Moreover, as people get richer, their aspirations for health and education may grow disproportionately quickly.That gives rise to a central problem of modern social democracy. Tax revenue that was a constant proportion of gross domestic product would finance public expenditure on those services However, that crucial assumption does not hold. It is true that the proportion of national income devoted to education has fallen since the 1970s, but a consequence has been growing dissatisfaction with state education. And in all countries expenditure on health tends to rise as a proportion of GDP as GDP itself grows.Labour-intensive services such as education offer less scope for productivity growth than manufacturing industry, so the relative cost of providing them tends to rise, and with it their relative price. If the Left has appeared to be in retreat in these areas too, the problem is one of practicality, not one of philosophy or popularity.If people wished to spend a constant proportion of their income on services such as education and health there would be no problem. “Suppose that instead of nationalising selected industries in the 1940s, the Labour government had simply taken a small stake in all publicly quoted companies.

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Now that all political parties embrace the market economy, what of substance separates them? There is, surely, one thing at least. The Left still believes that a few of the products of a modern economy should be available to all citizens on broadly equal terms.
Conservatives accept as inevitable that money will always buy better education and health. The Left, however, thinks equality of opportunity is desirable – and that dictates, if not equality of access to education, at least universal access to quality education. Similarly, in health the Left believes access should be on the basis of need, at least for critical care, not of ability to pay. Another area where it is widely accepted that citizens have equal rights and claims on resources is security and law, though practice falls short of the ideal.These aspirations seem still to be shared by a majority of the public. While many left-wing ideas have been in retreat these past two decades, the popularity of the National Health Service and the ideal of free, universal, comprehensive education have persisted. Now we are saying that the problem was Northern’s not the industry’s.”Professor Littlechild should look at small companies which are bid targets,” he added.Mr Devaney also said that small companies have been allowed the same overhead allowance as larger companies when Offer set the previous price controls and he argues that this should be changed in the current review.Industry observers say that the companies most vulnerable to bids are Northern, Manweb, South Western Electricity and South Wales Electricity These are amongst the smallest in the sector..

A further clampdown on electricity distribution prices across the sector is expected as a result.John Devaney, chief executive of Eastern, said: “We are pretty annoyed at Northern’s defence and the way it has misled the regulator into believing that there is a need for a wide review. The company has put its ideas to Professor Stephen Littlechild, the director general of Offer.Some firms are also angry at Northern Electric, which proposed a package of £500m in shareholder sweeteners and thus helping to bring down the wrath of Professor Littlechild on the sector.The sweeteners, part of Northern’s defence against a hostile takeover bid by Trafalgar House, would have increased Northern’s gearing to more than 200 per cent. That proposal, along with increases in electricity share prices, prompted Professor Littlechild to overturn price controls agreed in August. Eastern Electricity, the largest regional supplier, wants Offer to focus on smaller companies which typically have higher bills. It is thought that this view is supported by other large companies, including Southern Electric.
Eastern argues that a “typical” bill varies by as much as 15 per cent across the country, with some of the smaller firms having the highest bills It says that any review should aim to even this out.

A split is emerging among the 12 regional electricity companies over the review of prices being conducted by the regulator, Offer. These include providing special displays and demonstration PCs with CD-Rom drives to allow customers to try out multimedia titles.Taking in games, educational CD-Roms, and children’s interactive titles, the market for PC-based CD-Rom software is expected to be worth as much as £280m in 1995, rising to as much as £1.57bn by 2000.. The specialist game shops such as Future Zone (owned by the ailing Rhino retail company) compete with electronics shops such as Dixons and music stores such as Virgin and HMV.Funsoft has been working with retailers to help them develop multimedia selling techniques. Nintendo is launching a 64-bit cartridge- based console by the end of the year.”We have to do some educating among retailers who were hurt by the game cartridge problems,” Mr Taylor said.Distributors such as Funsoft supply both specialist and general retail outlets, in what is still a very fragmented market. The game cartridge market, where demand plummeted in late 1994, left many retailers with excess stock.Japanese manufacturers such as Nintendo and Sega announced they would soon be launching new consoles using more advanced software, leading customers to hold off making purchases of existing technology and titles.

Sega and Sony have already launched CD-based game machines in Japan, and will bring them to the UK in September. There were 500,000 CD-Rom players in UK households at the end of 1994; this is expected to rise to as many as 3m by the end of 1995.There are an additional 2m CD-Rom drives in continental European homes.Despite rosy prospects for hardware sales, some retailers are still wary. But independent analysts suggest it could grow exponentially over the course of the coming year. The company is also aiming to provide pan-European licensing arrangements for software publishers, relying on Funsoft’s German experience as a licensee for major software labels such as Time Warner, Lucas Arts and Novalogic.”The market is not exploding yet, but it will,” Mr Taylor said.The CD-Rom market is still in its infancy in the UK. And Alan Taylor, Funsoft UK’s managing director, said the company intends to close a deal within a few weeks in France to bring in another distributor. The company was formed earlier this year by Funsoft of Germany, a multimedia publisher and distributor, and Britain’s Total Home Entertainment, which is part of the John Menzies retailing group.
Funsoft UK supplies retailers with a range of CD-Rom products, including games and educational titles.Together, the two Funsoft companies will address up to 65 per cent of the European market. A new Anglo-German joint venture, Funsoft UK, is aiming to take 20 per cent of the UK wholesale market for multimedia products by the end of 1995, its backers said.