COMMENT: When the family silver starts to run out

"Together these two privatisations could conceivably be worth £8bn, which would pay for 3p off income tax. Both are likely to prove unpopular, however"

Post Office privatisation is definitely off, air traffic control will not be sold before the election, if at all; the only bits of family silver left for the Treasury to sell, it seems, are railways and nuclear power. For a government as low in the polls as Mr Major's, this is a dreadful hand to have to play. Everything has its price, but for the City, too, this is an unappetising choice between two dogs.

It is the political implications that will most worry the Government, however. Together these two privatisations could conceivably be worth £8bn, which would pay for 3p off income tax. Both are likely to prove unpopular, however, even if unashamedly aimed at the retail investor. Railway privatisation has raised widespread fears about standards of service, safety and prices, especially among the middle-class commuting voters to whom Labour is increasingly attractive.

By comparison, nuclear privatisation has a superficial attraction to it; by cancelling the nuclear levy the Government could cut electricity prices in England and Wales (but not Scotland) by as much as 10 per cent. On the other hand, with the Post Office debacle still fresh in the Government's mind, it may seem a risk not worth taking. Every last radiation or safety- related issue, from disposal of low-level hospital waste to shipping reprocessed fuel to Japan, will be pinned onto privatisation, whether related to the generators or not.

A government under less financial pressure would be sensible to delay one or both of these privatisations. There were suggestions yesterday, hotly denied by the Department of Transport, that the victim would be rail. If anything, however, the nuclear sale looks more vulnerable. Railway privatisation is well under way. The three Roscos, the leasing companies that own the passenger rolling stock, are already on the auction block this year and they alone could fetch up to £2bn. The sale of the first passenger franchises has gone past the pre-qualification stage. Railtrack itself, to be floated next year for perhaps £2.5bn, may account for less than half of total rail privatisation proceeds.

Certainly it would be possible to delay Railtrack's flotation while scooping up the revenues from the Roscos and the rest, but it is hard to see what would be gained.

It is the sale of the franchises, not Railtrack, that is causing most public concern; that process needs to be stopped now if it is going to be at all.

Nuclear power privatisation, by contrast, has hardly got to first base. The City, for the most part, remains deeply sceptical and at this stage there must be a risk of serious delay. The only conclusion it is possible to draw from all this is that ministers are attempting to hedge their bets. The Treasury needs about £5bn of privatisation proceeds in the run- up to the election to meet its forecasts and give itself credible scope for tax cuts. It therefore needs to push both these privatisations as hard as possible in the hope that it gets one through on time.

Labouring towards a policy on the City

When it comes to clichs and platitudes, the politician usually has a short head on the journalist. In the spirit of competition, which Gordon Brown is keen to see furthered in industry and commerce, we offer up the following analysis of the speech he made yesterday, entitled the dynamic market economy. This was an initiative that was long on rhetoric and short on detail. In most of what it covered, it posed more questions than it answered. For vision Mr Brown registered a good eight out of ten, for practical solutions, he would hardly thank us for reporting the score. In short, it was about as woolly as an unshorn sheep, pure flannel.

To be fair on Mr Brown, it wasn't that bad; on the other hand a great deal more thought is clearly required to prevent the civil servants strangling most of it at birth. To make utility charges the object of public inquiry, for instance, may be desirable, but it can hardly be regarded as any more practical than doing the same with taxes. Nor, judging by what he said, has the Labour Party yet fully thought out its position on City regulation, which would end up on these proposals as an unsatisfactory mish-mash of the statutory and non statutory. One thing the likes of Lord Hanson might take comfort in, however:there is not a hint in there of the dividend curbs recently given an airing by a high-ranking Tory minister. It seems that in these things Mr Brown is less of a socialist than Stephen Dorrell.

Pre-empting the tardy Bank

It is not often that large-scale executive dismissals are so comprehensively flagged as those yesterday at Barings. Within a couple of weeks, at the most, of its purchase of the bust merchant bank, ING had a pretty clear idea of who it wanted out. The new Dutch owner spoke privately of the cleansing process needed to restore faith and morale among staff and clients of this traumatised business. Anyone with a managerial line of responsibility for derivatives trading in the Asia region was being targeted for the chop the moment ING assumed control.

Nonetheless, it held back, largely it now transpires because of a misunderstanding with the Bank of England. The Bank had assured ING in late February the investigation into Barings would take six to eight weeks. To anyone used to British ways, that naturally meant three or four months. The Dutch took it literally as a commitment, and were aghast when things turned out otherwise.

Clearly it made little sense to wait for a report that, as far as ING was concerned, would shed little new light on the affair. To restore the credibility of Barings with clients, ING had to act sooner; hence the axeing (sorry, honourable resignations) of 21 executives.

No doubt the Bank of England's investigation needs to be a more complex and precise surgical operation than the one just applied by ING. Even so, the dragging pace of the Bank's inquiry, is worrying.

Beneath the heavy cloak of what it calls a semi-judicial inquiry, the Bank's painstaking approach to the task may seem as much a function of a hidden agenda, beyond the stated one of understanding the facts of the fall of Barings. The Bank's committee of supervision is presumably going as fast as it can, but to the outside world it must seem as if the inquiry is as much about defending the Bank of England, protecting its reputation as a regulator, thwarting the efforts of the Singapore authorities to offload responsibility for the debacle onto London, and keeping those pesky politicians off its back, as anything else.

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