Pen­sions at risk from Labour’s £200bn spend

Scottish Daily Mail - - The Brexmas Election - By Daniel Martin Pol­icy Ed­i­tor

JeReMy Cor­byn’s na­tion­al­i­sa­tion plans could hit pen­sions and risk years of dis­rup­tion, econ­o­mists warned last night.

Labour has un­veiled ex­tra­or­di­nary plans to bring rail com­pa­nies, the Royal Mail, wa­ter and en­ergy firms and the broad­band arm of BT into public own­er­ship.

But the in­de­pen­dent In­sti­tute for Fis­cal Stud­ies yes­ter­day warned of se­ri­ous ad­verse con­se­quences if a Labour govern­ment failed to pay ad­e­quate com­pen­sa­tion to the own­ers of these firms.

Pen­sion funds are one of the main in­vestors in these com­pade­cided nies – and the IFS said that Labour’s plans could leave them out of pocket.

The IFS said that un­less own­ers are com­pen­sated up to the full mar­ket value, the pol­icy would amount to ‘ex­pro­pri­a­tion of pri­vate prop­erty’.

The or­gan­i­sa­tion warned: ‘It will be im­por­tant to pro­vide com­pen­sa­tion to cur­rent own­ers at the ap­pro­pri­ate mar­ket price. To pay more would rep­re­sent bad value for money for the tax­payer.’

even if proper com­pen­sa­tion is paid, it would cost the tax­payer ‘many tens of mil­lions of pounds’.

The party has al­ways said the level of com­pen­sa­tion would be by Par­lia­ment. The IFS added: ‘Many of the pri­vate­ly­held com­pa­nies are for­eignowned. Pay­ing less than their full mar­ket value would risk harm­ing the UK’s stand­ing with other coun­tries.’

It said Labour’s rad­i­cal plans would bring at least 5 per cent of the to­tal UK as­sets cur­rently held by pri­vate com­pa­nies into public own­er­ship. It would lead to a more than £200bil­lion in­crease in the as­sets owned by the public sec­tor and would add over 310,000 to the size of the public sec­tor work­force.

The plans would also bring at least £150bil­lion of debt on to the public balance sheet, on top of the sum paid out to the cur­rent own­ers of these as­sets in com­pen­sa­tion – a sum which could amount to ‘many tens of bil­lions of pounds’.

The in­sti­tute said: ‘Re­or­gan­is­ing the own­er­ship and struc­ture of these in­dus­tries, while si­mul­ta­ne­ously achiev­ing the am­bi­tious tar­gets that have been set (for in­stance the rapid de­car­bon­i­sa­tion of the elec­tric­ity and gas grids), risks years of dis­rup­tion.’

The in­sti­tute also said it was un­clear whether na­tion­al­i­sa­tion would ac­tu­ally im­prove ser­vices any more than greater reg­u­la­tion would.

IFS re­search economist Lucy Kraft­man said: ‘The key ques­tion is whether they would be bet­ter man­aged in the public sec­tor, and what na­tion­al­i­sa­tion can achieve that chang­ing the cur­rent reg­u­la­tory frame­works can­not. At least in the short-run Labour’s cur­rent plan would

‘Ex­pro­pri­a­tion of pri­vate prop­erty’ ‘Com­plex and costly changes’

lead to sig­nif­i­cant dis­rup­tion which could eas­ily, for ex­am­ple, lead to a hia­tus in progress to­wards de­car­bon­i­sa­tion in the en­ergy sec­tor.

‘One should have very clear ev­i­dence for the long-term ben­e­fits be­fore em­bark­ing on such a com­plex and costly set of changes.’

To­day John Mc­Don­nell will vow to end ‘rip-off Bri­tain’ as he un­veils Labour re­search al­leg­ing that the Tories have cost fam­i­lies nearly £6,000 a year by fail­ing to curb ris­ing bills. He will claim plans to na­tion­alise key util­i­ties and in­crease wages will make house­holds nearly £7,000 bet­ter off each year.

The Con­ser­va­tives said it beg­gared be­lief that Labour was claim­ing it would cut the cost of liv­ing – when it was promising tax rises.

‘Rip-off’: John Mc­Don­nell

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