There is, however, something that CPS ignore. The current owners of these assets will value them at the commercial cost of borrowing to buy them. It is a fact that the commercial cost of borrowing to buy an asset is higher than that which the government pays. The result is that the private sector will value these assets at a lower rate than the government, precisely because the government can borrow more cheaply than anyone in the private sector. So, when the government, after nationalisation, substitutes borrowing in these industries at the government’s rate of interest as opposed to current borrowing at commercial rates of interest the value of these assets will rise. At the same time interest costs within these these industries will fall, and the surplus that they will generate will be greater than that which the private sector could have made. The result is that in fact far from requiring that additional tax be paid these industries should begin to make a return to the Exchequer greater than anything that they could generate as a profit in the private sector.
And how do we know that could happen? Because evidence supports the argument; that’s why.
If this assertion were true then the water companies would be worth less today than they were when privatised.