ALEX BRUMMER: Business ministers must get on board over takeovers

ALEX BRUMMER: With robust thinking about the dangers of surrendering control of vital assets at the highest level, Business Department must get on the train before it leaves the station

  • The doors to overseas takeovers of strategic assets were thrown open by New Labour
  • Il 2002 Enterprise Act changed the face of ownership in Britain
  • Most dramatically, the UK squandered control of privatised utilities and strategic assets such as power, acqua, ports and airports
  • When ‘vampire kangarooMacquarie took a £1bn majority stake in disgraced Southern Water in early August, the transaction was barely noticed.

    It occurred amid a slew of bids for UK aerospace innovators and the battle for Morrisons. The funding for Southern Water, fined in July 2021 for dumping between 16bn and 21bn litres of raw sewage into rivers and the sea, was hailed by water regulator Ofwat.

    It noted that the new investor ‘had committed to a substantial package of investment.How quickly they forget. As the owner of Thames Water from 2006-2017, Macquarie was vilified for the extraction of millions of pounds of dividends. This as Thames Water polluted the upper reaches of the river and brought London to a halt with leakage problems.

    Missing the train?: The insouciance of investment minister, Lord Grimstone, and his boss, Kwasi Kwarteng (nella foto), about financially driven bids for UK assets, is so frustrating

    Missing the train?: The insouciance of investment minister, Lord Grimstone, and his boss, Kwasi Kwarteng (nella foto), about financially driven bids for UK assets, is so frustrating

    Few things are more important to the health and well-being of British citizens than command and control of our water supplies. Yet contradictory thinking in government over foreign takeovers means that the social, governance and national interest impact of such deals rarely gets a look-in.

    Amid the spate of transactions recently, I thought it was possible to detect a change of attitude towards Britain’s open borders when it comes to financially driven, asset-stripping takeovers, when Mammon is the driving force. The Government declared a national security interest in the proposed takeover by Advent-controlled Cobham for submarine detector group Ultra Electronics. The bidding war for aerospace engineer Meggitt is being closely monitored in Whitehall.

    But the fight for Morrisons did not raise an eyebrow at a time when it is not possible to switch on the radio and here a blast from agriculture about dangers to our food security and empty supermarket shelves.

    Allowing private equity rivals Fortress or CD&R to load Morrisons up with debt, filling the pockets of greedy directors and grasping advisers, will not benefit shoppersone jot and could endanger staff pensions.

    The doors to overseas takeovers of strategic assets were thrown open by New Labour. Il 2002 Enterprise Act changed the face of ownership in Britain. Most dramatically, the UK squandered control of privatised utilities and strategic assets such as power, acqua, ports and airports. BAA, owner of Heathrow, Gatwick and Stansted, was sold to Spain’s highly indebted Ferrovial in 2006 for £10.6bn. Dubai Ports World was allowed to acquire P&O ports in the same year. Forth Ports, which controlled Tilbury in London, followed a few years later. A country built on maritime history and entrepot status sacrificed part of its global future.

    All of this illustrates why the insouciance of investment minister, Lord Grimstone, and his boss, Kwasi Kwarteng, about financially driven bids for UK assets, is so frustrating. They are failing to draw any distinction between trade takeovers, such as Akzo Nobel’s deal for ICI, and those which harm the UK’s vital interests – the original Advent bid for Cobham.

    The mistaken views of the late Cabinet Secretary Jeremy Heywood, who never saw a deal he didn’t like, thankfully have been expunged on Downing Street. There is now robust thinking about the dangers of surrendering control of vital assets, technologies and enterprises at the highest level.

    The Business Department needs to clamber on the train before it leaves the station.

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