The assault by shadow chancellor John McDonnell came as he pledged total, “permanent” and cost-free renationalisation of water, energy and rail if Labour won power at the next election.
The logic goes like this. Government can borrow more cheaply than the private sector (well, most often, not always).
Buy the companies with the cheap money, the dividend income more than covers the interest costs, free money!
Well, OK. But did it actually work out that way last time around? Actually, no, it didn’t. The nationalised industries were less efficient. Less profit that is, for any given level of charges and or quality of service. We can tell this because both profits and levels of service have risen since privatisation.
At which point the question becomes well, what’s the balance between that lesser efficiency and the cheapness of financing? Past experience of nationalised British companies doesn’t favour the financing side of that equation, does it?