Downing Street Years - Margaret Thatcher [425]
There was also Walter Marshall to consider. Not only did I like and admire him. I also felt that we all owed him a great debt for having kept the power stations working during the miners’ strike. He was opposed to any break-up of the CEGB, but he might just be willing to go along with a two-way split in which the larger company retained the nuclear power stations. There was no way in which he would have stayed on if the CEGB had been split into four. I could not, of course, allow his views to be decisive: nor did I do so. But I hoped to obtain his and his colleagues’ co-operation in the difficult transition to the new privatized and competitive system. So at a meeting in mid-January I came down on the side of the solution that Cecil favoured. But I added that this did not preclude moving at some future time to the more competitive model which Nigel Lawson would have preferred.
Later that month I agreed that the split in capacity between the two new proposed generating companies should be 70/30. This was the plan which I tried to sell to Walter Marshall when he came in with Cecil Parkinson for a long talk one February evening. Walter — never averse to blunt speaking — did not conceal his disagreement with the approach we favoured. I agreed with him — as he knew I did — about the great importance of nuclear power. But I did not think that its prospects would be damaged by our plans. Again and again I insisted that whatever structure we created must provide genuine competition. I often found that straight talking pays dividends. On further consideration and after further discussions with Cecil, Walter Marshall said that though the CEGB would express regret at what we had decided he was prepared to make the system work. Cecil Parkinson’s plans were also strongly opposed by Peter Walker who suggested that it would take at least eight years before there was any chance of completing this competitive model of privatization. None of us was convinced by this. So on Thursday 25 February Cecil could make his statement to the House of Commons setting out how we intended to privatize electricity.
This, though, was by no means the end of the matter. As always, the prospect of privatization meant that the finances of the industry were subject to searching scrutiny, perhaps for the first time ever. And what came to light was extremely unwelcome. For environmental reasons and to ensure security of supply, I felt it was essential to keep up the development of nuclear power. The real cost of nuclear energy compared with other energy sources is often overrated. Coal-fired power stations pour out carbon dioxide into the atmosphere and no one has yet put a credible figure on what it will ultimately cost to deal with the resulting problem of global warming. But the fact remained that there would be an immediate extra cost from nuclear energy which consumers would have to bear. This was tolerable if not popular.
But in the autumn of 1988 the figures for the cost of decommissioning the now ageing power stations were suddenly revised sharply upwards by the Department of Energy. These had been consistently underestimated or perhaps even concealed. And the more closely the figures were scrutinized the higher they appeared. By the summer of 1989 the whole prospect for privatizing the main generating company which would have the nuclear power stations started to look in jeopardy. So I agreed that the older Magnox power stations should be taken out of the privatization and remain under government control. This was one of Cecil’s last actions at Energy and it fell to his successor, John