Water industry investors and lenders would lose billions of pounds under Jeremy Corbyn’s plans to renationalise companies at a huge discount to their market value, a leaked Labour blueprint reveals.

Plans circulated among the Labour front bench reveal that the party would offer shareholders compensation of less than £20bn, versus their £44bn market value — heaping huge losses onto the pension funds and insurance giants that own and help to fund the water utilities.

The industry is already reeling, with water companies having been heavily criticised for taking on debt and paying billions to their offshore owners while delivering poor service to households.

The briefing paper for Labour, which includes a template letter for MPs to send to their constituents, says “there is no reason