British Energy runs flat out to stand still

The fact that British Energy is getting rid of almost a quarter of its staff should not prompt people living near its power stations to decamp to safer places, or at least not yet. Though a nuclear station is a more delicate animal than a coal or oil-fired one, and needs tender loving care 24 hours a day, the job reductions confirmed yesterday are not going to leave the station control panels unmanned.

Indeed, the proposals are modest compared with what happened among the privatised fossil fuel generators. National Power found it could dispense with the services of 70 per cent of its pre-privatisation staff, and PowerGen not much less. It was this unexpectedly high scope for efficiency gain that made the generators, and their regional distribution sister companies, into such unbridled cash machines. They have proved far more valuable than the City dreamed when they were first privatised. British Energy is different. Its plants need to run flat out all the time to be economic. As a consequence, the scope for further improvements in efficiency are less pronounced.

With this latest package, British Energy is probably going about as far as it properly can. The Nuclear Installations Inspectorate, the safety body, would certainly look with suspicion at any further inroads into staffing levels. So if British Energy cannot employ the slash-and-burn tactics of the rest of the industry to increase shareholder returns, what can on earth can it do once the present programme has run its course?

Hopes of building another pressurised water reactor power station had to be abandoned ahead of the privatisation; the economics of these things were so ludicrous that they would not have stood up to examination in the prospectus. At one stage there was a grand plan for expansion into gas-fired power stations, but we have more than enough of those already in Britain so that strategy has fallen by the wayside. Indeed, there are no current plans for British Energy to do anything at all in the UK off its own bat. Joint ventures seem to be the name of the game.

The shares, at 108p, stand 3p above the privatisation price - an acknowledgement of what a pariah stock this remains. This is a company whose expertise is the management of decline, for unless things change dramatically, these powers stations will never be replaced.