The Labour Party called for a halt to nuclear privatisation, claiming it will cost the Exchequer almost pounds 1bn in lost revenues in the three years to 1998-99. The demand coincides with separate warnings by Gordon McKerron, an adviser to the House of Commons Trade and Industry Committee, that the planned sale of the most modern reactors may raise less than a third of the hoped-for pounds 2.6bn.
Margaret Beckett, the opposition trade and industry spokesperson, said the Treasury's Red Book shows that the nuclear industry would have become a revenue source in 1996-97 and thereafter but will now be a substantial revenue drain.
She blamed the decision to sell the profitable more modern reactors while leaving the ageing Magnox stations with their billions of pounds of liabilities in the public sector.
"This shows a wanton disregard for the proper husbandry of the public finances. It is time to call a halt to the sale." She added that the work by Dr McKerron underlined the need to stall the privatisation process at least until the Trade and Industry Select Committee, which is investigating the sale, issues its report. A spokesman for the Treasury attacked the argument as one-sided.
"We will actually be offloading pounds 8bn in liabilities. We receive proceeds from the sale and continued proceeds in corporation tax," he said.
In a further blow to the privatisation plans, a City analyst warned yesterday that disposal of intermediate and high-level nuclear waste could be a big stumbling-block in attracting investors to the sale.
In evidence to the Select Committee, John Renolds, of the financiers James Capel, said the issue of waste disposal and the related financial risk could cause significant concern for potential investors in British Energy, the company set up to run the most modern reactors. He said that British Energy's small stake in Nirex, the nuclear industry's waste-disposal company, is "a small stake in what could be a very big black hole".
Evidence from James Capel also states that proceeds from the privatisation may be hit by fears over how regulation may affect the company. Professor Stephen Littlechild, the industry watchdog, caused a furore last year after the sale of shares in National Power and PowerGen by making a controversial statement on electricity price controls.Reuse content