1) Does public ownership mean going back to the 1970s?
2) How much will renationalisation cost? Won’t it be really expensive?
3) How much will shareholders be compensated under nationalisation plans?
4) What will the impact be of nationalisation on pensions?
5) Won’t renationalising damage the economy by forcing investors to leave? (mixed economy)
6) Won’t the trade unions hold us to ransom if we have nationalisation?
7) Isn’t the public sector inefficient?
8) Didn’t British Rail fail?
9) How can we have enough investment under public ownership?

1) Does public ownership mean going back to the 1970s?


Public ownership is very successful, both in the UK and around the world - and it's very popular too.

Our report ‘When We Own It: A model for public ownership in the 21st century’ explains how we can make public ownership more successful than ever before.

Public ownership – local, regional and national - can help us tackle challenges like climate breakdown and huge inequality. Publicly owned organisations will have new duties, for example to decarbonise, to ensure access for all to crucial services, to work with communities, to steward public assets and land. This will lead to better public outcomes, like:

  • Great public transport that makes it easy not to own a car, wherever you live
  • Still and sparkling water fountains in every town (in Paris the publicly owned water company has delivered this! #socialismwithasparkle)
  • Green new deal jobs to transition to zero carbon energy
  • Reopening post offices across the country with postbanks

We’ll replace inefficient regulators, using their budgets to create ‘Participate’ an independent, democratic organisation to represent the people who use public services. It will hold publicly owned companies to account, fight any threat of privatisation and maximise participation.

Publicly owned companies will be managed by professionals day to day, and held accountable by a supervisory board representing the broad, long term public interest. This will include the people who use public services (through Participate reps), workers and civil society (social, environmental and community groups), as well as experts and elected politicians.

2) How much will renationalisation cost? Won’t it be really expensive?

Public ownership is a brilliant deal for the public purse. Once we’ve taken assets into public hands, we’ll be able to stop wasting money on shareholder dividends, fragmentation and the higher cost of private sector borrowing for investment.

Public ownership pays for itself.

Buying back the water companies in England would pay for itself in 6 years. It would cost £14.7 billion (the actual book value of shareholders’ investments) and we’d save £2.5 billion a year.

Buying back our energy networks would pay for itself in 8 years.  It would cost £27.9 billion (the actual book value of shareholders’ investments) to buy back the National Grid and the regional distribution companies and we’d save £3.7 billion a year

When it comes to rail, we can take franchises in house one at a time as they come up for renewal without paying a penny in compensation. We already own the infrastructure through Network Rail. When new trains are needed, we can buy them directly on behalf of the public, and save ourselves the £200 million a year currently going to rolling stock shareholders.

3) How much will shareholders be compensated under nationalisation plans?

Parliament will decide on compensation levels for buying back our services, based on the public interest. Investors cannot assume they’ll get full market value. There are various factors that parliament will take into account when deciding on the upfront cost of taking back our public services.

UK and European courts have repeatedly said that “legitimate objectives of 'public interest', such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value”.

The CBI has wrongly claimed that renationalisation of water, energy, rail and Royal Mail would cost £196 billion. There are three huge  problems with the way they calculated this figure.

Firstly, they used the Regulatory Asset Base (RAB)/Regulatory Capital Value (RCV) of the companies involved. But this isn’t the real market value, it’s just a notional figure used by the regulators. Secondly, two-thirds of the RAB/RCV represents the debt of the companies, but the government would only be buying the one-third which represents the shareholder’s stake. Thirdly, the 30% markup is based on traditional takeover practice. But bringing assets into public ownership isn’t a takeover by a rival profit-seeking investor, so why would parliament give  shareholders this huge 30% extra handout to investors?

“The estimates of ‘market value’ which have been published by stockbrokers and commercial lawyers and others should thus be seen as an opening negotiating position by investors in a dynamic political process, rather than a serious attempt to forecast the final result of a legal challenge in the UK.“ David Hall and Vera Weghmann, Public Services International Research Unit

The actual market value of the shares is still too high a price to pay. We don’t have any choice about using these public services - water, energy networks, the Royal Mail, the railway - and that’s why they are so profitable. Shareholders have been receiving their billions of dividends every year based on continually ripping us off. And market values reflect the expectation that the companies will continue to make the same excessive profits they have in the past - if we pay them enough for them to enjoy this .  

