Shadow chancellor says policies do not fit within her plans to restrict public spending
Labour will not go into the next election promising to take private rail, energy or water companies back under public ownership, Rachael Reeves has said.
The shadow chancellor said on Monday morning that the policies were not compatible with new “fiscal rules” she would introduce to restrain public spending.
Speaking later in the day Keir Starmer said he agreed with Ms Reeves and that “having come through the pandemic it’s important that we have very clear priorities”.
Following the shadow chancellor’s interview a Labour spokesperson attempted to clarify that the party was “pragmatic” about the question of public ownership and said it could have a “positive” role in rail.
At the 2017 and 2019 elections Labour promised to bring the sectors into public ownership to help with the cost of living and drive down fares and bills.
But asked whether she was still committed to the policies, Rachel Reeves said they had been replaced by ideas like reforms to business rates and a “buy British” campaign.
“I’ve set out fiscal rules that say all day-to-day spending will be funded by day-to-day tax revenues,” she told BBC Radio 4’s Today programme.
“Within our fiscal rules, to be spending billions of pounds on nationalising things, that just doesn’t stack up against our fiscal rules.”
Asked to confirm whether she had just dropped the commitments, she said: “They were a commitment in a manifesto that secured our worst results since 1935. We have scrapped the 2019 manifesto.
“That is not the starting point. We’re setting out distinct policies under Keir Starmer, the plans today around industrial strategy, my commitments around a climate investment pledge, our plans to buy, make, and sell more in Britain, reforms to the business rate system.
“Those are the policies that will be going into the next election under Keir Starmer, not the policies of 2019.”
Following the interview, a Labour Party spokesperson told The Independent: “We are pragmatic about public ownership as long as it sits within our fiscal rules – a point Rachel was underlining in the interview by referencing this framework. For example, we know there is a positive role for rail in public ownership.”
But speaking at Q&A session after a speech in Liverpool later on Monday, party leader Sir Keir was asked about nationalisation of water and energy, and replied: “I agree with what Rachel Reeves said this morning. Having come through the pandemic, it’s very important that we have very, very clear priorities. And that’s why we’ve set our fiscal rules already, as an opposition.
“Rachel did that conference last year: that’s way ahead of the general election, setting out our priorities. And my priority, as I hope is obvious from this morning is growth. The mission of the next Labour Government will be growth and that partnership with business is where I see that growth coming from. So my approach here is, is pragmatic, not ideological.”
Asked specifically about taking rail back into public ownership he said: “Whether it comes to rail or anything else, I want to be pragmatic about this rather than ideological. I think what some of our mayors and Metro mayors are doing with public transport is the right way forward, absolutely focused on keeping the price down and making sure there’s control over where things go, particularly buses recently.”
Green Party co-leader Adrian Ramsay said privatisation had been a “failure” and accused Sir Keir of not representing the public’s “best interests”.
“It is depressing to see Labour abandoning their traditional support for public ownership of essential services at a time when this is so popular amongst voters,” he said.
“Their attempt to compete with the Tories will see ordinary people and the planet pay the cost as a result.
“It’s clear for all to see that the privatisation of essential services like energy, transport and water has served only to line the pockets of shareholders, rather than ensure that these services we all depend on are reliable and affordable.”
He added: “The Green Party believes it is essential that public services are publicly owned, both in order to guarantee the level of service required to meet society’s needs and help tackle the climate crisis, and to ensure good pay and conditions of those working within them.
“The fact that Labour has abandoned these beliefs shows just how far Keir Starmer is prepared to drag the party away from representing the best interests of people and planet in order to gain power at any cost.”
Public ownership of sectors like rail, water and energy enjoys broad popularity with the public.
A 2021 poll by ComRes found that 60 per cent people want energy in public ownership, versus 17 per cent who are opposed.
YouGov found in 2019 that 64 per cent want rail in public ownership and 63 per cent want water in public ownership. In both cases a small minority of 23 per cent were opposed.
It is unclear why Ms Reeves’ fiscal rules would conflict with taking the sectors into public ownership as such an approach would be unlikely to be financed through day-to-day spending.
In other European countries increased public control over utilities and rail has been used to help with the cost of living.
Emmanuel Macron’s French government last week fully nationalised supplier EDF to help France manage its transition away from fossil fuels and to meet its climate goals. It has also forced the company to take an €8.4bn hit to protect consumers from rocketing energy bills.
Germany’s government has meanwhile helped cut commuting and travel costs by providing funding for a €9 monthly season ticket on all local and regional public transport across its largely publicly-owned rail system.