Panicking energy giants tell Labour they are TOO SKINT to be nationalised

Britain's biggest utility companies are desperately trying to avoid nationalisation by arguing they have too many hidden liabilities for a future Labour government to afford to take them into public ownership.

A senior City source said energy giants including British Gas, E.on and Thames Water are preparing for the possibility of a Labour administration by trying to ensure they are “at the back of the nationalisation queue”. They are fighting amongst themselves in an attempt to persuade Jeremy Corbyn and John McDonnell to allow them to remain in the private sector and nationalise competitors who are more profitable instead.

“It’s like a beauty contest in reverse” the City source said. “They are all trying to prove to Labour that they aren’t worth buying because the long-term cost would be too great”.

“They are trying to convince Corbyn they are the ugly sisters who aren’t worth taking to the ball”. Energy giants are doing that by pointing out their balance sheets are not as healthy as their own shareholders and investors might believe.

Since the general election in June, chief executives and chairman have privately pointed out they need to spend huge amounts of money repairing the crumbling infrastructure used to pipe water, gas and electricity to the UK’s 23mn households. They have also drawn attention to the size of the pension deficits their companies are running, arguing that the cost of taking on those liabilities will make it doubly difficult for a Labour government to nationalise the companies they run.

The City source said: “It’s fairly desperate stuff. These multi-billion pound companies are all telling Labour they are in a far worse financial state than their competitors. It’s the exact opposite of the pitch they make to analysts and investors.

Another source in the Square Mile compared the strategy employed by the energy giants to the “poison pill” defence often used by a company that is attempting to fight off a hostile takeover by a rival. In that scenario, a firm that is the target of an unwelcome approach from a buyer makes it harder for it to buy shares in the open market by offering them at a discount to existing investors.

The fact that power companies are trying to argue they shouldn’t be nationalised when Labour comes to power underline the extent to which Jeremy Corbyn has been transformed from a political liability to an electoral asset in the last twelve months. Business leaders are now trying to organise meetings with the Labour leader and Shadow Chancellor John McDonnell.

But very few of them have any existing relationship with Corbyn’s inner circle and many simply don’t know who to call in order to gain an audience with Labour’s new leadership team.

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