“The whole aim of the exercise would presumably be to stop private companies from making excessive returns from the public. Why then would the government start by paying a market premium based on those same excessive returns?” Jonathan Ford, Financial Times

Arguably, it would be much fairer to pay shareholders the actual money they have invested in the service - the ‘book value’ of the shares. This is a much smaller amount of money - just £14.7 billion in the water companies, and £27.9 billion in the energy grid companies. In fact, in real terms, water company shareholders have actually reduced the amount of equity they have invested in the company since privatisation. 

Parliament can also take into account the track record of private companies in taking care - or not - of our public services, and the mess we now have to clear up.

That includes asset stripping, pension fund deficits, the failures of privatisation and the way we’ve all been consistently ripped off for 30 to 40 years. For example, in the water sector, our bills have gone up by 40% over and above general inflation in that period leakage levels are 20-25%, and our rivers and seas polluted with raw sewage. 

Private water companies have also extracted dividends of £1.8 billion every year  an eye-watering total of £56 billion taken out of the sector since privatisation. And to finance that, they have simply been borrowing more money every year, so they have built up a debt mountain, from zero debt in 1989 to £51 billion now. This debt would be honoured by our new publicly owned water companies and so in effect, privatisation has left us with a huge burden. Shareholders may receive less because of all these factors. If anything, they should be compensating us.

4) What will the impact be of nationalisation on pensions?

We currently waste £250 million every week on privatisation. That means public ownership is a good deal for every household in the country - including pensioners. It will benefit us through better services and/or lower bills and fares - worth nearly £10 per week per household..

Only about 5% of the shares in water and energy grid companies are owned by UK pension funds - 8.5% in water, 2% in energy - the other 95% are owned by financial institutions, who would get nearly all the benefit from high compensation payments.   Many companies are owned by foreign institutional investors. For example, Wessex Water is wholly owned by YTL, a Malaysian corporation publicly traded on the Malaysia and Tokyo stock exchanges. Northumbrian Water is owned by CK Hutchison Holdings, which is traded on the Hong Kong stock exchange.  

Bringing rail franchises into public hands will have no impact on UK pension funds, except for the tiny fraction of shares in the operating companies owned by UK pension funds, which will become slightly less profitable..

Not only is the proportion of shares owned by pension funds small, the proportion of each pension fund which is invested in privatised services is smaller still. Pension funds are intentionally invested in a wide range of industries, and fund managers do this to minimise and mitigate risk. They want to ensure that the impact of any changes in markets on pensions themselves are minimal. 

As such, the impact of bringing our water and energy grid into public ownership on pensions is so tiny it would be almost unnoticeable. Any ‘loss’ pension funds would face would be less than 0.1% - a figure smaller than the fluctuations of share prices seen on a daily basis. And that would have no effect at all on the pensions actually paid out to people.

If we want to look after pensioners, we should do that directly - for example, by giving over 65s a rebate on their utility bills - rather than by spending billions to compensate foreign investors at full market rate.

Some Royal Mail shares are owned by employees (there are almost no employee shares in water and energy companies. We can and should protect these employee benefits directly, rather than through over generous compensation to shareholders across the world. In fact, HMRC has ruled that we have to treat employee shares as employment benefits - and we cannot, and should not, treat international financial institutions as though they were employees. 

We can’t let private company shareholders hold us to ransom. Privatisation means all of us – including pensioners - getting stolen from every single day – see above. The real scandal is happening right now: pensioner deaths from fuel poverty; beaches polluted with raw sewage; rip off rail; Richard Branson suing the NHS; climate crisis threatening our grandchildren’s futures.

We all deserve the safety of a secure pension, but that shouldn’t be achieved by ripping off everyone else.  Public services shouldn’t be a cash cow. Pension fund managers have a responsibility to plan ahead and invest elsewhere in the economy.

5) Won’t renationalising damage the economy by forcing investors to leave? 

We’re talking here about a mixed economy, not about nationalising everything. The idea that private companies must run everything - including public services - is extreme and ideological. 

