Labour’s plan to nationalise Britain’s energy network would make the country poorer, hinder efforts to tackle climate change, and threatens a return to the frequent power cuts of the past, the UK’s leading business lobby group has warned.
Jeremy Corbyn is expected to outline plans that would transfer companies including National Grid and the network arms of Scottish Power and SSE, to public ownership soon after a Labour election win.
The Labour leader, along with the party’s shadow business secretary, Rebecca Long-Bailey, is expected to say on Thursday that the UK’s£62bn energy infrastructure – the pipes and cables that supply homes and businesses with gas and electricity – would be taken back into state control at a price to be determined by parliament.
But the CBI said on Wednesday the proposals amounted to hanging a “closed” sign above the UK, with renationalisation delivering “a triple whammy neither citizens nor the country can afford”.
Matthew Fell, the CBI’s chief UK policy director, said: “Much-needed investment is drying up under Labour’s threats, which seriously risks hampering efforts to tackle climate change, and puts in doubt the innovation that will deliver a net-zero carbon economy.
“These plans would threaten significant improvements in network resilience made since privatisation. No one wants a return to the frequent power cuts that were a feature of nationalised industries of yesteryear.”
Companies including National Grid, the network arms of Scottish Power and SSE, as well as smaller regional grids, would all come under public ownership if Labour wins power. Current investors in those firms would be reimbursed with government bonds.
It is thought Labour believes it will be possible to pay a price below the stock market value of the companies in question, by deducting a range of items such as pension fund deficits and state subsidies paid out to energy firms since privatisation.
Nationalisation of the energy networks forms a central part of Labour’s plans to address climate change, with the party arguing that the profits generated from the infrastructure should be invested in the green economy rather than given to shareholders in the form of dividends.
However, National Grid said nationalisation of energy networks would only hinder the progress already made in Britain’s shift towards renewable energy.
In a statement on Wednesday, it said: “National Grid is one of the most reliable networks in the world. We are also at the heart of the decarbonisation agenda. Only a few days ago we broke the record for the longest period of time the country has gone without coal generation.
“These proposals for state-ownership of the energy networks would only serve to delay the huge amount of progress and investment that is already helping to make this country a leader in the move to green energy.”
A spokeswoman for SSE said: “Aside from extensive disruption, paying for state ownership and control of energy networks would require full compensation for owners at great expense to taxpayers, or risk destabilising UK-listed utilities, which most pensions are invested in. Neither are in the public interest.
“Electricity networks are 17% cheaper than before privatisation and more reliable thanks to £100bn of investment by private companies like SSE – all funded by private capital investment and not a penny in public debt at the expense of the NHS or schools.”
Under Labour’s plans, the energy network companies would be brought under the control of a new national energy agency.
The agency would also oversee a network of smaller entities tasked with sourcing renewable or low carbon sources for 60% of all energy use by 2030. The agencies would be responsible for initiatives including the rollout of electric car charging points.