National Power joins tax revolt
Thursday 22 May 1997
Keith Henry, National Power's chief executive, said: "A legal challenge is not high on our agenda. We feel it extremely unlikely that the Government would do anything illegal."
The company said it should be excluded from the tax because it was not a price-regulated monopoly, had not made excess profits and operated in a competitive market with an increasing proportion of revenue earned overseas.
Mr Henry also argued that the taxpayer had enjoyed a windfall gain from the privatisation of National Power because of the way the Government had sold it in two stages.
According to an analysis sent to the Chancellor, Gordon Brown, by the company, gains for the taxpayer from the sale of National Power totalled pounds 6.825bn to March 1996. This figure included pounds 3.86bn in net proceeds, pounds 265m of dividends on the 40 per cent stake the Government initially retained and pounds 2.1bn in corporation tax, VAT and National Insurance contributions.
Against that, the company said that shareholders benefited by pounds 2.86bn over the same period through dividends and the increase in market value. The figure does not include the pounds 1.2bn special dividend National Power paid last year.
National Power yesterday reported an 8 per cent fall in pre-tax profits last year to pounds 740m as its UK market share shrank from 32 per cent to 24 per cent and wholesale electricity prices fell 4 per cent.
The company forecast a further drop in market share this year to as little as 20 per cent as competition from independent generators increased. UK operating profits fell by pounds 70m last year to pounds 783m, but this was offset by an increase in overseas profits from pounds 15m to pounds 74m.
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