Public services - a particular sector of the economy - will work for people not profit. But the vast majority of private businesses will continue in private hands, with investors able to invest as they like. And the former shareholders will be able to use the billions of pounds they receive in  compensation to invest right across the economy - which should provide a significant boost in investment. 

Both the economy and society in the UK will benefit hugely from public ownership of public services like the NHS, care, education, public transport, water, energy, the Royal Mail and council services. It will be better for citizens and better for the vast majority of private sector businesses.

The private sector - apart from the specific shareholders of the handful of companies which will be renationalised - will either feel no impact or will benefit from nationalisation. Strong public services are the backbone of a good economy. All businesses will have a better deal on utility bills, reducing their costs. They will also benefit from better public transport, making it easier for employees to get to work.

Public ownership is the norm in many European countries and investors continue to invest in the private sector. For example, in France hundreds of cities are bringing water into public hands. In Switzerland the railway is run in public ownership and is the best in Europe. In Denmark, public ownership is creating a green wind revolution. None of these countries are suffering economically as a result of their commitment to public ownership.

In France in the 1980s, Mitterrand nationalised a range of industries. This, research has found ‘had a net zero impact on government finances...didn’t cost French taxpayers a centime’. But it did enable the state to create new industries, boost jobs, soften the blow of deindustrialisation and make transport and energy policies more sustainable.

6) Won’t the trade unions hold us to ransom if we have nationalisation?

One of the great failures of privatisation has been destroying good and important jobs and the motivation of public service workers in an outsourcing race to the bottom. Public ownership will mean treating workers fairly and appreciating the work they do. We need to properly recognise the value of public services and the people who work in them.

We also need full transparency and accountability mechanisms so that the public can hold the public sector to account and make sure wages are appropriate. Our latest report puts forward a model of 21st century public ownership where different interest groups are involved.

Workers organise through unions. We propose that public service users also need organising through a new democratically accountable organisation ‘Participate’. This will reflect the views of people who use public services and give them powers to make sure public services are delivering.

Workers on boards can help to improve industrial relations, by ensuring that workers and their unions are involved in decision making in a collaborative way. This can make the relationship between management and workers less adversarial. It's commonplace in German industry, and has broad support across the political spectrum. 

7) Isn’t the public sector inefficient?

Contrary to widespread assumptions, global evidence from dozens of studies in a full range of  sectors over many years shows that there is no inherent difference in efficiency between public and private sector organisations. But because private owners then take money out of the business, privatisation means we the public are wasting this money, as mentioned above.

We already have a wide range of public sector institutions right here in the UK, proving that public ownership is efficient and effective.
Reading Buses, Lothian Buses and Nottingham City Transport are all award- winning municipal bus companies which escaped Thatcher’s reforms. 

Publicly owned Scottish Water outperforms the privatised water companies in England, taking care of rivers, investing and lowering bills.

Many unsung public sector organisations do a great job and make a profit for the public purse – like the Met Office, Ordnance Survey, the Royal Mint and Channel 4. 

The East Coast line from London to Edinburgh succeeds every time in public hands, and fails whenever it’s privately run.

And of course, our NHS is efficient, effective and much loved (so that even Conservatives claim to defend it as they are cutting and privatising it). 

Internationally, the Transnational Institute has found 835 examples of cities taking control of services like water and energy. 

In the Netherlands, publicly owned water companies transparently benchmark and compare themselves to each other to continually improve.

In our report ‘When We Own It: A model for public ownership in the 21st century’, we propose ‘sunshine regulation’ trade associations who share data to improve services, transition teams to build capacity for in house services and an office for public ownership to promote best practice and innovation across the country. The public sector can collaborate and share information in a way that the private sector can’t.

8) Didn’t British Rail fail?

The truth is that British Rail actually performed relatively well. But in the future we definitely need passengers to be more involved – both to improve services and to make sure government doesn’t underfund again. 

British Rail was intentionally underinvested in. That’s what’s happening right now in our NHS.

“That’s the standard technique of privatisation: defund, make sure things don’t work, people get angry, you hand it over to private capital.” Noam Chomsky

The railway is vital for our society and economy, so the government needs to fund it properly. We should be copying Switzerland, where every village can rely on a ‘clockface’ service because government invests in high quality, reliable public transport.

