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John McDonnell has accused industry “fat cats” of scaremongering over threats of legal action in response to Labour’s nationalisation plans.
The shadow chancellor was giving a speech on the economy in Birmingham today (4 December).
There have been widespread reports that utility companies are prepared to take legal action against a potential Labour government if it goes ahead with its nationalisation agenda.
Meanwhile, National Grid and SSE have both shifted operations into offshore companies to protect themselves against Labour’s plans, according to recent reports.
In his speech McDonnell claimed Labour’s plan to bring the major energy companies into public ownership has been independently estimated to save an average of £142 a year, while proposals to retrofit every home in the country will cut bills by more than £400 on average per year.
He said: “Getting rid of the dividends being paid out, the overpaid management and the financial speculators isn’t just the right thing to do. It doesn’t just return the essentials of life to people’s hands. It will save you money as soon as Labour get into government and make it happen.
“No wonder the privatisation fat cats are scaremongering with their threats of legal action.”
Labour has also published a report looking into the cost of privatisation under successive Conservative governments.
The report claims that since 2010 the average household pays £68 more for their dual-fuel energy bill and £75 more for their water bill, while adding that a Labour government would allow households to annually save £559 on energy and £113 on water bills.
It also criticises investment in water supply infrastructure which it says was lower in 2018 than in 1990 despite more than 20 per cent of all water currently being lost through leakages from water pipes.
Furthermore, it added, between 2012 and 2017, water companies paid out more than £6.5 billion in dividends and interest, while bosses were paid £58 million in salary, bonuses, pensions and other benefits.
In terms of tax, the report said water companies received almost £164 million more in tax credits than they paid in tax despite pre-tax profits of more than £16 billion.
McDonnell also claimed that “profiteering through privatisation and the Conservatives’ failure to curb rising bills has cost families nearly £6000″ annually since 2010.
In response to Labour’s figures on water, Water UK chief executive Michael Roberts said: “These fantasy figures take no account of inflation, which is how real people feel the difference in their pockets. On average, customers have seen water bills going down in real terms for the last 10 years, and they will keep going down over the next five years. And according to Ofwat, bills in England and Wales are £120 lower than they would have been without privatisation and regulation.
“It’s also completely untrue to state, as the Labour document does, that ‘privatisation has not meant more investment’. Investment doubled in the decade following privatisation compared to the previous ten years when the industry was in government hands, and companies have now invested around £160 billion in making our water and sewerage service one of the best in the world.”
Labour’s manifesto, titled “It’s Time for Real Change”, says that under Labour access to energy and water would be treated as “rights rather than commodities”.
Utility Week has written its own manifesto which you can read here
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