Try my wizard new scheme, Tony: you can nationalise lots of firms, call it privatisation and still make whopping profits

Have you noticed how Tony Blair's opposition to nationalisation and public ownership is redolent of the dogmatists he holds in contempt? If he were just a touch more pragmatic, I could help him to make a bob or two for the Exchequer and to modernise the public services all in one sweet deal. And he would redeem - at least in part - his somewhat sullied brand in the City.

He needs to stop seeing nationalisation as an obsolete way to rescue failed companies of so-called strategic importance (Rolls-Royce 30 years ago) or as a discredited method of managing essential industries for the public good (rail, water, energy). No, it is time for Labour to work through the full implications of Blair's love affair with the plutocracy.

Nationalisation in 2002 should not be about correcting market anomalies, but about the government jumping into the markets with its big boots on and having some fun. Or, to put it another way, Blair should reconstruct government as the biggest private equity firm in the country. Taxpayers' money - the most stable source of cash flow in the UK - should be used to buy up underpriced and undermanaged assets, turn them round and sell them off again at a whopping profit.

Such deals would involve the government acquiring all the publicly traded shares in a company. In the City, this is known as "taking companies private". So Blair could actually claim to be "privatising" a company, not nationalising it at all - which is the kind of spin that made new Labour what it is today.

Here is the first deal. He and Gordon Brown should purchase ailing telecoms businesses. Thousands of miles of brand spanking new cable can currently be procured for not much more than the price of a Labour gala dinner.

Why the discount sale? Well, in the late 1990s, the price of money for telecoms and media businesses was in effect zero. The whole world wanted a piece of their action, which meant that they could raise funds on absurdly generous terms. Unsurprisingly, they trousered as much as they could, loaded up with debt and put down enough cable to wrap around the world many times over.

It was the new-economy version of the property boom of the 1980s, when too many office blocks were built and rents collapsed. In this case, there were just too many superhighways laid. With so few data traffic jams, no scarcity, the price of transmitting information collapsed.

Result: the revenues of these businesses are not growing as fast as they were expected to do and it is difficult to see how they can ever pay off those billions of borrowings.

Capital markets have no loyalties or pity - and not much of a memory, either. The same bankers and fund managers who begged for a piece of an Energis in the UK or a Global Crossing in the US have locked their doors and put an e-mail bar on any company with the word telecom in the business description. Poor old Energis, once a member of the FTSE-100 index of blue chips and worth billions, can barely borrow the price of a mocha latte, let alone raise the cash to see it through the downturn.

But some of these operations are now being ridiculously undervalued by the financial markets, just as they were ridiculously overvalued three years ago (the efficient-market theory, prop of the global economic system, really does test one's faith from time to time). This offers fabulous opportunities for long-term investors with stiff upper lips and exceedingly deep pockets. One such is John Malone, a gazillionaire who has been inexorably acquiring ailing cable television companies throughout Europe while never leaving his Denver homestead. Next on his shopping list are Telewest and NTL in the UK, if he does not get sidetracked by the dismemberment of Leo Kirch's German empire.

Over here, there are not many individuals or companies with Malone's resources. So there is a gap in the market that Blair and Brown could fill. The point is that Brown's balance sheet is robust, in spite of his penchant for double counting and restating the national accounts in a way that obscures quite how much the government is really spending. (By the way, do you think plucky Patricia Hewitt's Department of Trade and Industry will probe the cooking of the government's books as part of its newly launched investigation of the accounting profession?)

Anyway, here is the clever bit. The new privatisation is not just about making money. There is also social profit to be had, given that Blair is committed to providing high-speed internet access both within the public sector and between ordinary people and public services. Whitehall, schools, town halls and hospitals are bound to be paying over the odds at present to rent broadband capacity. They would not be in the public sector if they knew how to negotiate a good rate. In which case, it would be far better for the government to have its own networks and let them tender for the tens of millions of pounds' worth of public sector business.

And the beauty of the scheme is that in five years' time, probably less, the market for telecoms will have turned. Once more, there will be some kind of equilibrium between supply and demand. At that point, the network can be sold back to the stock market.

My only condition for all of this is my normal one: fairness not favours, in the form of a 2 per cent commission paid to my Dutch Antilles associate. What else would you expect from one of new Labour's better friends?

Robert Peston is editorial director of QUEST(TM), www.csquest.com; e-mail rpeston@csquest.com

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