Nationalisation has become the word British politicians dare not say, and the reason they give is always the same: it is unaffordable.<\/p>\n
They claim that just taking water back into public ownership would cost over \u00a3100 billion, but that claim is outright nonsense, and it is worth understanding exactly why.<\/p>\n
The trick is in what \"cost\" means. When we nationalised industries in the 1940s, we did not hand over a mountain of cash. We paid with government bonds, typically at 3% interest, repayable over thirty years or more, and in practice then rolled into the national debt.<\/p>\n
The real cost of nationalisation is, then, nothing more than the interest on those bonds, and a nationalised business bought at a fair price should always be able to cover that from its own surplus. There is, then, no cash payout, and no one is \"buying\" anything at a fantasy price.<\/p>\n
What might that mean for the water industry? Private investors and lenders have sunk around \u00a3100 billion into it, but the industry is not worth that now. Its shares are often worthless, and a fair price would reflect its current, depreciated value. That means shareholders accept their losses and lenders would take a haircut, meaning they get back part of what they lent. They knew the risk when they invested in a privatised monopoly, and they should accept the consequence.<\/p>\n
The case for doing this is straightforward. Nationalisation protects essential services that are too important to fail. It lets us invest in their future at the lowest possible cost, because government borrowing is cheaper than private borrowing. And it future-proofs water, rail, energy, and other sectors against a repeat of the calamities privatisation has already delivered.<\/p>\n
Nationalisation is not the problem. The misinformation about its cost is.<\/p>\n