John McDonnell insists Labour's nationalisation plan is not a 'magic card trick' - but fails to say how much it would cost

John McDonnell has insisted Labour’s plan to nationalise the railways, Royal Mail and utility companies is not a “magic card trick” as he claimed it would not cost taxpayers a penny.  

The shadow chancellor said the party’s proposal to take key infrastructure back into public ownership would “not be a burden on taxpayers” and would be paid for by issuing government bonds.

The Tories said Mr McDonnell’s plan would mean “more debt and higher taxes” while the public finances would “spiral out of control” under his stewardship.

Nationalisation was a key plank of Labour’s 2017 general election manifesto but it remains unclear exactly how much it would cost to implement.

Mr McDonnell was asked repeatedly on the Andrew Marr Show on BBC One to estimate what the bill would be but he refused to do so.

Asked to give a number, he said: “You don’t need a number because what you do is you swap shares for government bonds and that is covered by the costs of those profitable industries we take over.”

When told that the issuing of bonds still amounted to government spending that would have to be paid for, he said: “Yes it is and it will be parliament who sets the price on any of those nationalisations but what I am saying is the cost is always covered because these are profitable industries and that will cover the cost of any borrowing.”

When told that such a plan would not provide the money needed to start the nationalisation process and that as a result taxpayers would have to pick up at least some of the bill, he said: “There will not be a burden on taxpayers.

“The price will be set by parliament, government bonds will be issued and any cost of government bonds will be covered by the income from those profitable industries.”

Mr Marr suggested Labour’s plan sounded like a “magic card trick” but Mr McDonnell rejected the accusation.

“Well it isn’t because it has been done elsewhere and it has been done across Europe as well now,” he said.

“In Paris water has been brought back into public ownership. Why? Because people feel they are being ripped off by profiteers.”

Liz Truss, the Chief Secretary to the Treasury, said: “John McDonnell's borrowing binge shows exactly why Labour is not fit to govern.

“When asked repeatedly how much Labour's spending commitments would cost, the shadow chancellor was unable to say. No wonder Labour are preparing for a run on the pound.

“Labour's costs would spiral out of control, meaning more debt and higher taxes - with working people paying the price.”