Labour is pushing ahead with plans to nationalise Britain’s six largest energy suppliers after a landmark vote at the party’s annual conference last week, shadow chancellor John McDonnell has confirmed.
Delegates at Labour’s annual conference in Brighton voted for the party to adopt a 2030 “net zero carbon” target, which would mean a radical overhaul of the UK economy to strip out fossil fuels.
The motion included a commitment to nationalise the largest energy providers: EDF Energy, British Gas, Npower, Eon and ScottishPower. SSE, currently a member of the Big Six, will soon exit the market after agreeing to sell its British household supply business to Ovo, a private company.
“I’ll abide by the democratic wishes of the party. Of course I will,” Mr McDonnell told the Financial Times on Tuesday.
Jeremy Corbyn, Labour leader, proposed nationalising the Big Six when he ran for the leadership in 2015, but the party did not adopt the policy in its 2017 manifesto.
Since then Labour has proposed nationalising the companies that own energy networks which transport electricity and gas to homes and businesses — including National Grid — but stopped short of seeking to take control of the Big Six suppliers.
The shadow chancellor said the party would consult on the details of the plan as quickly as possible. “There’s two stages, a consultation around how you do it and secondly a consultation about whether it goes into the manifesto as a priority for a first term (in government),” he said.
Jefferies, an investment bank, last year estimated the market valuation of the Big Six energy companies at £124bn, although shares in Centrica, Britain’s biggest energy supplier and the owner of British Gas, have fallen 46 per cent since the beginning of 2019.
Influential figures close to Mr Corbyn have suggested that the companies could be brought under state control much more cheaply — by being bought for their “book value”.
Dave Hall, a professor at Greenwich university who has worked closely with the Labour leadership, has previously estimated a cost of £24bn-£36bn.
Some of the Big Six have themselves been trying to exit the retail market in Britain in recent years, as they have struggled against intense competition from a flood of smaller companies that have entered the industry since the turn of the decade, using their lower cost bases to attract customers with cheaper deals.
At the start of this year, Ofgem, the energy market regulator, also introduced a government-mandated cap for 11m households which has eaten into profit margins.
Npower, now also owned by Eon of Germany, had sought to merge with the household supply business of SSE before the deal fell apart at the end of last year and SSE instead turned to Ovo.
Those companies that do not want to exit the market are likely to put up stiff opposition. Energy UK, a trade body, said of the Labour proposals: “Private investment in energy, which was £13.1bn last year, has revolutionised the industry, creating a power sector that has been world leading in decarbonisation while creating green jobs, boosting economic growth and delivering increased choice and reducing costs for customers.”