Tory landslide means the nationalisation debate is over

There will have been a collective sigh of relief breathed across the boardrooms of the utilities sector when the exit poll was announced at 10pm.

The sheer strength of the Conservative mandate – and the rout of Labour – was immediately confirmed by the defeat behind the eyes of shadow chancellor John McDonnell as he was presented with the prediction.

For utilities, one thing is clear – the threat of nationalisation has vanished into thin air. A hung parliament or even a close win for the Tories (it seems ludicrous to even retrospectively hypothesise about a Labour majority now) may have kept the embers of that policy alive. It was conceivable that a humbled but victorious Conservative party may have looked for lessons in the stickiest of Labour policies.

There is no need for that now. Jeremy Corbyn’s brand of 21^st Century Socialism has been comprehensively rejected and seems likely to be returned to the back benches as the opposition is forced to find a new foothold in the political spectrum. Nationalisation was a flagship policy for Corbyn and will be associated with him for many years to come. It has been transformed into political kryptonite. Why would anyone else go near it?

Sections of the utilities sector have been dominated by this potential threat for months. Now we will see what its sudden disappearance – and the equally abrupt clarity on Brexit – does to some share prices.

So, what does the Conservative majority mean for utilities? Much of this depends on which Boris Johnson will now emerge. The prime minister is newly unshackled from the need to appease anyone – not the Democratic Unionist Party nor any wing of his own party. The victory he has delivered makes him untouchable, at least for the time being.

On the critical task of reaching net zero by 2050, there have been warm words from the Johnson administration but little in the way of a concrete plan of action. We know there is support for offshore wind as well as carbon, capture, use and storage. We can expect £1 billion invested in a fast-charging EV network and £9.2 billion in improving the energy efficiency of homes, schools and hospitals.

That manifesto, however, was written in an uncertain political climate. Things have suddenly become a whole lot more certain. With the UK set to host the COP 26 climate next year, and Johnson keen to assert the UK’s stance as a global leader, could he be tempted to introduce more ambitious net-zero targets?

The Tory manifesto also pledged to keep the existing energy cap while introducing “new measures to lower bills”, adding that the Competition and Markets Authority would be given enhanced powers to tackle “consumer rip-offs and bad business practices”.

The clear outcome of this election is that Brexit is now an inevitability. The nature of it, again, will depend on Johnson. He has promised to get Brexit done but it will now be his Brexit. Nigel Farage has been consigned to a footnote in history, the European Research Group is once again a fringe group – they no longer have any influence on the decisions the prime minister makes.

To find out more about what the Conservative Manifesto means for utilities, see our analysis.

What we still do not know is what a Boris Johnson premiership means for the sector.

We are about to find out.