JEREMY CORBYN’s Labour Party has pledged to cut household bills for energy, water and post – by bringing companies running these services into public ownership when it forms a government.
The Party estimates that the move could save the average household £220 a year on energy costs alone. When consumers buy gas or electricity from private sector companies, large chunks of what they pay by-pass the company itself and are paid over to shareholders. When a company is publicly owned, all its income can be spent on providing the service.
Labour points to the water industry to make its case. It has calculated that in the last ten years the private water companies have paid out in dividends around 1,000 more money than they have paid in tax. Further, three water companies – Anglian, Severn Trent and Yorkshire – paid more in dividends than they made in profit over the last decade. This suggests that customers are having to sustain the companies borrowing money just to hand over to shareholders.
The other advantage of public ownership of utility companies is that investment can be directed to benefit consumers – whereas private companies would be drawn to invest in what is most profitable. Labour would direct utility companies to invest in renewable energy rather than energy sources – such as nuclear power and fracking – which need public subsidy or are dangerous.
Bringing the companies into public ownership would not cost the taxpayer, as the companies would not actually be bought for money (which would go to shareholders). Shareholders would receive government bonds in return for their shares, which could be cashed in gradually in future years. This would be a good deal for shareholders, as once a government announces it will offer services through the public sector, there is no future for the private company and the value of their shares would plummet.
Labour Leader Jeremy Corbyn explained the aim of the policy, saying, “The Tories have rigged our economy so that bill payers fund wealthy shareholders of companies which in turn pay little in tax. It doesn’t have to be this way. Labour will rebalance our economy so that the many are no longer ripped off by the wealthy and powerful few. Labour will transform our energy, water and mail markets so that they work for consumers. Our plans for public ownership and greater transparency will slash bills and drive investment in efficiency and renewables. Under a Labour government, our economy will work for the many, not the few.”