Many people in the Labour Party support bringing utilities like water (in particular, Thames Water) and electricity transmission back into public ownership. Supporters often present nationalisation as a simple fix: no greedy investors, no dividends, and lower bills. But, in reality, nationalisation is far more complicated and involves real trade-offs that are often glossed over.

Financial risks of running these industries do not disappear when the state takes over. Under private ownership, investors bear the risk and expect returns through dividends and interest. Under nationalisation, that risk shifts to customers and taxpayers instead. If the government still borrows to fund investment, interest payments remain. If it wants to avoid borrowing, then customers would have to pay higher bills now to fund upgrades and maintenance — a return to the “pay-as-you-go” model used after the Second World War.

Nationalisation also wouldn’t automatically improve how these industries are run. The state once had strong expertise in managing utilities, but that capacity largely no longer exists. There is a risk that governments use nationalised industries for political goals, such as freezing prices, which can lead to underinvestment and reduce service quality. Anyone arguing for nationalisation needs to be honest that it likely means higher bills today, real financial risk for the public, and no guarantee of better performance.