The haste to privatise was understandable in the early years when "denationalisation" was unpopular and would certainly have faltered had it not been for the extraordinary energy and determination of Margaret Thatcher. But there were costs: look at British Gas, which is now being restructured by the Government because its privatisation in 1986 allowed insufficient competition.
Yet even after the policy of privatisation was vindicated, ministers continued to mishandle particular sell-offs. Only last month the Government caused consternation by selling off £4bn of stock in the electricity generating companies hours before the industry regulator indicated the need for electricity price cuts.
In the case of coal privatisation, the evidence suggests that again ministers were prepared to ignore warnings about the venture. Desperate to be rid of the industry, they were delighted to accept what looked like an over- generous bid. Mr Budge offered £300m more than his rivals. To a government that is saving for tax cuts, this was too good to refuse. So ministers turned a blind eye to Mr Budge's unsavoury record of financial failure that had been reported in great detail to the Department of Trade and Industry.
The question is whether Mr Budge will turn out to be the slimmed-down coal industry's saviour or the person who finally finishes it off. The DTI could help us to assess his character more accurately by publishing the report, by Coopers & Lybrand, that questions his fitness to run a business. The Government should also explain its extraordinary decision to overlook the report's criticism.
A bigger worry arising from this episode concerns future sell-offs. The Government is understandably keen to privatise the railways and nuclear power. Together, the two industries may be worth £8bn, enough to fund as much as a 4p cut in income tax. If ministers are prepared to sell these to whoever is the highest bidder, they could cause immense damage.
In the case of rail, the Government wants to sell more than 60 different entities, ranging from Railtrack to the companies that run passenger services. Even the section that creosotes sleepers is seeking a buyer. Such a complex sale could easily go wrong, leading to confusion amid the creation of instant millionaires more concerned with asset stripping than transport.
As for privatisation of nuclear power, the timetable for securing a sell- off to fund pre-election tax cuts looks impossible. It is hard to see how the sale can be achieved while guaranteeing that safety and decommissioning costs are adequately provided for.
We would prefer, on the evidence available, that Mr Budge did not own coal mines. We certainly do not want his like running important parts of our railways, let alone building up positions in the companies that run our nuclear power stations.Reuse content