SSE and National Grid move ownership of UK operations overseas

Two of the UK’s leading power companies have announced that they have shifted ownership of their British operations overseas in reaction to Labour’s proposed nationalization policies.

SSE and National Grid had confirmed that they had set up offshore companies in Switzerland and Luxembourg and Hong Kong respectively.

These three countries have “bilateral investment treaties” with the UK which mean that investors are protected in the event of a state asset grab.

While the moves in themselves cannot prevent renationalisation, they would force Corbyn to pay a higher rate to take control of the businesses.

Labour recently released its manifesto, with plans to nationalise the rail, water and electricity industries, as well as the Royal Mail and BT Openreach.

SSE, which is worth £13.6bn, said it had shifted both its electricity distribution business and its high-voltage network in Scotland to a Swiss holding company.

In a statement, the company said: “SSE has incorporated in Switzerland a direct and wholly owned subsidiary company to acquire, oversee and hold investments or other financial assets.

“The company has become the holding company for SSE’s electricity transmission and distribution networks through a share-for-share exchange. This is intended to support long-term investment in low-carbon infrastructure in SSE’s core businesses.”

Labour has accused the two firms of “prolonging the rip-off” of consumers following the announcement of the move.

The Party has also claimed that these firms have been “overcharging customers to the order of billions of pounds.”

Consumer watchdog Citizens Advice stated in 2017 that both companies were had made £7.5 billion in “unjustified profits” over eight years.

SSE chief executive Alistair Phillips-Davies explained that Labour’s plans would be hugely disruptive for the industry and could risk the UK’s leadership position in offshore wind.

National Grid, which owns the UK’s power cables and gas pipelines, said:

“Labour’s proposals for state ownership of National Grid would be highly detrimental to millions of ordinary people who either hold shares in the company or through their pension funds — which include several local authority pension funds.

“To protect their holdings, and in line with our legal fiduciary duty to our shareholders, we have established holding companies in Luxembourg and Hong Kong. This has no financial benefit to the company and does not affect its day-to-day operations. It is solely to protect our shareholders’ interests.”

The electricity giants, which between them own the majority of the UK’s power distribution system, follow utilities companies such as Anglian Water and Yorkshire Water in creating overseas subsidiaries.

Fellow utility Severn Trent is said to be considering taking similar steps after it was revealed in May that Labour would purchase the UK water industry at a discount rate to take account of “asset stripping since privatisation.”

Shareholders would be given government bonds as a means of compensation.

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