According to the Confederation of British Industry (CBI) the price tag for Labour’s plan to renationalise utilities, Royal Mail (RMG) and the train operators would be £196bn.

Framing this number in terms that most of us understand (i.e. the pound in our pocket) the CBI points out it would amount to taking every penny of income tax paid by UK citizens in a single year.

The organisation also points to a £9bn loss for savers and pensioners (investors) or £327 for every household in the country from such a move as listed companies were taken over by the state.

And if a Labour-led government opted to pay below market value for these assets, the CBI says the confidence of international investors in the UK would be undermined.

Since the commitment to renationalisation was made in Labour’s 2017 manifesto on 16 May 2017, the big utilities firms and Royal Mail have performed poorly on the stock market.

Company Performance since May 2017 (%)
Royal Mail -50.9
Stagecoach -33.9
National Grid -22.7
United Utilities -18.3
SSE -11.8
Go-Ahead 16
National Express 20.4
FTSE All-Share -3.2
Source: SharePad, 14 October 2019

However, this could reflect separate regulatory issues for the utilities space and a combination of several factors at Royal Mail including industrial action and a failed revamp of the business. The performance of the transport operators has been more mixed.

Current polling suggests Labour would be extremely unlikely to form a majority government after any general election.

However, the political shocks of the last few years might leave investors wary of taking anything for granted. You can read articles about the potential impact of a Labour administration under Jeremy Corbyn on the market here and here.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 14 Oct 2019