UK Edition
Labour adviser warns of huge cost of John McDonnell's nationalisation plan
The cost of Labour’s plans to nationalise swathes of British industries would cause a “major difficulty”, an adviser to the party has admitted.
In comments that appear at odds with a claim by John McDonnell, the shadow chancellor, that nationalisation “will not cost … anything”, Robert Calvert Jump suggested state takeovers would involve significant spending because of the need to compensate foreign investors.
Writing in a new book, coincidentally edited by Mr McDonnell, Dr Calvert Jump warns that more than half of shares in Britain’s leading companies are held by foreign investors who would be “legally entitled to compensation” as a result of investment treaties with the relevant countries.
In the case of Royal Mail, ministers would have to “ spend hundreds of millions of pounds more in compensation to shareholders” than the Coalition raised from its privatisation, he added.
Mr McDonnell told the BBC last week that the price at which firms are bought would be “determined by Parliament” and would “not cost [taxpayers] anything because what we’ll be doing is taking an asset that will give us an income.”
In a chapter of Economics for the Many, Dr Calvert Jump writes that the cost of compensating foreign nationals would be a “major difficulty” with national ownership, adding: “This is not a trivial problem in the UK, where 54 per cent of ordinary shares held in UK incorporated companies listed on the London Stock Exchange are known to be held by foreign nationals.”
Chris Philp, a Tory MP, said: “Labour’s own advisers admit their plans would cost hundreds of millions more, making a mockery of John McDonnell’s farcical claims.”
A Labour spokesman said: “The authors of this book participated in their personal capacities. Dr Jump is not a legal adviser to the Labour Party.”