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Last Updated: Thursday, 23 March 2006, 10:13 GMT
Chancellor plans big asset sale
Boiler tubes at power station
British Energy is waiting for a government report on nuclear power
Nuclear power group British Energy and the Tote bookmakers will be sold off as the government looks to raise billions of pounds from state-owned assets.

Its 65% stake in British Energy could be worth up to 10bn, especially if the firm gets the green light to operate new power stations in the UK.

The Tote is scheduled for sale by the end of the next financial year, and could raise an estimated 500m.

The privatisations will help fund Gordon Brown's budget spending plans.

"The Chancellor is looking at selling any assets he can find," said Justin Urquhart Stewart from Seven Investment Management.

"He is looking to sell various state assets that can bring in a bit of lucre and prevent him having to borrow any more and break his Golden Rule."

Asset sale

The Government is already part of the way through a 30bn programme of boosting the Treasury's coffers by selling off state assets such as surplus property and land.

British Energy generates more than 20% of Britain's energy through one coal-fired power station and eight nuclear ones.

It was privatised in 1996, but nearly went bust in 2002 as it was hit by a fall in wholesale power prices. It was bailed out by the government, which took a stake before British Energy relisted on the Stock Exchange last year.

Mr Brown said the decision to sell the stake in British Energy would not be taken until after a government study had reported its findings on whether Britain should commission a new series of nuclear power stations to replace its ageing ones.

Stuart Fraser from Brewin Dolphin stockbrokers said there would be plenty of private investor demand for a share sale.

"It is a high risk stock, not one for widows and orphans, because it has already been bailed out once when energy prices fell.

"But the market has a good appetite for risk at the moment."

Red Bloom, ridden by Kieren Fallon
Commercial rivals would jump at a chance to run the Tote

Churchill's Tote

The government has long had a plan to sell the Tote to a racing trust that would help pump back its profits into the horse racing industry.

Founded by Winston Churchill in 1928, the Tote enjoys a monopoly of horse race pool-betting in exchange for a guarantee that money is pumped into the sport every year.

However, many in the gambling industry have complained that the Tote could be sold off too cheaply.

"The worst possible end result would be to sell it to a racing trust," said one industry spokesman.

"There is insufficient business acumen in racing to use this asset, which is a potential gold mine, and give full benefit to the racing industry."

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