Advisers got pounds 34m for pits sell-off

The controversial sale of British Coal's pits to RJB Mining, the company controlled by entrepreneur Richard Budge, in 1994, cost the taxpayer pounds 34m in advisers' fees, according to an official report published today.

Of that total, says the National Audit Office study, the bulk went to just three City firms. Rothschilds, the merchant bank, was paid pounds 9.1m; Clifford Chance, the law firm, picked up pounds 12.7m and Touche Ross, the accountants, received pounds 4.3m. Dewe Rogerson, the City public relations agency, was paid pounds 320,000.

The sale provoked an outcry for two main reasons. At the same time as the deal was being struck, Mr Budge was being investigated by another branch of government to see if he should be disqualified as a director over his involvement in another business venture.

Lord Wakeham, the minister responsible for appointing Rothschilds, also caused a furore when he joined the bank after leaving the Government.

On the row over Mr Budge, the NAO found that Department of Trade and Industry officials talking to him about selling the pits had no idea he was also being looked at by the DTI's Insolvency Service. In the end, they decided not to apply for his disqualification but, says the NAO, "any such application could have had a significant impact on RJB Mining's bid".

Since then, reports the watchdog, the DTI has tightened its procedures, issuing guidelines to officials on obtaining information about bidders in privatisations and the sources they can use. These guidelines should be applied in future sell-offs, the NAO says.

On Rothschilds, the NAO revealed the bank initially demanded a pounds 4m "success fee" for handling the sale as well as charging an hourly rate. This demand, pointed out the watchdog, was only made after the bank had been chosen to handle the sale. The fee was subsequently negotiated down to pounds 2.5m.

In future, says the report, departments should think about the overall size of the package before agreeing to pay a success fee. The factors to be taken into account in determining fees should be agreed in advance of the adviser's appointment.

Officials are also criticised for failing to set budgets for the advisers' total costs. In future, they should "make every effort to set overall budgets at the earliest opportunity where reasonably reliable estimates can be made".

One of the hidden benefits to the Government from the pounds 963m sale, the report discloses, is that it agreed to act as a guarantor of the benefits to former miners from the British Coal pension fund - in return for a half share of any surplus from the fund. The NAO estimates this half share, on current forecasts, could yield pounds 2bn for the Government.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
Life and Style
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Ed Miliband, Nick Clegg and David Cameron appeal to the audience during the Question Time special
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living