Slightly worrying, eh?

Jeremy Corbyn has drawn up plans to take control of Britain’s energy networks in a multi-billion pound power-grab modelled on the nationalisation of Northern Rock.

A leaked Labour party document has revealed plans for a swift and sweeping renationalisation of the country’s £62bn energy networks at a price decided by Parliament.

The blueprint, seen by the Telegraph, lays bare for the first time Mr Corbyn’s plan to bring all energy network companies under public ownership “immediately” following a Labour election win.

The party is planning to employ the same legislative tools used to nationalise Northern Rock in order to justify naming its own price for the companies.

Nationalising them? Well, silly idea, obviously. But at below market price? Stealing them? And how are they going to use the NR tactics?

That depended upon the BoE not offering liquidity support so therefore it was bust. Now, maybe BoE was instructed not to offer liquidity but still. In that circumstance it was actually bust.

What would be – what could be – the equivalent tactic? Announce they’re going to buy them at £x, watch the price fall to price £x and announce that’s market price?

Unfortunately I’m too cheap to pay for either the Telegraph or FT where this is explained.

32 comments on “Slightly worrying, eh?

  1. Here it is in all it’s glory.
    JILLIAN AMBROSE
    ENERGY EDITOR
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    15 MAY 2019 • 6:00AM
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    The looming risk posed by Jeremy Corbyn’s threat to nationalise the UK’s £60bn energy networks industry has stalked the City for months CREDIT: PETER LAWSON / REX FEATURES

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    The Labour Party’s decision to flip the switch on plans to bring energy under state control has sparked outrage in an already embattled market.

    The looming risk posed by Jeremy Corbyn’s threat to nationalise the UK’s £60bn energy networks industry has stalked the City for months. It first emerged in 2017, softened by vague political rhetoric and doubts over the party’s chances in a general election.

    Since then, the unraveling of political norms in Westminster has sent shivers through the City as the hazy threat of a Labour government came into sharper focus.

    Now the party’s blueprint for wresting back control the British energy system’s arteries and infrastructure have been laid bare in a leaked nationalisation plan.

    –– ADVERTISEMENT ––

    The sweeping strategy goes far beyond the City’s worst fears.

    It takes aim at FTSE 100 energy giant National Grid, as well as the network businesses owned by Big Six energy suppliers SSE and Scottish Power. All 19 of the UK’s regional energy networks, once beloved of major international infrastructure investors, will be brought back under public ownership. The vast control centres, which balance the UK’s energy system on a second-by-second basis, will also be handled by the state.

    “It’s an absolute reversal of thirty year of energy policy,” says one senior City source. “A whole generation of investment has been undertaken on the basis of a system which will now disappear.

    “This is a total unpicking of the whole industry.”

    Another senior executive warns that, were Labour’s plans to be enacted, investment would come to “a juddering halt” amid “unseen levels of bureaucracy, inefficiency and inertia”.

    “Nowhere in the world has the re-nationalisation of electricity networks delivered better value for the public than when it was privately owned,” he says.

    Labour leader Jeremy Corbyn
    Labour leader Jeremy Corbyn CREDIT: TOBY MELVILLE/REUTERS
    The revolution will be quick and unequivocal. Once in power, the party vows to take the legislative steps necessary to grab control of the networks “immediately” and install a new public body to manage the UK’s sprawling energy infrastructure.

    Labour plans to dodge the multi-billion pound hit to public finances by using Government bonds and currency to pay for the energy companies. It will also take on each company’s debt, likely to be an eye-watering sum, and undertake a refinancing based on the strength of the public balance sheet.

    The catch is that the price tag will be determined by parliament. Labour points to the nationalisation of Northern Rock in the wake of the credit crisis of 2007 as a legal precedent for the move.

    By the end of Labour’s first parliamentary term the National Energy Agency would be in charge of overseeing a multi-tiered network matrix intent on overhauling the energy system for a low-carbon future. The National Energy Agency will oversee regional equivalents, which in turn will be responsible for municipal energy agencies and local energy communities.

    The layers of control are designed to deliver the benefits of central control while harnessing the power of a “de-centralised” model, which has yielded success in other European nations. The national quango itself is a curious mix of infrastructure operator and regulator. It will control the system and its future investments while operating the high voltage wires that power the nation.

    It will also take responsibility for ensuring that the grid becomes “greener”. At least 60pc of all energy would come from low-carbon sources by 2030, while electric vehicle chargers and battery storage projects would be set up across the country.

    The National Energy Agency’s broad remit underlines Labour’s dual criticism of both private companies and the regulator tasked with controlling the revenues they can earn through home energy bills.

