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McDonnell: £37bn paid to shareholders should have been invested

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11/11/2017 | 01:15am CET

More than £37bn has been paid to shareholders of privatised rail, telecoms, energy and water companies which could have been invested in public services, according to the shadow chancellor John McDonnell.

The figure comes from new research by the Labour party into the tens of billions privatised companies have paid out to shareholders in companies such as Royal Mail, Centrica and the National Grid.

However, the £37bn figure set to be quoted by McDonnell in a speech on Saturday also includes companies such as BT, which has paid out £6.3bn in dividends since 2010. But the party said it would not renationalise the telecommunications firm.

Speaking in Lincoln on Saturday, McDonnell will say that tens of billions paid to shareholders should have been used to bring prices down for consumers. “These figures show what could have gone into investment in these public services in order to expand and improve them or keep their charges down,” he will say at the event to mark the 800th anniversary of the Charter of the Forest, which, in 1217, enshrined the rights of people to the lands they lived and worked on.

Labour’s manifesto in June pledged to bring “key utilities back into public ownership to deliver lower prices, more accountability and a more sustainable economy”.

Specifically, the party said it would bring private rail companies back into public ownership as their franchises expired, move to a publicly owned, decentralised energy system, replace the current water system with a network of regional publicly owned water companies and reverse the privatisation of Royal Mail.

The new research, compiled with the House of Commons library, highlighted more than £10bn paid to shareholders by the National Grid PLC since 2010, as well as £5.2bn paid by Centrica, the owner of British Gas, and £1bn by Yorkshire Water.

Party sources said Labour was not directly committing to bring the full list of 23 privatised companies featured in the research into public ownership. Others include Thames Water and train operators First Great Western, East Midlands Trains and Virgin Rail.

In his speech, McDonnell will compare the seven past years of austerity with the billions paid in dividends from privatised companies. “Families suffer from stagnant wages not being able to keep up with prices of items like energy bills, and underfunded public services, yet billions has gone into the hands of shareholders,” he will say.

“The next Labour government will call an end to the privatisation of our public sector, and we will look to bring back in to public ownership many of the vital services sold off by the Tories, which are undermining the living standards of millions of working households.”

The Institute for Fiscal Studies’ deputy director Carl Emmerson said profit alone was not the key argument for renationalising privatised companies. “The argument being made here could be made about any profitable company – that dividends could go the Treasury rather than to shareholders,” he said.

“However, we don’t tend to think that the government is best placed issuing lots of debt buying up companies just because they are profitable, because the private sector is often better at managing things like risk than government. Otherwise the government could just buy Apple. The argument for nationalisation is usually a different one than the one being made here. It’s about how who can manage it best.”

Copyright © 2017 theguardian.com. All rights reserved., source Guardian Online

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