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Jeremy Corbyn’s plans to nationalise the energy grid are needless and impractical

Labour wants to do an awful lot and it is in danger of trying to do too much. That rarely ends well in either politics or business

James Moore
Thursday 16 May 2019 13:56 BST
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Jeremy Corbyn: 'It wasn't the EU that slashed public services to pay for tax cuts for the rich, it was the Tory government'

Perfect timing? Labour unveiled its plan to bring the National Grid back into public ownership as part of a “green industrial revolution” on the day the part privatisation of the probation service was reversed.

The latter was an unmitigated disaster. It cost the nation £500m according to the National Audit Office. After that, even applying the word “Calamity” to Chris Grayling, who oversaw the move while at the Justice Department, might be under selling it.

Tory party vice chairman Chris Philp criticised Labour’s plan as “ideological”. We’ll discuss that. But on the day his government shelved an ideologically driven programme of its own that was also stupid and ruinously expensive, well, put it this way, if there’s an award for lack of self awareness he should get a nomination at the very least.

Philp also highlighted the potential expense of taking the Grid back into public ownership. He was on firmer ground there. It wouldn’t come cheap.

Labour is playing a dangerous game with its vague plans to try and justify paying less than market value for the companies it wants to renationalise. Some utilities are already taking steps to protect themselves from it doing that, and I would expect that process to continue.

It’s also worth remembering that the ones that are UK owned, like National Grid, play a role in the savings and pensions of many people and they’re not all rich.

Labour will inevitably need to borrow more to fund its ambitious plans to “transform” the UK’s economy and society. Lenders tend to be a little reluctant to advance money to governments that are apt to move the goalposts when it suits them.

Still, the best arguments against the nationalising Grid plan are practical rather than financial or ideological.

Labour has borrowed some of the “green new deal” idea put forward by progressive Democrats in the US. It wants to see solar panels installed in homes across the UK, with the focus on social housing and low income families, overseen by a new National Energy Agency. It would also look after the Grid.

The prize would be the further greening of Britain’s energy supply - which badly needs to happen given the climate crisis - while assisting those who suffer the most from the impact of fuel poverty.

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John Pettigrew, the boss of National Grid, says fine, but if you want to do that, nationalising the company I run would be an unnecessary distraction that would also complicate the programmes we already have underway. It’s a fair point to make.

Labour wants to do an awful lot and it is in danger of trying to do too much. That rarely ends well in either politics or business.

The example of the Co-operative would be a good one for Labour to heed.

It attempted to integrate its retail and other businesses (funerals, insurance, pharmacies) with the Co-op Bank at a time when the latter was grappling with the effects of a very bad merger.

The ineffective management created a mess that it was ill equipped to deal with and the institution entered a downward spiral that nearly broke it. Today it’s a narrower, more focussed, and vastly more successful operation.

Labour could still create a National Energy Agency to oversee the green programme and keep the Grid honest without complicating matters by nationalising it.

Pettigrew would help his cause somewhat if the Grid proved itself to be a progressive organisation by showing some leadership on the current question of putting workers on boards as part of Britain’s revised corporate governance code.

He told me a decision on that has yet to be made, but then raised lots of complications such as the fact that it has a big US business. Needless to say, having international operations didn’t stop Capita from putting two employees on the board.

He and the heads of other formerly state owned businesses in Britain need to remember that the arguments against the idea of nationalisation as a concept have looked increasingly shaky as time has gone on and the flaws in some of the Conservatives’ privatisations have been exposed.

It isn’t just probation. There are good reasons why Labour’s plans to bring the railways back into public ownership are proving quite popular.

Nor is the behaviour of some of the energy sector’s leaders, such as Centrica boss Iain Conn helping people like Pettigrew to make their case. Conn was awarded a chunky pay rise after a miserable year for both his consumers (bills rose) his shareholders (profits were hit, so were their holdings) and his workers (job losses were announced).

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