Labour nationalisation plans could delay low-carbon transition, IFS warns

Labour’s plans for the nationalisation of different sectors could lead to a disruption in the UK’s transition to a low-carbon economy, the Institute for Fiscal Studies said in a study on Wednesday.

The IFS said that taking water, energy companies, Royal Mail and the railways under state control would be "costly, complex and risky", and advised Labour to tighten regulation instead.

Lucy Kraftman, an IFS research economist, said: “The industries that Labour plan to nationalise are vital to the UK economy.

"The key question is whether they would be better managed in the public sector, and what nationalisation can achieve that changing the current regulatory frameworks cannot."

Kraftman said that, at least in the short run, Labour’s current plans would lead to "significant disruption" which she said could easily, for example, lead to a hiatus in progress towards decarbonisation in the energy sector.

"One should have very clear evidence for the long term benefits before embarking on such a complex and costly set of changes."

The shadow chancellor John McDonnell flatly rejected the IFS argument, saying that nationalisation would allow the government to speed up the transition and enable a decarbonisation sooner.

The IFS said the change of ownership would bring around £200bn of assets and £150bn of debt onto the public sector balance sheet.

“To pay more would represent bad value for money for the taxpayer," it said.

"To pay less would amount to an expropriation of private property, which would leave current owners - including pension funds - out of pocket."

It noted that many of the privately-held companies were foreign-owned, and explained that paying less than their full market value would risk harming the UK’s reputation and standing with other countries.