LEADING ARTICLE : Fast breeder realpolitik

The Government's undignified haste in selling off the nuclear power industry was all too evident yesterday. Michael Heseltine was keen, in announcing the terms of privatisation, to convince MPs that every detail had been carefully prepared. But a glance at the White Paper reveals a government desperate to raise quick money for tax cuts before the General Election. As a result of rushing the sale, it will now almost certainly raise less revenue than might otherwise have been generated.

The first concern on most people's minds will be safety. On that front at least ministers have not compromised. Yesterday events will not make another Chernobyl or Three Mile Island more likely. Since we are assured that the safety regime for the privatised companies will be as strict as it has been while the power stations have been in public ownership, there is no reason in principle to be opposed to privatisation, which has yielded significant efficiencies in other power utilities, where a combination of competition and regulation have improved the deal for the customer.

Even the anti-nuclear lobby should take some satisfaction. Mr Heseltine announced that no new nuclear power stations will be built in the foreseeable future. The Government is unwilling to pay for them and, according to Mr Heseltine, the City cannot come up with sound plans for financing new plant.

Consumers may also be cheered by yesterday's news. The fossil fuel levy - essentially a tax on electricity consumers to pay nuclear decommissioning costs - is to be abolished earlier than expected, so permitting cuts in electricity bills.

But safety and bills aside, the privatisation plan looks messy. To make the industry more attractive to the City, the Government has forced Nuclear Electric and Scottish Nuclear into an awkward marriage. As a result an opportunity has been squandered to enhance the level of competition currently faced by Powergen and National Power, the two giant generators created four years ago when the non-nuclear side of the electricity industry was privatised. The ageing Magnox reactors, to be kept separate in the public sector, will not make up for the lack of competition since they will gradually be phased out of service.

The sale will also have to be very quick. The Government wants it completed by next year, which reduces the flexibility the seller has to time the sale in a way which maximises the proceeds. That is against the interest of the taxpayer. So too is the risk that the White Paper deliberately underestimates the eventual cost of decommissioning Magnox reactors, which may feel good in the short term but carry a serious sting in the tail.

Kenneth Clarke's failure to raise interest rates last week has prompted justifiable fears that electoral considerations are now driving monetary policy. The hasty nature of the plans for nuclear privatisation confirms that ministers' preoccupation with a tax-cutting election programme is damaging sound government.