The Government said yesterday that it would not stand in the way of a foreign-led takeover of British Energy on strategic grounds.

As shares in British Energy, which is 35 per cent owned by the Government, soared yesterday amid continued speculation about a possible £10 billion takeover approach, a spokeswoman for the Department for Business, Enterprise and Regulatory Reform said that it was “not UK energy policy to encourage national champions”.

“We are used to foreign ownership of energy suppliers in the UK. We are relaxed about it,” she said.

EDF, of France, and RWE, of Germany, have discussed the idea of a joint bid with Britain’s Centrica, the owner of British Gas, whose shares also rose sharply yesterday. Other companies, including Sweden’s Vaten-fall, France’s Suez and Spain’s Iberdrola, the owner of Scottish Power, are also interested in the company.

British Energy generates 20 per cent of the UK’s electricity and is a key player in the push to build new reactors through its ownership of the most attractive sites. Advisers close to the discussions said yesterday that no firm date had yet been given for bids and it could be some time before a firm offer is made.

The Government is willing to consider a sale of all or part of its stake in British Energy, but is thought to be concerned about too much control over the future of UK nuclear power being concentrated in a few companies.

British Energy had been in discussion with several power firms about partnerships or joint ventures to build new reactors, after the Government gave the go-ahead for new plants in January. British Energy runs most of the UK’s nuclear power stations, all but one of which will be closed by 2020, and supplies large industrial consumers. It also owns land that has been earmarked for new nuclear sites.

The Government’s Shareholder Executive has appointed UBS to handle the sale of its 35.2 per cent stake in British Energy.

The Government, which believes that each new nuclear station will cost about £2.8 billion to build, has emphasised that its principal concern is to ensure that new nuclear stations are built swiftly.

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