Fresh blow to 'Scotland plc' after French buy nuclear energy giant

FEARS have been raised that Scotland is losing its key decision makers in the international business world after a £12.5 billion buyout of British Energy was announced yesterday.

The takeover by French energy giant EDF has raised serious concerns over the long-term future of British Energy's headquarters in East Kilbride and 1,400 jobs in Scotland.

With Lloyds TSB's buyout of HBOS and the loss of the Scottish & Newcastle headquarters recently, the number of FTSE 100 companies based in Scotland appears to be dwindling.

Added to that are concerns that the Scottish Government's implacable opposition to nuclear energy will see EDF eventually withdrawing offices in Scotland – despite assurances yesterday that the East Kilbride HQ would remain open.

The Scottish CBI "regretted" the loss of a major company based in Scotland. CBI Scotland's director, Iain McMillan, said: "It is sad to see the loss of another major company headquartered in Scotland.

"Our preference is obviously for Scots-based firms being the ones who are launching the takeover bids."

But EDF has committed to maintaining British Energy's East Kilbride office and said staff at the site and other locations, including Barnwood, would "benefit from new opportunities".

Pierre Gadonneix, chairman and chief executive of EDF, offered reassurances to British Energy staff.

He said: "We are keen on making British Energy involved in a new nuclear development in Britain. Among the assets in which we are very interested are the skills of the people of British Energy which would be involved in new nuclear development."

However, this commitment did not prevent a political row breaking out in Holyrood over the damaging effect of the Scottish Government's anti-nuclear policies.

Alex Salmond, the First Minister, who has met EDF executives to discuss the future of Scottish jobs, was accused of being a hypocrite and "showing bare-faced cheek".

Labour's finance spokesman, Andy Kerr, who is also the MSP for East Kilbride, said: "The takeover by EDF of British Energy obviously carries with it concerns about employment and headquarters functions.

"And it is ironic that the Nationalists call for the retention of the headquarters function here in Scotland while having closed minds and closed doors to the renewal of nuclear capacity in Scotland. It is sheer hypocrisy on the part of the SNP."

However, Mr Kerr said he was optimistic jobs would remain in Scotland and East Kilbride because of their highly specialised expertise.

Conservative enterprise spokesman Gavin Brown, a fierce critic of the SNP's energy policy, added that nobody wanted to see Scotland's fourth-largest plc taken out of the Scottish economy.

But he said: "Alex Salmond has a brass neck and bare-faced cheek if he thinks that EDF would keep jobs in a country that doesn't want its product.

"The way to keep the jobs is for the SNP minority government to get behind British Energy and stop messing about with the security of Scotland's future energy supply."

But the argument over energy policy was dismissed by Mr Salmond.

A spokesman for the First Minister said: "Clearly, if EDF are making a commitment to keep the jobs here then it is not a problem.

"We welcome the commitment by EDF to East Kilbride and to Scotland."

He added that Mr Salmond had met EDF chief executive Vincent de Rivas in June to discuss the potential deal.

The spokesman said: "He emphasised the Scottish Government's opposition to new nuclear stations but also pressed for an assurance by EDF about the East Kilbride facility."

BACKGROUND

THE £12.5 billion deal means that EDF, which is 85 per cent owned by the French government, will own Britain's eight nuclear power stations.

These include Torness and Hunterston in Scotland.

It gives EDF a 27 per cent share in the UK energy market, making it the largest provider. More importantly, it gives EDF the chance to develop the next generation of nuclear power stations in the UK and increase its share of the market.

For British Energy shareholders, EDF's all-cash bid values British Energy at 774p a share, 9p more than a previous bid that was rejected. This included a £6 billion pay-day for the British government.

Deal heralds new wave of nuclear power plants for Britain

THE £12.5 billion takeover of British Energy by EDF has paved the way for the next generation of nuclear power stations to be built in the UK.

Because of the Scottish Government's anti-nuclear policy none of the new stations will be built in Scotland, but EDF has announced plans to construct and operate two reactors each at existing nuclear sites at Hinkley Point in Somerset and Sizewell in Suffolk.

In the foreseeable future the company wants to build four new European Pressurised Reactor (EPR) design plants in the UK, the first of which it hopes to begin constructing in 2012 and commission in 2017.

The EPR plants are designed to be more efficient and produce less waste than British Energy's older plants.

Yesterday, the company refused to comment on how much the new plants would cost, but said a similar plant it was building in Flamanville, France, was in 2005 estimated to cost 3.3 billion.

As part of the agreement with the government, EDF is also developing a portfolio of sites it will make available for other companies that want to develop new nuclear plants.

Several companies, including Perth-based Scottish & Southern Energy and ScottishPower owner Iberdrola of Spain, have also indicated an interest in developing new nuclear plants in the UK.

In his speech to the Labour Party conference this week, Prime Minister Gordon Brown emphasised again that he saw nuclear power as the cornerstone of future British energy provision and attempts to reduce carbon emission by 80 per cent by 2050.

Yesterday he welcomed news of the takeover as "good value for the taxpayer and a significant step towards the construction of a new generation of nuclear stations".

The deal will also swell Treasury coffers by £6 billion because the British government is a major shareholder in British Energy.