Water UK is warning that Labour’s plans to renationalise the water UK companies in England would hit the retirement funds of over five million pensioners who would lose thousands of pounds each.

The organisation which represents all the UK water companies was commenting on new reports in the media that the Labour Party was firming up on its proposals to renationalise the water sector. 

Water UK Chief Executive Michael Roberts was commenting on reports in The Sunday Times and The Times newspapers over the Bank Holiday weekend s that Labour is planning to renationalise the water companies at £24 billion below full market value.

The Sunday Times article reveals details of a leaked internal Labour party document which would see shareholders, pensioners and employees with investments in the firms losing up to half their value.

According to the Sunday Times, which has seen the blueprint, Labour would pay less than £20 billion in compensation. Under conservative market estimates the companies are valued at £44 billion to as much as £90 billion if debt is included.

The article says the briefing paper states:

“Compensation would be a “political process of negotiation with shareholders” and take into account state subsidies, pension fund deficits and “asset stripping since privatisation”.

Water UK was quick to respond.

Water UK: “smash and grab raid” would hit retirement funds of 5 million+ pensioners

Water UK Chief Executive Michael Roberts said:

“It would be an absolutely devastating blow for millions of pensioners if the water industry was subject to a smash and grab raid by a future government paying well below market value for it. More than five million pensioners have funds invested in the water industry - including very many public sector workers - and they would lose thousands of pounds each under these leaked plans.

“It’s becoming clearer by the day that the financial case for nationalising the water industry doesn’t stack up. As well as hurting pensioners it would land taxpayers with a multi-billion pound bill, both for the purchase of the industry and the extra £100 billion that needs to be invested in the sector over the next decade.”

Labour would use borrowing to finance its renationalisation plans, which also extend to the energy and rail sectors.

Defending the proposals, on the BBC’s Andrew Marr Show, Shadow Chancellor John McDonnell said:

Water is a successful company in terms of the income it raises. The income, that we will manage more effectively, will cover the borrowing, so there will be no net cost.”

Peter Parry, policy director at the UK Shareholders Association told theTimes newspaper that the government would need to pay the market rate if the government wants to renationalise former utility companies or sectors, adding:

“It’s very damaging for the prospects of invesntment in general. International investors will just steer well clear in future if they think the government wil just swoop in for less than it’s worth.”

Plans to take the water sector in England back into public ownership look set to remain in the spotlight and be the focus of ongoing media attention in the run-up to the next generral election.