No reason for the Government to block this deal

`The takeover could be made conditional on National Power selling a lot more of its generating capacity than presently envisaged. It would thus enhance competition rather than dilute it'

An English National Opera board meeting followed by a congenial dinner with fellow directors is not the most suitable of backdrops for considering the future of Britain's electricity industry. That was where John Baker, chairman of National Power, was rushing off to on Tuesday night when he first heard of the American bid interest in his company. Even a few years ago, he probably wouldn't have allowed it to spoil his evening too much - the bid threat might not have been taken seriously at all. Southern Company of the US would politely have been told to get lost and Mr Baker could have been confident he would have full political backing for his stance.

These days it is not so simple. News of Southern's intentions brought the usual knee-jerk condemnation from Labour and a few "bad business, this" mutterings from the Tory backbenches. But it is a measure of how far attitudes have changed that the prospect of a foreign takeover of Britain's largest power generating company could have resulted in such a subdued political reaction. Does it really matter any longer in this age of global markets and corporations whether our industries are British owned?

Ten years ago it would certainly have been thought so. These days? Well, maybe not, provided our companies remain properly run and regulated in a publicly accountable way. Some businesses, notably the car industry, have enjoyed a positive renaissance under foreign ownership, and plenty of others thrive. In any case, while National Power is plainly still the most powerful force in the British electricity market, it does not hold the same pivotal position it once did. Its share of the market, already down from more than a half six years ago to a quarter now, is being forcibly further reduced to just 20 per cent over the next couple of years.

None the less, there are clearly public policy issues involved in such a takeover. Southern already owns the regional distribution company, South Western Electricity, so its takeover involves a degree of vertical integration of previously segrated distribution and generating businesses. That issue is about to be resolved by the Monopolies and Mergers Commission in favour of generators who want to buy distribution companies. Even if ministers wanted to block the Americans on grounds of vertical integration, therefore, they would be hard pressed to do so.

The Government has an important extra lever in all this, however - its golden share in National Power. The golden share was put there for precisely this sort of eventuality and is plainly worth something. At the very least the Government could use its power of veto over any National Power takeover to extract big concessions from the Americans. Indeed this seems to be the most likely and sensible way forward for the Government. The takeover would be made conditional on National Power selling a lot more of its generating capacity than presently envisaged. The takeover would thus enhance competition rather than dilute it.

At this stage, Mr Baker is keeping his door gently ajar to the American approach. Southern seems to be genuine in its promise of a proper merger with a serious position for the British company in the combined group, though this is tempered with the threat that if it has to, it will go hostile. It is easy to be sceptical about Southern's smooth-talking banter, to dismiss its talk of all the supposed benefits of a global partnership as little more than a cover for good old-fashioned American imperialism. But it would be wrong to do so.

Southern is prepared to be as accommodating as it has to in its determination to bring about this marriage. If the sort of structure that allowed the merger of Britain's Beecham with SmithKline of the US, or Reed with Elsevier of Holland, has to be put in place, so be it. There is no reason for the Government to block this deal; nor, if the price is right, are there apparent reasons why National Power should oppose it.

Part-time boom will not win the election

It seems almost churlish to find fault in the remarkable reduction in unemployment revealed by yesterday's figures. Ministers, rightly in some respects, see their achievement in bringing Britain's unemployment rate below the European average as key evidence of the success of the Government's approach to managing the economy. Britain's deregulated, flexible labour market has not been created without a good deal of pain, but there is surely some reason for believing the economy is about to emerge strengthened by the Conservative surgery.

Unemployment - even on the internationally accepted definition, not just the manipulated headline count - has now been in retreat for four years. That must be some kind of vindication of policy. But the Government should beware of too much triumphalism. The new figures are not unambiguously good news. The reason lies in the mix of new jobs being created. Out of 118 added in the three months to February, 75,000 could be identified as part-time jobs for women, 13,000 as part-time jobs for men, and 24,000 full time (18,000 men and 6,000 women). Part-time work is real work and suits many women, but it is hardly a sign of a booming economy if it accounts for three-quarters of all new employment. City economists see the predominance of part-time work as a good reason for expecting wage rises, and inflation, to remain subdued. In many industries underlying earnings growth is at a record low.

So if there is to be the recovery in consumer spending predicted by the Chancellor, it is unlikely to be fed by big rises in pay. A modest improvement in the economy based on a lot of part-time and temporary jobs are hardly enough to return him to Number 11.

Unfortunately for the Conservatives, just as people only realise that they were happy when they have become unhappy, they will only feel good about the economy long after we have all stopped having to hunt for the feelgood factor. Politically, there is not much in these figures for the Government to rejoice about.

News
peoplePaper attempts to defend itself
Voices
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits