Originally, the CBI reported that the party would have to spend at least £196bn – 9% of GDP – to nationalise railways, water, energy, and mail if it were in government.
Labour questioned that figure, in emails to the CBI seen and reported by the Guardian.
The business lobby group had assumed buyback of the rail industry’s rolling stock – the trains it leases out to rail operators – but Labour argued that this had never been a part of the plans.
The CBI admitted it recognised a buyback was not “official Labour policy”.
However, its chief economist told Labour over email that the group still estimated those costs to be small relative to buying water and energy – which it said would make up the bulk of its original £196bn costing.
The CBI has published an explanation of how it estimated the up-front cost of renationalisation, in which it says that “a number of assumptions were necessary”, including that the government would buy back rolling stock.
It estimated the market value of each private company in water and energy, by applying a mark-up of 30% to the latest value of the asset base. Utility companies have typically reached a price above asset value in historical takeovers.
The CBI did not, however, break down its costs to Labour on the basis that its members “do not feel comfortable doing this.”
Andy McDonald, the shadow transport secretary, demanded that the CBI apologise. On his Twitter page today, McDonald said that he took it as a compliment “that the CBI has to resort to telling lies to discredit Labour’s popular plans for public ownership”.
McDonald told the Guardian that “shoddy research and shabby conduct” at the CBI was a “great disservice” to political debate.
The CBI, however, told the paper that it “stands behind its analysis of Labour’s plans for large-scale renationalisation”.
“Labour has a lot of questions to answer on its renationalisation proposals”, the CBI said. “If a Labour government chose not to purchase the rolling stock, they would still need to pay the cost of leasing them”, it added.
Earlier this year, analysts for Reuters valued the regulated asset values of water and energy in the UK at around £125bn.
Labour has said that shareholders would be compensated using bonds, which it described as cost neutral to the public. The CBI points out in its analysis that although this would not show up in the borrowing figures, it would be directly reflected in the debt figure.
Assuming that the up-front cost would be met by issuing government bonds, the CBI said that levels of debt would reach over £2trn – or 94% of GDP.
The CBI has been contacted for comment.