Heseltine plans nuclear sell-off

BY PATRICIA WYNN DAVIES

Plans to sell off the profitable part of the nuclear industry were last night presented to Cabinet colleagues by Michael Heseltine, President of the Board of Trade.

While Mr Heseltine is aware of the sensitivity of such a privatisation, he is understood to have told members of the Cabinet's economic and domestic policy sub-committee that the sell-off, rejected by the City when Baroness Thatcher was prime minister, can now be accomplished.

The key difference between this and the abortive move to sell off the industry nine years ago concerns the ageing Magnox stations, which Mr Heseltine has said should remain in the public sector, thus sparing shareholders massive decommissioning costs. The plants are nearing the end of their useful life and the potential costs of making them safe after closure could run into billions.

Under Mr Heseltine's current proposals, the flotation would be confined to the pressurised water reactor at Sizewell and the gas cooled reactors, allowing the Government to raise between £2.5bn and £3bn in revenue next year, in time for pre-election tax cuts. Some £2bn-worth of revenue is needed to pay for a 1p cut in the basic rate of income tax.

Legislation enabling the sell-off is already on the statute book, but Mr Heseltine will be aware of the need to take the country and his party with him if he is to avoid a re-run of his plans to privatise the Post Office. These ended in an embarrassing Government U-turn following protests from Tory backbenchers.

With fears of a repeat of Chernobyl uppermost in many minds, safety regulation will prove a crucial factor, while the project could see the opposition parties making huge political capital from arguing that the Government is prepared to risk safety in order to cut taxes.

Brian Wilson, a Labour trade spokesman, said: "If they think privatising the nuclear industry is going to be a vote-winner then they are in for a very nasty shock. People will see the makings of yet another massive rip-off while the tax-payer is left to pick up the bill for decommissioning. The profitable parts of the industry will be handed over on the cheap."