It’s absurd that while the UK government isn’t allowed to run a railway (except as operator of last resort) our railways are mostly run by state owned companies from other countries.

Passenger numbers have gone up since privatisation because of demographic and economic factors – many people have to commute into London, Birmingham, Glasgow and other metropolitan hubs. But public ownership could make the railway a real choice for many more people and help us move away from cars and planes.

What do we want for our railway in the 21st century? We can keep wasting money on shareholders, or we can reinvest that money in lower fares and better services. Let’s focus on the future, not the past! 

9) How can we have enough investment under public ownership?

Some people reject the idea of public ownership now because of the underfunding of British Rail before privatisation, and the political choices that led to local water authorities being starved of funding in the 1980s. What’s our response to this?

The reality is, governments can and do invest. Private companies have in fact invested very little of their own money in renewable energy, or wastewater treatment, or fibre-optic cable – the impetus has all come from political demands.

Across Europe, public rail, water and energy companies have been making constant investments in new services – for example, the case of Munich in energy – and in London TfL has been making good, ambitious investment decisions for many years, including the Oyster ticketing system, the Overground and DLR as well as Crossrail. Even the current UK government is investing on a large scale in energy – formerly through feed-in tariffs for renewables, and in nuclear power at Hinckley Point – and in rail, with Crossrail and HS2, and in water, with public loans for a new sewer in the Thames.

Many technological and infrastructural innovations have come from government investment. The economist Mariana Mazzucato has shown that the state is responsible, through its smart and bold investment, for some of the most exciting technological developments in recent decades, from smartphones to the space race – although the private sector almost always takes the credit (in both senses).

The public sector can invest more cheaply than the private sector because it can borrow more cheaply, thanks to the backing of government and ourselves.

Publicly owned companies must be allowed to borrow

It’s true that the Thatcher government didn’t want the water companies or British Rail to borrow money for investment. They regarded this as government borrowing, which they were desperate to cut back. But we need a new rule – that money can be borrowed for investment. Then companies can decide to raise money for investment as long as their income will support it. This means public water, transport and energy companies can take their own strategic decisions to achieve their public service objectives. This is how the EU treats investment by public companies.

Public services differ in the way they are financed. Some can be financed almost entirely by the income they receive from charging the public – they don’t have to rely on government funding from taxation. The water industry, for example, is fully funded by our bills. But private water companies have borrowed £51 billion and paid out dividends of £56 billion. Every household in the country pays £53 a year just for the cost of servicing that unnecessary debt.

So a public water authority with statutory duties to provide clean water and treat sewage has a clear public service incentive to make long-term investments and keep the company running at break-even, or a surplus, and the financial capacity to do so.

This already happens in Scotland, where people pay for their water through their council tax bill, but this part of the bill is kept separate and reserved only for Scottish Water. The service is self-financing and Scottish Water is investing more per head than any of the English companies.

For services that make no money themselves, and exist purely for the good of society, like the NHS and education, their funding will have to come from the Treasury budget. Their funding will depend to an extent on the political priorities of the government of the day – just like they do now. And those priorities depend on who we elect and how much control we have over our public services.

This is also the case for services which have some revenue, but not enough to cover the cost of providing the service to everyone, like our railway – their funding will have to be supplemented by the Treasury as well.

There are two ways to deal with this.

Firstly, we can have legislation that recognises the need for long term funding from government. Railway privatisation legislation put an obligation on the Transport Secretary to provide the private railway with a multi-year funding settlement. Even though it doesn’t say anything about how large the settlement should be, this has given the privatised railway a security of finance. British Rail never benefited from such settlements. Similar guarantees could and should be put in place as part of legislation for the future publicly owned companies.

Secondly, more generally, we must fund public services properly. Public ownership is not a panacea and public services will not work well without adequate funding, whoever owns and runs them. Austerity has created terrible conditions for our public services.

The UK’s public spending is about 41% of our GDP – much lower than the average for similar European countries, which is 48.9%. When compared to these countries, the UK ranks worst for inequality, and one of the lowest for poverty and child poverty rates.

Public services are the backbone of strong societies across the world. It’s time to recognise the short and long term value of investing in them.