British Energy to get £500m bail-out

Ministers are today preparing to unveil a bail-out worth up to £500 million to save nuclear generator British Energy from collapse.

The financial guarantees could be followed within weeks by a further cash injection to help the privatised firm, hit by falling energy prices. The company told the Government last week it needs at least £280 million in cash to allow it to stave off creditors.

Trade Secretary Tessa Jowell has been forced to pay out because the company produces a quarter of Britain's electricity, and its demise could jeopardise supply and put public safety at risk.

However, the bail-out will anger many Labour MPs and trade unionists who do not want the company's shareholders to be helped from the public purse.

The knives are out for British Energy's executive chairman Robin Jeffrey, who told City analysts last month that the company was not in crisis.

The Financial Services Authority is examining whether the company was sufficiently open about its problems. British Energy said Mr Jeffrey had not learned the full scale of the crisis when he talked to analysts on 14 August.