CBI admits error in £ 196bn price tag for Labor plans – The Guardian, Theguardian.com

TheConfederation of British Industryhas admitted it exaggerated the “eye-watering” £ 196 bn price tag that it claimed Labor’s nationalization plans would cost.

In an email exchange betweenLaborand the CBI, seen by the Guardian, the UK’s foremost business lobby group told the party it recognizes that some of its analysis did not reflect the party’s policy.

Threatening to undermine the credibility of its warning over the costs, the admission comes afterthe CBI said Labor would need to spend at least £ (BN) to take control of the rail network, water, energy and mail companies should it be elected to power.

In the leaked exchange, Labor asked questions of the lobby group’s assumption that (Labor) would buy back the rail industry’s rolling stock – the trains leased out to rail operating companies – saying this was not part of its plans.

In response, the CBI’s principal economist told the party: “We have assumed the rolling stock would be bought into public ownership as the trains are currently owned by the private sector and therefore full-scale nationalization of rail would require this. However, we recognize that this isn’t official Labor policy on nationalizing the rail industry. ”

The economist claimed the cost of purchasing the rolling stock used on the railways was “estimated to be small” relative to buying the water and energy companies, suggesting they would make up the bulk of the £ 196 bn figure.

However, the lobby group refused to detail the exact costs, saying in the email exchange: “Unfortunately we are unable to provide a breakdown of the £ 196 bn figure as our members do not feel comfortable doing this. ”

There are about 14, 000 trains on Britain’s railways owned by private sector leasing companies, which are paid fees by train operating firms to use them. While Labor would not need to buy the rolling stock, it would still need to pay leasing firms to operate a nationalized service using their trains.

Around half the fleet is due to be replaced in the next two years, at a cost of about £ 13 BN. The remaining, older fleet would be worth less than that amount.

Andy McDonald, the shadow transport secretary, said the CBI had based its figures on “fabricated false information” about Labor’s rail policy and that the group “don’t have the guts to publish their figures”.

Demanding an apology from the CBI director general, he added: “The CBI’s shoddy research and shabby conduct does a great disservice to our political debate during the hugely challenging times through which we now live. At the very least, I would expect an apology from Carolyn Fairbairn over the distorted misrepresentations her organization has sought to peddle. ”

The CBI said: “Labor has a lot of questions to answer on its renationalization proposals. They have yet to set out clear plans of how exactly they would be run, but we know the scale of the upfront cost to be sky high.

“They must also explain how such a move would not deter investment into the UK at a time when it is most needed and whether they would pay a fair market rate.

“The CBI stands behind its analysis of Labor’s plans for large-scale renationalization. The cost of purchasing rolling stock is a fraction of the £ 196 bn and was included as that is what full-scale renationalization of the rail industry would likely involve. If a Labor government chose not to purchase the rolling stock, they would still need to pay the cost of leasing them. ”