POLEMIC ; Nuclear reaction to a merger

Tom Wilkie on Scottish anger over plans for the power industry
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Unlikely as it may seem, privatisation of the nuclear industry looks set to become a test of John Major's constitutional commitment to maintaining the UK as a true union of equal partners. The way in which the assets are sold will show if the Prime Minister respects Scottish sensitivities or if Scotland is simply a remote colony to be exploited for the benefit of the South.

Scottish Nuclear is the state-owned company set up to run the reactors north of the border. Over the past five years, under the chairmanship of James Hann (an Englishman), it has carved out a distinctive identity for itself. It has made its two power stations tourist attractions, running bus tours to Hunterston in Ayrshire and Torness in Lothian. It has fitted itself into the Scottish scene.

As a business it has turned a £33m loss in 1990 into a £150m profit this year. It has done so, moreover, without massive redundancies, without vast amounts of public money and, at least in part, by involving staff at all levels in a novel "Gainshare" profit-sharing and efficiency scheme. Nuclear Electric, its English counterpart, has not approached the Scots' low generating cost of 2.2p per unit. It has increased efficiency by the more traditional route of shedding staff by the thousand.

But in London ministers believe they can get a higher price if the Government amalgamates the two companies and sells them as one. Ministerial judgement is that, with just four reactors grouped into two stations, a privatised Scottish Nuclear would be too small to be viable.

Internationally, however, there are many privately owned nuclear utilities which operate just one reactor. Stephen Littlechild, the electricity industry regulator, has warned that a unified nuclear generating company would decrease competition and discourage innovation.

The proposal has provoked outrage north of the border, where such a forced "marriage" is seen more as a rape by the English. Scottish Nuclear's staff embody the best traditions of high-quality Scottish engineering, but a loss of control to the South would inevitably entail heavy redundancies.

Worse, the proposal shows no signs of understanding the importance of the Scottish dimension. Within the company itself this matters, because the engineers who run Scotland's nuclear power stations have never worked for the same management as their English counterparts. Even in the days of state ownership the Scots stations were run by a Scottish organisation, not the Central Electricity Generating Board.

Yesterday the Scottish Nuclear tour bus appeared in Parliament Square as management and unions lobbied MPs to save the company's independence. Even the environmental lobby groups are taken aback by the strength of feeling in Scotland. One seasoned Greenpeace campaigner remarked that she couldn't understand the Scots' passion for nuclear power.

But this is the energy business and the Scots have been here before. Over the past two decades they have seen the revenues from what many believed was "Scotland's oil" enrich the Treasury in London. They do not want to see another energy industry follow.

After the dbcle of Panorama's interview with the Prime Minister, sensitivity to the Scottish dimension matters more widely. The Government can act to defuse public opposition, as when it abandoned privatisation of water north of the border.

Scotland was once a Conservative nation. In the 1955 general election the Conservative and Unionist Party gained more than 50 per cent of the vote north of the border, something the Labour Party has never achieved. Now it appears the Conservatives are willing to write Scotland off in return for an extra £500m to finance pre-election tax-cutting bribes for English voters. It is hard to escape the conclusion that the party of Middle England has finally decided to sod Scotland.