state owned and inefficient.

Anyone who wants testament to the idiocy of politicians should watch the This Week item on the NHS where the politicians seek to defend the indefensible.

report this

The Old Man

Feb 12, 2018 at 22:33

You are all missing the point. Taking the utilities into public ownership will create many new jobs as employees won't have to work too hard and a new multi-layered management structure will be needed. Just what we need with the current levels of employment.

report this

Roger Savage

Feb 12, 2018 at 22:58

McDonnell doesn't seem to understand (or has chosen to ignore) the complex nature of many of the businesses involved in supplying utilities. National Grid, for example, doesn't simply provide UK-focused delivery, it also has interests in the US. So does Centrica which also has interests in oil and gas exploration with Norwegian partners (Spirit Energy).

It isn't as simple as Company X supplying utilities to Country Y so which parts of the business will they offer Govt Bonds for?

Let's face it, it's a ill conceived policy by a Labour Party that would say or do anything to get votes. Worse still, the shadow cabinet seem particularly incompetent / unpleasant (and I can't stand any of the mainstream 'alternatives' either, btw). LibLabCon - they're all traitors to the hard working, honest Brit, quite frankly and seem to all too enthusiastically court the votes of the slackers and spongers at every turn by promising them the moon on a stick.

If public ownership is so great, why are quangoes and local authorities run with a mix of incompetence, profligate waste and contempt for the public?

The most depressing thing is that people fall for politician's lies over and over again, despite the same parties often pledging to fix problems they caused (or embraced) in the first place / last time around. Doesn't say much for the intelligence of the electorate, frankly.

report this

magic beans

Feb 13, 2018 at 09:48

“The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”

― George Orwell, Animal Farm

report this

Robroy

Feb 17, 2018 at 10:37

How can you ever trust men like Corbyn and Mc Donell the pair of them are staunch communists ,show me a communist country that far exceeds a capilist one ,Corbyn and his cahoots promise everything and won’t deliver anything apart from returning to the miserable 70 s,the unions would soon flex their power and we would go back to the strike first scenario ,get ready to ditch your investments if they ever get in

report this

Novgorod

Feb 17, 2018 at 12:04

So borrowing loads more money is zero cost - really? Well when the markets see this never ending avalanche of new gilts hitting the market yields will soar and Old Labour's borrowing binge will cost us all a fortune.

Soon interest payments will consume ever larger amounts of government expenditure and will soon be in a downward loop of borrow more, tax more, borrow more, tax more etc ...

Why can't they do what modern smarter socialists do - simply regulate these industries to do what they want them to do? It would be so much cheaper for the country.

Not only is McDonald an economically illiterate Marxist dinosaur, but it turns out Corbyn may very well be traitor.

But hey the Americans voted in the moron Trump, despite all his faults and misdemeanours being on full display - I suspect we'll vote in a party and leaders clearly unsuited to running any country never mind tackle the huge societal and technology challenges we all face.

report this

CT

Feb 19, 2018 at 10:41

Some really good comments here but Magic Beans would blindly have us become the next Venezuela. It is just Corbyn saying anything to get political gain. £90 billion more debt for our kids to never pay off is just what we need and lets string up Esther McVeigh aswell. Open your eyes Magic Beans. Roger S and Robroy are spot on. Whilst so many are bleating have a look at the waste permitted by our not so wonderful NHS managers.

report this

magic beans

Feb 19, 2018 at 10:50

plus ça change

report this

CT

Feb 19, 2018 at 10:56

Je vais prendre cela comme une acceptation réticente MB

report this

magic beans

Feb 19, 2018 at 11:03

la lutte continue.;-)

report this

Novgorod

Feb 19, 2018 at 11:15

Actually, Corbyn will indirectly end up destroying the NHS and much of the welfare state.

Why? Because after five years of rule, the country will be dramatically more indebted than now and full of nationalised inefficient industries with high inflation, a collapsed pound and maybe even exchange controls (holiday obsessed Brits will love that one!).

Once back in power it will be the golden opportunity for the hard right within a future Conservative government to simply cull huge parts of the state on the basis that we can no longer afford it and charge citizens for many NHS services. The priority of that future government will be to demonstrate that Britain is once again an investible proposition for investors and companies to grow the economy and create jobs.

We're already on that road - but a Corbyn government will merely bring that day forward much more quickly.

report this

CT

Feb 19, 2018 at 11:25

True Novgorod

but in the meantime..... my wife is a nurse and the abuse to staff in A&E is horrific - if drunks were charged for treatment the numbers would fall dramatically and that would make a huge difference to staff morale and recruitment

report this

Novgorod

Feb 19, 2018 at 11:35

No medical professionals should ever have to face that kind of abuse - in my experience NHS staff are sincere people trying to do a great job.

And agree - for a lot of self inflicted conditions such as the one you mention and even others such as obesity, maybe such people should be charged for their treatment, (if they have the money). They should also consider taxing excessive sugar and fat across all food groups to help fund the NHS given all the diseases excessive consumption of them causes.

We need a big push from government to improve diet and raise health awareness, we're sort of seeing that, otherwise the NHS will be crippled.

The government has done some very successful public campaigns to reduce smoking and drink driving for example, which I'm sure has saved thousands of lives.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Standard Life Aberdeen sells insurer to Phoenix

by Jack Gilbert on Feb 23, 2018 at 07:24

Sorry, this link is not
quite ready yet