Labour tries its hand at privatisation — and hands John Major’s firm a fast buck

QinetiQ, the business created out of the Defence Evaluation and Research Agency, is Labour’s first attempt at full-scale privatisation, and it has deservedly run into heavy flak. The Daily Telegraph is particularly agitated about the fact that private investors cannot apply for shares in next month’s £1.1 billion flotation, which is open only to institutions. Bankers handling the sale say QinetiQ is too complex to explain to ordinary punters without spending unjustifiably large sums on a marketing campaign. Spokesmen for small shareholders declare that every citizen should have the chance to benefit from the sell-off of state assets. The bankers’ attitude is certainly patronising, but the institutions that will take up the shares are no more than collective repositories of citizens’ savings, and the row about who can apply is a distraction from the real potential scandal, which is the matter of how the US ‘private equity’ group Carlyle was allowed to acquire, for £42 million in 2002, a one third stake in QinetiQ that could be worth £340 million after the flotation.