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At Prime Minister's Questions this week, Deputy PM Dominic Raab claimed that the CBI estimated that nationalisation would increase energy bills by £2000.

On energy bills he says Labour's plan of "nationalising energy companies" would have put £2,000 on bills.

Given the current Ofgem price cap of around £1200 introduced by Theresa May to stop energy company profiteering and the fact that the French state-owned EDF supplies 20% of the UK's energy already;

“I have been clear that our broken energy market has to change – it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much,” said May.

Is the claim that the CBI estimated a tripling of bills under nationalisation an accurate quote of the CBI's position, and is that position remotely credible?

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Sort of, but not really. I believe the claim is based on a 2019 analysis of Labour's renationalisation plans published by the CBI entitled Renationalisation: The Cost. This analysis estimated the total bill of Labour's plan of bringing Rail, Energy, Water and Royal Mail back into public ownership at £196 billion.

Unfortunately, the document doesn't explicitly split out the estimate for nationalising the energy sector, but does note that the party's plan is to nationalise the transmission and distribution markets of the energy sector, rather than nationalising the private companies that actually generate electricity.

The cost of this particular asset is explored in The Cost of Nationalisation, published by the Centre for Policy Studies, and which the CBI report references, and the regulated asset value (RAV) is estimated at £55.4 billion. Using the CPS' estimate that the total figure for nationalisation would be £176 billion (or £6,471 per household), and some arithmetic, the bill of £55.4 billion would come out to a bill of £2,036 per household.

It's worth bearing in mind that although the Labour party demanded an apology from the CBI over an "incorrect assumption about its plans for the rail industry", and suggested that "the error threw into doubt the £196 billion price tag put by the CBI on the overall programme", I'm not aware of any refuting of either the CBI's analysis or that of the CPS with particular reference to the energy nationalisation section, so I think this figure is fairly credible.

So was Raab's claim accurate? His actual words according to Hansard were:

The most disastrous thing for the energy bills of hard-working people across the country would be to follow Labour’s plan to nationalise the energy companies, which the CBI says would cost as much as £2,000 in bills.

While Raab isn't specific about which energy companies he means, I think it's reasonable to assume he was referring to energy generation companies rather than the distribution networks currently in private hands. Labour's March 2019 plan referred to in the CBI report did not suggest nationalising energy generation companies, but rather the transmission and distribution network, so the figure does not match the claim. However, Labour's 2019 manifesto did include a commitment to part-nationalise energy generation companies:

The supply arms of the Big Six energy companies will be brought into public ownership where they will continue to supply households with energy while helping them to reduce their energy demands.

So, to sum up:

  • The £2,000 figure from the CBI/CPS Raab referred to is a one-off figure based on dividing the cost of nationalisation by the number of households in the UK, rather than a permanent increase to energy bills.
  • This figure is based on nationalising the transmission and distribution network, rather than energy generation companies, the cost for which would be higher than £2,000 (the CPS report gives an estimate of £185 billion, or about £6,801 per household).
  • Labour didn't promise to fully nationalise energy generation companies in their manifesto, but only to nationalise the supply arms of the Big Six (as well as the transmission and distribution network).

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