Beckett tamed by the watchdog mandarins

COMMENT; 'The truth of the matter is, that while utility regulation may be in need of some institutional reform, its underlying foundations are essentially sound'

If in doubt, order a review. In a move worthy of that great fictional civil servant, Sir Humphrey Appleby, all those weird and wonderful ideas Labour toyed with while in opposition to address the supposed excesses of the privatised utilities - profit sharing, sliding scale regulation and the like - are now to be subjected to a thorough going review. And by civil servants no less. It can be said with a reasonable degree of certainty that by the end of the process, most of these suggested innovations will have been quietly buried.

So mature, considered and generally unrevolutionary did Margaret Beckett's speech on regulatory reform seem yesterday, that for all we can surmise, Sir Humphrey must already have had his way and persuaded the new President of the Board of Trade to back away from all that was said while on the other side of the fence. Rate of return regulation is ruled out entirely. Executive remuneration is a matter not for regulators but for the companies themselves, she says in words that might have come straight from the lips of John Major. She's also going to stick with the idea of independent regulation, free from political interference.

And in an admission that she would never have made in opposition, Mrs Beckett concedes that "the combination of competition, regulation, and the introduction of new technology in the utilities since privatisation has in most areas brought benefits in the form of lower prices to consumers". Well there's a thing. It seems that Mrs Thatcher built something worth preserving, after all.

The truth of the matter is, of course, that while utility regulation may be in need of some institutional reform, its underlying foundations are essentially sound. In some cases, notably telecommunications and gas, regulators have already succeeded in ironing out virtually all the early privatisation excesses, so much so that the introduction of new-fangled ideas such as profit sharing might actually work against the interests of the customers they are meant to protect.

That's particularly the case with gas where old-style price cap regulation is now so severe that there is a real chance that TransCo won't earn the regulator's assumed rate of return. Under profit sharing, customers would end up having to help meet the difference with higher prices.

In other utilities regulators are well on the way to achieving the same thing. The exception is the most recent price regulated privatisation, rail, which is being left out of Mrs Beckett's review. John Prescott is determined to keep the railways as his own special plaything.

For a party that made so much out of privatised excess while in opposition, the irony is that now it's in government there's not much left to be done about it, other than a little tinkering at the edges. There may be some scope for standardising general principles of economic regulation across the utilities, and the cult of personality among regulators certainly needs to be curtailed. Under its own steam, however, price cap regulation is now delivering for customers in exactly the way it was always intended to. As with so many other things, it all came too late to help the Tories.

Brown won't be able to please everyone

Gordon Brown has lots of constituencies to please in tomorrow's Budget. For the markets, he needs to produce a fiscally responsible Budget. For industry, it has to be business friendly - lots of measures to help investment and offset the effect of the expected abolition of tax credits on dividends. For Old Labour, it has to be a Budget with a social conscience. Measures to help the poor, reduce unemployment and crackdown on the fat cats will have to be included alongside anything that helps business.

Then there are the economic pundits, a small but hard-to-please elite of conuscenti. Only a raft of measures to dampen down the consumer boom and halt sterling's soaraway appreciation will satisfy them. And finally there's Middle England, or New Labour. This is the most difficult constituency of all to square with the others. It expects some fiscal tightening but not that much. Dress it up in green clothing and it becomes that much more acceptable. But at what point does fiscal tightening become a breach of Labour's election promise not to increase taxes? Hit new Labour voters too hard, and they'll start complaining.

So to use a dreadful old cliche, Mr Brown has got quite a tightrope to walk. Having now discovered a "black hole" in the public finances, largely artificially it has to be said, he's got to fill it. He's also got to find money for reform of the tax and benefit system and to fund all those investment incentives that industry is confidently looking forward to. At the same time he's got to raise money to soak up some of those building society and insurance windfalls, taking it out of the economy altogether. And finally he's got to do all this without giving the Conservative opposition ammunition to be able to say, credibly, we told you so. If he pulls all that off, he really will be a Chancellor to remember.

FitzGerald's strategy will take some time

Unilever's sale of its John West canned fish business to Heinz seems to lay at least one stock market canard to rest - that it might use the pounds 5bn proceeds from the sale of its speciality chemicals business to take a tilt at the Pittsburgh baked bean leviathan itself. It wouldn't make a lot of sense to sell your unwanted businesses to a company you intended to bid for.

Unilever's chairman, Niall FitzGerald, has been playing a good guessing game with the City for weeks now. He has told Unilever watchers to expect the unexpected and Heinz has been one of a raft of names linked with his shopping list. With Heinz now seemingly ruled out, perhaps the rumour mill will turn to other US consumer goods companies, like Campbell Foods and CPC.

Or maybe not. Actually, Mr FitzGerald has persistently stressed since announcing the speciality chemicals disposal his intention of rebalancing group assets towards the mouth-watering opportunities in emerging markets such as the Far East and central and eastern Europe. Buying Campbell would not achieve that aim. And even CPC, which is more international than most, still makes half its profits in mature markets such as the US and Europe. The difficulty for Mr FitzGerald is that while the City keeps looking for the big deal, his alternative strategy is going to take some time to realise. Most branded goods companies in emerging markets are family owned and relatively small. In any case, Mr FitzGerald wants to build his own brands in these markets.

While there might be a few deals long the way, therefore, much of this development is bound to be organic. It is something Coca Cola has been doing for years - starting from scratch in new markets and building the brand. The problem is that Unilever has a bit of ground to make up. Only a third of its profits come from emerging markets. Meanwhile that earnings dilutive pounds 5bn will keep burning a hole in Mr FitzGerald's pocket.

world cup 2014A history of the third-place play-offs
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur

Diving in at the deep end is no excuse for shirking the style stakes

The Mexico chief finally lets rip as his emotions get the better of him
world cup 2014
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
...and the weight loss industry is rubbing its hands in glee
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Mario Balotelli, Divock Origi, Loic Remy, Wilfried Bony and Karim Benzema
transfersBony, Benzema and the other transfer targets
Yaya Touré has defended his posturing over his future at Manchester City
Detail of the dress made entirely of loom bands
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
There were mass celebrations across Argentina as the country's national team reached their first World Cup final for 24 years
transfersOne of the men to suffer cardiac arrest was 16 years old
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
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 Money & Business

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Trade Desk Specialist (FIX, Linux, Windows, Network Security)

£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice