But electricity generators said there would be 59000 megawatts of capacity available - more than enough to

But electricity generators said there would be 59,000 megawatts of capacity available - more than enough to ensure that the lights do not go out. The previous record was set on 25 January last year when demand reached 48,800 megawatts. There is a possibility that peak consumption will exceed 50,000 megawatts for the first time later this month. Traditionally the second Tuesday in January - which this year falls on the 14th - has proved to be the day of highest demand.A dispute has been raging between the Grid and big industrial electricity consumers about the ability of the privatised power industry to meet demand. Several independent gas-fired plants are on interruptible supply contracts which means they can be taken off-line at short notice.Lisa Waters of the Energy Intensive Users Group, whose members account for a quarter of daily UK electricity demand, said: "The impression we have is that the Grid has no contingency plans. They keep running to our members and offering them huge sums of money to get off the system whenever a problem arises.

Nobody is taking responsibility for ensuring there is sufficient capacity to meet demand and the Grid should be worried."However, a senior source at one of the privatised generators said: "It is in nobody's interests for security of supplies to be called into question. We are working flat out to make sure that we meet whatever demands are put on the system.". The Chancellor of the Exchequer, Kenneth Clarke, yesterday took the first steps towards contracting out the Treasury's economic forecasting to the private sector by announcing that he would shortly appoint consultants to study the feasibility of the idea. The move threatens the jobs of up to 45 staff at the Treasury, but if the service is contracted out they will be allowed to mount an in-house bid in competition with private sector economic forecasters. The idea of contracting out the forecasting function was floated in late 1994 in a Treasury review of its own expenditure which has since led to a sharp reduction in the number of civil servants.But at the time Mr Clarke decided to delay the detailed review of the forecasting function for a couple of years.The three-month consultants' study is to look at the feasibility of contracting out the central economic forecast and the forecasting and monitoring of public finances.Other areas would include the background work required to produce the economic assumptions made in public expenditure planning, and the assessment of the accuracy of forecasts, by looking at what happens in the economy.The Treasury said that if the consultants' report confirmed that a "market test" was feasible, a formal contract specification would be issued in late spring or early summer inviting outside organisations - and Treasury staff, if they wished - to make bids.The aim would be to complete negotiations in time for the successful bidder to take over responsibility for forecasting from the end of this year.The Treasury said the study would include the security implications of allowing an outside organisation to have access to sensitive forecasting information that is a key part of the Budget announcement.It would also examine options such as moving the forecasting function entirely outside the Treasury or having civil servants working alongside a private firm.Comment, page 15. The "virtual corporation" seems to be all the rage these days so why not a virtual Treasury as well? Perhaps that is what the Chancellor had in mind when he announced yesterday that consultants would be appointed shortly to study whether its economic forecasting functions should be contracted out to the private sector It all sounds very laudable and efficiency oriented. If the BBC can outsource just about everything apart from programme commissioning and airlines can contract out simple administration jobs to India, why not let Whitehall follow the fad? But hold on a minute: surely one of the core roles of the Treasury is to monitor and forecast economic events and take action where necessary to correct problems?Furthermore, the forecasting function is not confined to churning out the Budget Red Book once a year.

Economic models are also used routinely in the Treasury to look at the impact of new policies for tax and spending.For a start, there would be a minor security problem, in that an outside firm would have to be told all the tax and spending options. More seriously, to split the forecasting function from the analysis of policy options, which would have to remain in the Treasury, is an unnecessary extra complication and expense.Given the questionable advantages of going this route, the potential cost savings look modest. With only 45 people affected, including support staff, the total budget must only be a couple of million at most and the potential savings from contracting out must be considerably less.The Treasury is no better and no worse at forecasting than other so-called experts. Experience also shows that forecasters hardly ever beat the average of their peers for more than a year or two at a time, so finding an outsider who will do better would be about as easy as picking the Grand National winner.