The Labour party’s plans to renationalise water companies in England could cost the government as little as £14.5bn, according to new research. Labour, which has promised to take the privatised utility companies back under state control, favours basing shareholder compensation for the renationalisation on book value.
Calculations for the Financial Times has estimated the book value of the 15 English water companies’ shareholder equity at £14.5bn.This is much less than an industry-funded estimate by the Social Market Foundation, a think-tank, which suggested a cost of £44bn to compensate shareholders based on market value — rising to a total expense of £90bn if the companies’ debt was included. The companies maintain that basing compensation on book value would be confiscatory and penalise shareholders.
Credits go to The financial times for this report.