Labour's nationalisation plans would come with 'eye-watering' £196bn price tag, business group warns
Labour's plans to renationalise vast swathes of the UK economy would come with a "beyond eye-watering" £196bn price tag, a major business group has warned.
The CBI - which represents large businesses - estimated that Labour's proposals to return train companies, utilities and the Royal Mail to public ownership would cost close to £200bn and bring "no clear benefits".
But Labour accused the lobby group of "incoherent scaremongering".
The CBI's analysis looked at the cost of bringing England's water companies, National Grid, electricity and gas networks, rail rolling stock and Royal Mail back into the public sector.
It argued that the move could see a 10.7% increase in public debt, bringing borrowing "to levels not seen since the 1960s".
"Servicing this debt is expected to cost around £2 billion per year," the CBI said.
"While the Government’s assets would increase, and there would be the potential for revenue generated by these utilities, the confidence of international investors in the UK would be severely hit should Labour refuse to pay full market value for the industries."
The group added a premium of 30% to the current value of the companies - which it said was "based on historical takeovers and market to asset ratios of publicly listed companies" - to come up with the £196bn figure.
The total assumes that a Labour government would pay full-market value for the utilities and transport networks if it took them over.
The CBI warned that the total cost of Labour's nationalisation plans was equal to the Health and Social Care and Education budgets combined.
The group's chief economist Rain Newton-Smith said: "The price tag for Labour’s renationalisation plans is beyond eye-watering – close to £200 billion. And that’s only the starting point. It doesn’t take into account the maintenance and development of the infrastructure, the trickle down hit to pension pots and savings accounts, or the impact on the country’s public finances.
"There are so many other genuine priorities for public spending right now, from investing in our young people to the transition to low carbon economy and connecting our cities and communities. These issues are what keep businesses up at night and what they want to see the Government get on with addressing."
He added: "Firms want politicians to invest in major infrastructure projects rather than undermine confidence in our economy and waste time, energy and public money in a renationalisation project with no clear benefits."
But Labour hit back at the analysis, accusing the CBI of making exaggerated claims and disputing the 30% premium added to the value of the firms analysed.
"It is disappointing that the CBI seems incapable of having a grownup conversation about public ownership - which is hugely popular and common across Europe," a spokesperson said.
"It sadly reveals that they are more interested in protecting shareholders than in creating a fair economy."
Alfie Stirling, head of economics at the left-wing New Economics Foundation, meanwhile said: "The CBI’s analysis fails to assess the possible impact of nationalisation on the public finances in a balanced way.
"The upfront costs have likely been inflated by the choice of assumptions, and any public income from the newly purchased companies has been excluded from the calculation entirely."