Are you worried about the prospect of a Labour Government nationalising rail and energy companies?

I am interested in investing in some UK energy companies but I am cautious because of Labours plan to nationalise.

How would they assess the appropriate level of compensation for shareholders if they nationalised these industries?
Wouldn’t the payouts be in government bonds instead of cash?
Are those who hold a stake in the would be affected companies worried?
Is anyone else put off because of Labours intentions?

I don’t really know much about how this would work and would love to hear your thoughts.

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From the above article:

John McDonnell: “The value of any industry that is brought into public ownership is determined by parliament itself, and that will be a detailed assessment”

“When parliament determines that, what those shareholders will get is a secure bond which is much more secure than what they’ve got at the moment.”

It seems from this article that John McDonnell is saying that parliament will assess the price of the companies and pay out shareholders accordingly and that payment will be in the form of government bonds. If the gov bonds have an interest rate comparable to the companies dividend then they are likely to be well sought after if interests rates haven’t risen. Essentially you’d be getting a full dividend without any of the risk that comes from owning the stock.

I think we can all but speculate what will actually happen ultimately but personally I’m not too concerned and is hasn’t put me off buying shares in a water company recently. I still dont think its all that likely that labour will win a gen election for this to happen. Even if it did it sounds like shareholders will probably get a fair payout.

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It’s one of many reasons to fear this Labour government. Corbyn and McDonnell are unreconstructed Marxists and would be terrible for all UK business. Their front bench is made up of the only people who will serve them rather than any talent. It would be great to go back to the days of a credible opposition, I even miss Ed Miliband…

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Why are you fearing them if you don’t think they’re a credible opposition?
It’s good to have a proper difference again. As much as I supported Blair it was a variation on a theme between all the parties at the time

They aren’t credible but the promise of “free stuff” is very appealing to a lot of people and, given the state of the Tories, we may yet find them in power. The current Labour party is led by people with some very troubling views, who attract some genuinely nasty supporters and support anti-business policies which have been proven time and time to bankrupt nations (see Venezuela) so I’d politely disagree with you that this proper difference is welcome.

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I don’t think this is the forum for you to churn out your political viewpoint. But seeing as you started it:

The current Conservative Party (and Government) are a shambling shower led by people with some very troubling views, who attract some genuinely nasty supporters, and support pro-business policies to the detriment of the people, resulting in a rise in rough sleeping, food bank use, NHS waiting times, national debt, train tickets, and utility bills (despite yearly promises to cap them).

See, we can all comment on political parties! Politics is fun. :grin:

With regards the original question, no I’m not worried. I do have some shares that may be affected, but if Labour renationalise my expectation is that I won’t be impacted negatively. Even if I am, that would be outweighed by my bills no longer being padded to pay out shareholders.

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Following on from that, this isn’t a good place to discuss which political party’s you simply like or dislike. It’s divisive, doesn’t help investors & there’s better places to do that elsewhere.

Let’s stick to discussing politics in the context of investing please, if that doesn’t happen then I’ll close the thread in order to avoid any pointless arguments.

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My apologies Alex, I will endeavour to behave in future!

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That’s ok, I hadn’t mentioned this before :slight_smile:

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You mean stuff we’ve paid for?

A lot of utilities have already dropped in price due to Corbyn’s comments on this, to the point that they are now pretty cheap and dividends are high. If you don’t think they’ll get nationalised they could be a good long term buy. I don’t think it will happen even if Labour get in. I don’t think they will have a big enough majority or enough support from their own back benches

Gas / Electric Utilities did take a hit - more to do with Government legislation ( price capping for example ) and Capacity Market changes I would say.

Maybe it was that, I was holding National Grid and SSE energy, I’m still down with both on share price although I think the dividends have just about made up for it. I think SSE was also hit by uncertainty of whether they were going to split off the retail business or merger with someone else or what. Both are recovering a bit over the last couple of weeks

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A post was split to a new topic: Removed posts 18.03.2019

Who knows, transitioning pension fund/bank investments from unstable contractors and ultimately unsustainable utilities to government bonds may be good for stability, especially considering the economic cycle looking forward over the next 24 months and where interest rates are at. Also find McDonnell’s plan on employee equity very interesting.

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I’m hoping for shares where I work. They might give me a specimen bottle and a cardboard sick bowl twice a year :crossed_fingers:

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The topic of politics…

I do not worry too much about nationalising the rail companies but the things that worry me is at times I see the current Labour shadow cabinet using the of nationalising industries as a way of solving the industries problems. I do worry that there is a point that nationalising industries will cause problems for our economy and the national debt.

Rail is an example of where privatisation hasn’t worked, we have some of the highest fares in the world along with some of the worst services. For some rail journeys it can be cheaper to buy a second hand car and drive there than to buy a rail ticket. I would support renationalisation of Rail but I’m not sure the nationalisation argument holds up so well for some other industries.

I don’t support nationalising National Grid because I have shares in them :smiley:

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I think the more pertinent question is - why hold utilities at this point in the cycle?

Biggest single issue with nationalising our rail and energy companies will be taking their debt on to the national books. Now, they are currently private debt that are (to varying degrees) underwritten by the government - taking that debt onto our books will impact our credit rating and a labour government will inevitably have to raise debt (at least short term) to pay for this.

With us already not having a AAA credit rating I doubt any government would be stupid enough to risk a further downgrade. But the fact that UK is the healthiest of all the EU nations shows just how far the EU is away from a financial meltdown if we were to have a another financial crisis.

What exactly do you refer to as “the healthiest”?