ALEX BRUMMER: With robust thinking about the dangers of relinquishing control of vital assets at the highest level, Business Department must board the train before it leaves the station
- The doors to overseas acquisitions of strategic assets were thrown open by New Labour
- The Enterprise Act of 2002 changed the look of property in Britain
- Most dramatically, the UK squandered control over privatized utilities and strategic assets such as electricity, water, ports and airports.
When ‘vampire-kangaroo’ Macquarie took a £1bn majority stake in disgraced Southern Water in early August, the transaction went barely noticed.
It happened amid a slew of bids for British aerospace innovators and the battle for Morrisons. The funding for Southern Water, which was fined in July 2021 for discharging 16 to 21 billion liters of raw sewage into rivers and the sea, was praised by water regulator Ofwat.
It noted that the new investor had “committed to a substantial investment package.” How quickly they forget. As the owner of Thames Water from 2006-2017, Macquarie was vilified for extracting millions of pounds in dividends. This is because Thames Water polluted the upper reaches of the river and brought London to a standstill with leakage problems.
Missing the train?: The indifference of Investment Secretary, Lord Grimstone, and his boss, Kwasi Kwarteng (pictured), over financially-driven bids on UK assets is so frustrating
Few things are more important to the health and well-being of British citizens than the command and control of our water resources. But conflicting government thinking about foreign takeovers means that the social, governmental and national interests of such deals are rarely considered.
In the midst of the wave of deals of late, I thought it was possible to spot a change in attitude to Britain’s open borders when it comes to financially-driven asset takeovers, while Mammon is the driving force. The government declared a national security interest in the proposed acquisition by Advent-controlled Cobham for submarine detector group Ultra Electronics. The bidding war for aerospace engineer Meggitt is closely watched in Whitehall.
But the battle for Morrisons didn’t raise eyebrows at a time when it’s impossible to turn on the radio and here’s an outburst from agriculture about dangers to our food security and empty supermarket shelves.
Allowing private equity rivals Fortress or CD&R to load Morrisons with debt, stuffing the pockets of greedy executives and grab-and-go advisers won’t benefit shoppers one iota and could jeopardize staff pensions.
The doors to overseas acquisitions of strategic assets were thrown open by New Labour. The Enterprise Act of 2002 changed the look of property in Britain. Most dramatically, the UK squandered control over privatized utilities and strategic assets such as electricity, water, ports and airports. BAA, owner of Heathrow, Gatwick and Stansted, was sold in 2006 to the highly indebted Spanish Ferrovial. Dubai Ports World was allowed to acquire P&O ports in the same year. Forth Ports, which Tilbury controlled in London, followed a few years later. A country built on maritime history and warehouse status has sacrificed part of its global future.
All of this illustrates why the indifference shown by the Investment Secretary, Lord Grimstone, and his boss, Kwasi Kwarteng, to financially driven bids on UK assets is so frustrating. They make no distinction between trade takeovers, such as Akzo Nobel’s deal for ICI, and takeovers that harm the UK’s vital interests – the original Advent bid for Cobham.
The misconceptions of the late Cabinet Secretary Jeremy Heywood, who never saw a deal he didn’t like, has thankfully been scrapped in Downing Street. Considerable thought is now being given to the dangers of relinquishing control of vital assets, technologies and enterprises at the highest level.
The Business Department has to clamber onto the train before it leaves the station.