Nuclear power becomes a rushed sale
Tuesday 13 February 1996
The Labour-chaired committee is talking politics. It is scandalised that the Government is planning to sell British Energy for less than the pounds 2.8bn cost of one of its nine power stations, Sizewell B. As a result, the latest draft of its report recommends keeping Sizewell B out of the initial flotation, rather than selling it at an embarrassing loss.
The advisers, in contrast, talk the language of corporate finance.They do not dispute the fact that British Energy is probably worth less than the cost of Sizewell B alone. But they respond with blank incomprehension to the committee's concern.
Have those daft MPs not heard of sunk costs, ask the advisers? "What you have spent in the past you have spent in the past," BZW told the committee, in a statement of the blindingly obvious. The assets are worth what they will fetch on the market, not what they cost. Furthermore, the idea of selling the other eight elderly power stations by themselves is plainly a nonsense. Sizewell B, a modern power station with a long life remaining, is an essential sweetener, without which nuclear privatisation is a complete no-hoper. British Energy would then be a company with a decent cash flow and the ability to pay steadily rising dividends so - other things being equal - it ought to be marketable as a conventional utility.
Everything has its price and British Energy clearly has one. The problem is that even with Sizewell B, it is so low that it becomes hard to see how the taxpayer and the consumer will gain from this bottom-of-the-barrel privatisation. In terms of efficiency - usually by far the best argument for privatisation - there are very few cost savings to come, because the British Energy workforce is already low. The other standard argument, that privatisation is the only way to bring new investment into British Energy, has been demolished by the decision not to build any more nuclear power stations.
The taxpayer and the economy as a whole would be better off if the Government kept British Energy's strong future cash flow from electricity sales inside the public sector, benefiting the public finances. Instead, we are getting a rushed sale ahead of an election, verging on a forced one. Investors are going to exact a heavy price for it.
- 1 Gwyneth Paltrow and Chris Martin file for divorce after 10 years of marriage
- 2 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 3 Katie Hopkins and The Sun editor David Dinsmore reported to police for incitement to racial hatred following migrant boat column
- 4 Bookies now say Ed Miliband is more likely to be prime minister than David Cameron
- 5 Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
Gwyneth Paltrow and Chris Martin file for divorce after 10 years of marriage
Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
Katie Hopkins and The Sun editor David Dinsmore reported to police for incitement to racial hatred following migrant boat column
'Jihadi John': Isis executioner Mohammed Emwazi wanted to wage jihad in Somalia until his friends were betrayed and killed by al-Shabaab
Parma, Missouri: 80 per cent of town's police quit after first black mayor is elected
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
Katie Hopkins on LBC: Listen to caller taking The Sun columnist to task over migrant comments
iJobs Money & Business
£12000 - £15000 per annum: Recruitment Genius: An expanding Insurance Brokerag...
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...