A paper published by Professor David Hall, Director of the university's Public Services International Research Unit (PSIRU), shows that annual savings to UK households would be £7.8bn if water, energy grids and Royal Mail were brought into public ownership.
The research also estimates that the total cost of compensation of returning shareholders' investment under nationalisation would be £49.7bn.
This figure – which is significantly lower than the one quoted by the Confederation of British Industry (CBI) – is based on compensating shareholders the exact money they invested, rather than paying 'market values', which would result in excessive returns at the expense of UK households.
Professor Hall said: "Based on intensive empirical research, this paper shows that public ownership of utilities would amount to annual savings of just under £8bn - £315 per household per year – even after taking account of the cost of compensation. Nationalisation would pay for itself in less than seven years.
"Rather than costing the country nearly £200bn in compensation to investors – a claim made by the CBI last month – nationalisation could cost less than £50bn if shareholders are compensated for the amount they invested. There is no law requiring that they be paid the 'market value', and it is up to parliament to decide on a case by case basis the appropriate amount of compensation."
Professor Hall calculates that the average household would be £142 better off a year as a result of nationalising energy grids, and £113 better off if English water companies were publicly owned.
A second paper by Professor Hall and Dr Vera Weghmann looks at how public ownership compensation would affect UK pension funds and employees, again using empirical data on actual ownership. It shows that UK pension funds own only about 5 per cent of the privatised water and energy companies, and employees own only 0.1 per cent.
Professor Hall said: "From these figures, we can see that 95 per cent of the value of increasing compensation would go to largely foreign investors other than UK pension funds. This is not an efficient way of helping pension funds, and the private companies would do better to reduce the deficits they have run up in their own pension funds. Employee shareholdings are even smaller, except in the case of Royal Mail, and employee shareholdings in any case have to be treated differently, as an employment benefit: other shareholders could not benefit from this exception".
A third, also by Professor Hall and Dr Weghmann, examines the potential risk of legal action under bilateral international investment treaties (BITSs) and the Energy Charter Treaty (ECT) overcompensation for the nationalisation of water and energy companies. Based on detailed analysis of actual ownership of the companies, the paper shows that the potential for using BITs or the ECT is, in practice, limited to investors who hold about 20 per cent of the companies. BITs (or ECT) processes are costly, take years, are uncertain in outcome, and are currently facing strong political opposition across the world, including in Germany.
Professor Hall added: "It is unlikely that there will be a 'flood' of BITs cases, and the timescale and uncertainty means they are unlikely to make significant impact on actual compensation."
