After years of flirting with the idea, we’ve finally seen Labour’s plans to renationalise the energy industry. As always, far from being a panacea, this shiny, expensive policy would turn out to be a disaster.
We can rehearse the arguments about why privatisation works and nationalisation doesn’t. From supermarkets to mobile phone providers, having more choice is good. It forces firms to take their customers’ views seriously, punishes those who take them for granted, and creates openings for upstarts to come through with a better product at a lower price.
Just like all companies, energy firms compete with each other to offer the best price and service. There is more to do, but our reforms mean it has never been easier to switch supplier.
Under a nationalised system, that would all change. There would be no choice about where to get your energy and no fear of people going to the competition. Energy networks would be run by bureaucrats unaccountable to voters or customers. Good service would be crushed under the weight of inefficiency, paperwork and internal politics.
But it’s the way Labour has proposed enacting this policy which has troubled me most. When asked how much all this would cost the taxpayer, John McDonnell has been reluctant to answer, instead offering the cryptic phrase: “Parliament will decide.” On one hand, this is a simple dodge of an awkward question – research has shown Labour’s nationalisations could cost £176 billion, more than three times the price of HS2. But it also ignores the obvious: if Labour gets into government, it will control Parliament. So what McDonnell means is: “I will decide.”
It’s worth taking a moment to absorb this. To enact his nationalisation plan, McDonnell won’t pay market rates. He’ll just take private property at a rate he deems appropriate.
There will be no choice in Labour's bureaucratic energy market.
If that is his plan – what an absolute outrage. Private property has been the backbone of our economy for centuries. People invest here because they trust Britain to keep its word, to respect the rule of law and to pay what’s due. If those people are scared away, it will do untold damage to our energy networks, but also to firms hoping to grow or entrepreneurs hoping for investment to start up.
Foreign direct investment is strong, and has been a continual vote of confidence in Britain. A Corbyn-led government snatching assets from investors at next-to-nothing prices would decimate investment just when we need it most. It won’t just be lights out in your home, but lights out for the millions of businesses who rely on that investment to create jobs.
And who’s next? We have a housing shortage in this country. Instead of building more houses as we need to, would Labour take properties away from owners at a price “determined by Parliament” to sell off on the cheap? This seems far-fetched, but is not a million miles away from what Jeremy Corbyn has floated before.
Don’t get me wrong – Tories aren’t blind to the problems that exist today. Not enough people can afford a house, some train services are still crowded or unreliable, and some bills are still too high. That’s why we are fixing the housing system, putting record amounts into infrastructure and championing new entrants such as challenger banks. But Labour’s answers will make all of these problems 10 times worse. To continue to make utilities better and cheaper, we need more competition, not to end it altogether. Just as to increase opportunity we should allow people to make more choices and keep more of what they earn, not clobber them with ever higher taxes.
We hear a lot from Labour about how Brexit is the biggest threat to our economy. But the truth is: it’s Corbyn, McDonnell and their extreme plans for the economy that pose the real threat.
Their war on enterprise and the individual is fuelling an insidious notion that aspiration and success are somehow bad, and all we need is a committee run by politicians to solve our problems. As anyone old enough to remember the late trains and soggy sandwiches of British Rail can tell you – this is a fantasy that has failed before.
I’m extremely optimistic about our future. But only by embracing success and enterprise, and rejecting Labour’s destructive plans, will we achieve what’s newly-possible outside the EU.