Whitehall sources said that under plans presented to the Cabinet yesterday, Nuclear Electric and Scottish Nuclear - minus the ageing Magnox reactors - would be sold off as a single entity, although each would retain its own operating identity and management.
Downing Street declined to comment on the plans, saying such an issue was "market-sensitive", but sources confirmed that the Cabinet also gave the go-ahead for the scrapping of the fossil-fuel levy on the electricity industry in England and Wales, paving the way for an electricity price cut of more than 8 per cent to "sweeten" the privatisation.
The sale will be confined to the advanced gas-cooled reactors and the pressurised water reactor at Sizewell, Suffolk, leaving the taxpayer eventually to pick up the bill of several billions for decommissioning the Magnox plants that are nearing the end of their useful lives.
Scottish consumers already pay about 2.5 per cent less for their electricity - there are no Magnox stations in Scotland so the fuel levy to meet decommissioning costs is not applied - but it is understood that they too may benefit from an extra price cut.
The decision to opt for a single company, but with devolution to an autonomous Scottish company, represents a compromise - or as some critics said yesterday a "fudge" - between opposing factions within and outside the Cabinet.
Professor Stephen Littlechild, the electricity industry regulator, had urged the Government to break up the industry, possibly adding two of the English stations to the two north of the border. Critics of a single sale also argued that it was necessary to ensure competition.
But Mr Heseltine's view that there would be ample competition between nuclear power and other forms of generation and fuels has prevailed. As a further concession to Scotland, there were suggestions yesterday that the holding company of the privately-owned industry would be located there.
The sell-off could raise between £2bn and £3bn in revenue in time for a tax-cutting Budget before the next general election. Some £2bn worth of revenue is needed to pay for a 1p cut in the basic rate of income tax for a complete financial year.
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