    Labour has long levelled accusations of “profiteering” against the network companies and their owners. The policy plan also lays some of the blame for this at the door of the regulator. It claims Ofgem has overestimated the risks taken by investors and thus allowed them to garner undue rewards of around £7.5bn over the last eight years. In a “cat and mouse” game between investor and regulator, Whitehall is bound to lose, the party reasons.

    Labour’s shadow secretary Rebecca Long-Bailey
    Labour’s shadow secretary Rebecca Long-Bailey CREDIT: HEATHCLIFF O’MALLEY
    In the report, Labour MP Rebecca Long Bailey writes: “Since Thatcher’s wave of privatisations, energy network companies have been able to post huge profit margins, overcharging customers to the order of billions of pounds, and failing to invest properly in infrastructure needed to accommodate the transition to renewable energy.

    “Gaming and profiteering are not remediable glitches with the current system – they are intrinsic to it. Given the challenges facing the energy system, the status quo is no longer tenable.”

    National Grid, once a predictable pension investor stalwart, now faces an uncertain future.

    “Only a few days ago we broke the record for the longest period of time the country has gone without coal generation,” a spokesman says. “We deliver reliability, investment and innovation for just 3pc of the average energy bill.”

    Senior industry executives have told the Daily Telegraph that they are furiously opposed to the plans, which they say could scupper future investment in UK plc.

    David Smith, the chief executive of Energy Networks Association, says the plans “will not only fail to deliver Labour’s objectives but they will also be extremely costly to the British public”.

    He adds: “The companies responsible for grids are already delivering huge levels of investment that have led to record levels of clean energy, lower costs and fewer power cuts than ever before.

    “Under state ownership the energy networks were more expensive and less reliable. Since privatisation in 1990 network costs to the bill-payer have fallen by 17pc. At the same time that costs have fallen, reliability has improved: the public have experienced 60pc fewer power cuts while their length has been reduced by 84pc.”

    The industry may claim a glowing past, but there can now be no guarantee of a bright future.

  2. The telegraph doesn’t actually say, except for stating that the price will be set by parliament.

    I can remember years ago (1990s?) court cases still dragging on after the post-war nationalisations. I imagine it’ll be the same here, with the taxpayer losing both ways.

  3. It can be read here for free, it’s an excellent resource.

    http://library.pressdisplay.com/pressdisplay/viewer.aspx

    Lots of other newspapers and magazines from around the world are available free of charge. All you need is your library card number, or just use “88888888”.

    As for the story – it’s a stupid idea from Corbyn, but then again why would anyone be surprised about that.

  4. > Surely there’s no way Jezza can implement this and still Remain in the EU?

    Which is why he’s for Brexit I guess.

    I wonder if anyone’s told him he can’t go all the way in his anti-Thatcherism and re-open the mines?

  5. Yes, well. I think it’s Jim who’s previously made the point on here about what happens if the Tories are thrown out because they don’t deliver Brexit and then Jezza gets in and his supporters realise the only way he can do the stuff they want is via Brexit.

    The thing is, if typical Brexiteers have so far been disinclined to start cracking skulls, I don’t think Jezza’s fanboys will show any such restraint.

  6. My neighbours plan to steal my car next week, giving me a sum of money they have decided on in return for it.

  7. As ever with JezLabour the details are hazy. The FT says “Labour’s paper is set to be launched by Mr Corbyn and Rebecca Long-Bailey, the shadow business secretary” so we’ll have to wait for that to see if there actually is a plan or just the usual bullshit.

  8. Er, Ted, Have you read what PG&E are planning this summer? But of course that’s in the loony end of your place.

  9. national grid is the dominant player in New England electricity. all sorts of merchant power plants in Massachusetts and Connecticut have national grid as the counterparty. it’ll be interesting to see the levels where the covenant-lite debt of those transmission and generation assets trade, once folks realize that the counterparty providing the cash flow services those debts can unilaterally decide to abrogate contracts.

    even if Corbyn can’t renegotiate contracts in the United States, the lawsuit that makes sure he doesn’t will take years and years. not the sort of cash flow uncertainty that levered assets can withstand.

    maybe assets that are perfectly healthy now, will become distressed assets. time to start sniffing around

  10. “I think it’s Jim who’s previously made the point on here about what happens if the Tories are thrown out because they don’t deliver Brexit and then Jezza gets in and his supporters realise the only way he can do the stuff they want is via Brexit.”

    Not quite, more that Jezza knows 2 things – that to get into power he needs the Tories to piss off their own voters so much that a large proportion jump ship elsewhere, but also that if he gets into power he needs us to be out of the EU to do all his nationalising without the EU overruling him. So he can’t do any deal with the Tories because a) that puts his fingers on the Brexit corpse as well as May’s and b) anything other than a Hard Bexit would leave any Labour government still controlled by the EU. So I figure he will string May along, but always vote against the WA, citing her intransigence in coming to an agreement, hoping to force either the Tories to choose between a Hard Brexit or cancelling A50, or for the EU to kick us out regardless. He may be stupid enough to think that a Hard Brexit is a terrible thing for the Tories, as bad as a BRINO – if he does thats his miscalculation – it would probably be the Tories salvation.

