Image copyright PA Image caption Shadow chancellor John McDonnell has said Labour's nationalisation plans would be cost-neutral

Labour's nationalisation plans would cost at least £196bn, according to the Confederation of British Industry.

The employers' group said the up-front cost of taking control of the water and energy utilities, train firms and Royal Mail was equivalent to all income tax paid by UK citizens in a year.

It was the combined total of the £141bn health budget, and the £61bn spent on education, analysis by the CBI said.

A Labour Party spokesman said it was "incoherent scaremongering" by the CBI.

John McDonnell, the shadow chancellor, has said that nationalisation would be cost-neutral as the companies' profits would cover the cost of borrowing needed to finance it.

In addition, the party has said that rail nationalisation, for example, would be hugely popular with travellers tired of poor services. And bringing National Grid back under state control would be part of plans to create a National Energy Agency to help usher in Labour's proposed Green Industrial Revolution.

Labour's shadow transport secretary, Andy McDonald, said the CBI had "chosen to fabricate false information about Labour's rail policy" by suggesting that the party was advocating buying rolling stock instead of leasing it.

He added: "The CBI's shoddy research and shabby conduct does a great disservice to our political debate during the hugely challenging times through which we now live."

But a CBI spokesperson said the organisation stood by its analysis, adding: "The cost of purchasing rolling stock is a fraction of the £196bn and was included as that is what full-scale renationalisation of the rail industry would likely involve.

"If a Labour government chose not to purchase the rolling stock, they would still need to pay the cost of leasing them."

In correspondence seen by the BBC, the CBI refused to give a breakdown of its £196bn figure.

Investor confidence 'severely hit'

The CBI's report estimated there could be a 10.7% increase in debt from bringing industries back into public ownership.

This would raise debt levels to 94% of GDP, the highest point since the 1960s, and would cost about £2bn a year, according to the study.

It also said that under Labour's plans, savers and pensioners could suffer an estimated £9bn loss to their holdings, which translates into £327 for every household in the country.

The CBI bases its analysis on the nationalisation of:

Nine water and sewerage companies and seven water-only companies in England

National Grid, and the electricity transmission and distribution networks

Rail rolling stock

Royal Mail

The report said the confidence of international investors in the UK would be "severely hit" if Labour refused to pay full market value for the industries.

Image copyright PA Image caption Labour has said nationalisation of energy infrastructure would help create a green revolution

Although the analysis said that the state-owned assets would increase in value and there would be potential revenues generated, the study's focus was on costs rather than estimates of potential benefits.

Rain Newton-Smith, the CBI's chief economist, called the price tag "eye-watering". And she said that £196bn was only the starting point.

"It doesn't take into account the maintenance and development of the infrastructure, the trickle-down hit to pension pots and savings accounts, or the impact on the country's public finances.

Fair economy

"There are so many other genuine priorities for public spending right now, from investing in our young people to the transition to low carbon economy and connecting our cities and communities.

"These issues are what keep businesses up at night and what they want to see the government get on with addressing. Nationalisation would waste time, energy and public money."

Last week, the Institute for Fiscal Studies suggested that focusing on the upfront cost of Labour's plans was the wrong approach. "Economically what matters is whether these assets would be better managed by the public or the private sector," it said.