In an interview with the Today programme on Tuesday the 26th of July, Keir Starmer reiterated the suggestion made by Shadow Chancellor Rachel Reeves that the Labour Party is no longer committed on-principle to the nationalisation of utilities. Starmer asserted that circumstances had changed since his leadership election pledge in 2020 and that nationalisation no longer complied with “financial responsibility”. The logic for making this statement as the Leader of the Labour party would’ve been clear twenty or thirty years ago, but is nonsensical in the current economic climate.
Energy companies are making record-breaking profits. In the first 3 months of 2022, BP announced that it had made over £5bn in profits, whilst this week Shell and Centrica released statements detailing how they have collectively made 11.3bn in profits, of which a sizeable amount was earmarked for shareholder dividends. Not only does this come at a time when we are witnessing an escalating cost of living crisis in which wages have not kept pace with inflation, but it is these high energy prices that have driven inflation to 11%.
Research by the Institute for Government suggests that the primary driver for inflation in the month of June alone was a combination of gas, electric, and fuel prices for consumers. The takeaway from this research should be that the companies which are themselves at fault for raising these prices, the same companies who are now making record profits as citizens now find it increasingly impossible to pay their energy bills. Allowing these companies to continue unfettered, propped up by a broken price cap, is the height of financial irresponsibility.
The result of this irresponsibility is that we now pay out as a country more than it would cost to nationalise, and likely run, the biggest 5 suppliers in the U.K, those with enough of a market share to dictate energy costs across the board and who now drive the increase in living costs. It is no wonder then that the nationalisation of utilities is overwhelmingly supported by the British public, with 60% of people in favour of it and only 13% against. The British public clearly see a problem with the current model of private ownership.
Interestingly, this is something that has been recognised by the French government under pro-market centrist President Emmanuel Macron too. His government has taken decisive action to bring the energy provider EDF into full public ownership, striking a €10 billion nationalisation deal which has been touted as a core component of the state’s Green policy and a means to fairly manage consumer prices. This comes at a time when the previous model of French government majority ownership of EDF had already ensured that bills rose just 4% this year, and yet Macron has still made the move to secure stable energy prices and production in the long term.
This is the kind of alternative that Starmer should realistically be looking toward. The Labour leader recently outlined his priorities for government as “Growth, growth, and growth”, surely nationalisation fulfils that in a distinctive way by ensuring that any profits made from these services can be reinvested by the British government into public services and green energy, rather than going to private shareholders and, in the case of energy supplier EDF, the French government.
Keir Starmer is right, the economic circumstances have changed in the energy and utilities sector. However, this is not a change that in any way supports a move away from nationalisation. Rather, the French government have shown a way forward to some degree with a plan that promises to bring utilities into public ownership, to reinvest any of the profits made into future Green plans and public services, and to reduce the cost of these essentials for consumers by ending shareholder dividends and the transfer of wealth from citizens to the economic elite. It does not, therefore, make sense for Starmer to be distancing himself or the Labour Party from a nationalisation programme on the grounds of “financial responsibility”. In fact, the responsible decision would be to embrace nationalisation and refocus it as the core of Labour’s answer to the present cost of living crisis.