    “The thing is, if typical Brexiteers have so far been disinclined to start cracking skulls, I don’t think Jezza’s fanboys will show any such restraint.”

    There’s very few of them though, the Momentum crowd. And there’s a lot more tough nuts on the right but who aren’t involved in politics, yet. Wander into any estate pub (usually with a flat roof, and plastered with England flags) and the blokes you’ll find in them won’t be Momentum types, they’ll be more your football hooligan types, who will side with Queen and Country over a bunch of lefty agitators any day. And more than capable of kicking them to kingdom come and back.

  11. Surely the better plan is to burden the industry with impossible-to-meet emissions targets, LGTBAME board representation rules, equal pay rules, and so on; until the companies become worthless. Corbyn then declares that capitalism has visibly failed, and he can snap them up for a song.

    Or, simpler, he revokes the Bank of England’s independence, raises interest rates sufficiently to make all debt-carrying companies insolvent, and nationalises them. Homeowners with mortgages have their homes nationalised and become council tenants. What’s not to like?

  12. Robbing Peter to pay Paul never gets complaints from Paul.

    All Corbyn needs is enough Pauls

  13. “Undue” rewards of 7.5b over eight years on assets worth 60b?

    They’re taking the piss.

    Nationalizing would cost far more than that in inefficiency. Even before they started increasing renewables.

  14. I don’t think the EU would stop him. The quid pro quo would be remain in the EU. Laws are weapons, to be used or not used depending on the needs of the moment.

  15. Can’t help but think this is all incredibly good news. The Tories utterly destroyed. UK out of the EU, all strings severed. Corbyn locked in a mutually destructive battle with the Corporate Hegemony.
    What’s not to like?

  16. Tim,
    Northern Rock wasn’t actually bust and BoE didn’t actually withdraw liquidity support.
    Darling nationalised NR after a run on the bank created by a BBC scare story claiming that it was bust then got an accountant to say it would have been bust if BoE had withdrawn liquidity support [although to have done so would have been in breach of its charter] – in order to do so the accountant (not one employed by any of the “Big 5”) had to do some creative accounting (i) assume that BoE withdrew support and no-one else would lend anything against the security of its mortgage book (ii) a 20% write-down below written-down value for mortgage assets in a “fire sale”, (iii) no tax refund on realised losses (iv) that the fees paid by HM Treasury to Goldman Sachs or whoever for advice was a liability of NR. That last one was really scraping the barrel.
    I’ve actually read the accountant’s report. I duly supplied comments to which there came no reply.
    So Corbyn’s idea that Labour would imitate the NR nationalisation is just another way of saying that they would steal National Grid.

  17. As I pointed out in the slavery thread, the modern left have no truck with paying for anything.

  18. Have fun with your rolling blackouts, Britain.

    For which Corbyn will no doubt blame the Rothschilds.

  19. Threaten to nationalise and imply below market rates when in opposition.

    Industry stops investing because of increased risk.

    Get elected and claim industry is under invested and needs to be privatised.

    I also note that Labour isn’t planning any redundancies when it consolidates, knowing them it will become somewhere to hide the jobless once the economy starts tanking.

  20. Martin, you nick the kit. IIRC, it’s what Castro and Mossadeq did. And that bloke in Egypt wot gave rise to our ill-fated expedition there a while back.

  21. Long on wheelbarrows.

    Corbs has also said he’d abolishing the lower rate of the minimum wage for under 25s, so they get the same higher rate that over 25s do. Said words to the effect of ‘equal pay for equal work is hardly controversial’, but didn’t address the issue of who an employer will chose when faced with two applicants where both will have to be paid the same but one has experience and a track record and the other (being a YP) doesn’t. BBC article didn’t pose that question either.

  22. @Kevin Lohse May 15, 2019 at 7:58 am

    Surely there’s no way Jezza can implement this and still Remain in the EU?

    That is my understanding too.

    @njc Thanks

  23. An employer faced with two applicants where one has experience and a track record and the other doesn’t isn’t an issue of equal pay for equal work, as by definition the employer won’t be getting equal work from them.

  24. Jgh exactly. I’d say he’s just plain thick but… of course it’s no bad thing for Labour if it’s harder for people to stand on their own two feet, for example if they can’t find jobs that pay above the minimum the state says they can sell their labour for. And obviously it’s problems inherent in the system revealing themselves when perfectly reasonable changes like that don’t produce the intended result.

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