Yahoo Finance CBI: Labour's re-nationalisation plans will cost £175bn and 'do profound harm' to pensioners
The head of Britain’s biggest business lobby has attacked the Labour Party’s plans to renationalise key infrastructure in the UK, such as rail, water, and energy.
“The Labour Party’s current proposals get the balance wrong,” Confederation of British Industry (CBI) director general Carolyn Fairbairn said in a speech on Thursday, “and will harm the very people they are intended to help. They already have prompted investors in our country to reach for their coats.”
The Labour Party, the UK’s biggest opposition party, has repeatedly pledged to re-nationalise infrastructure such as railways, energy supply networks, mail delivery, and water suppliers if they win power. The re-nationalisation plans were a key part of the party’s 2017 election manifesto.
“We need to put Britain at the forefront of the wave of international change in favour of public, democratic ownership and control of our services and utilities,” Labour leader Jeremy Corbyn said in a speech last year.
The plans would “do profound harm” to the UK economy, Fairbairn said on Thursday, and make up to eight million people “poorer in their old age” due to investments made by pension funds in the private companies that currently provide these services.
“The sense that the current system is run not for consumers, but for shadowy investors exploiting ordinary people for personal gain, is not the true picture,” Fairbairn said in a speech at Liverpool John Moores University.
“Those investors are not the unaccountable fat cats of fiction. They are you and me. They’re anyone who pays into a pension, donates to one of our big charities or participates in an employee ownership scheme.
“Take the water company that supplies Liverpool. It’s 70% owned by pension funds, charities, and employees.”
Fairbairn said Labour’s plans would cost the economy £175bn, a figure based on a white paper by the right-leaning think tank the Centre for Policy Studies that came out last year.
“It’s the regression to a way of doing things we have already tried, at which we have already failed and at which we would fail again,” Fairbairn said.
Fairbairn admitted that utility and transport companies in the UK do need reform but said re-nationalisation “would be like throwing out the baby and keeping the dirty bath water.”
“We agree. These industries are not always working as they could and should,” she said. “But, of course, Labour doesn’t just identify a problem – it also presents a radical remedy. And that is where our disagreement begins.”
Fairbairn suggested alternative remedies such as automatically switching people onto the best utility tariffs for them, caps to dividends when customer care goals are not met, and more local accountability for companies.
“The conversation between business and the Labour Party must continue. We believe they are asking the right questions,” she said. “But by working with business – and not against it – we believe they can find much better answers.”
The CBI represents 190,000 businesses across the UK.
