The wheels of commerce are turning ever faster with a flood of takeover bids for the FTSE 350. But the general election campaign will usher in a period of regulatory purdah.
Under such circumstances, Czech billionaire Daniel Kretinsky’s attempt to take over Royal Mail owner International Distributions Services (IDS) is unlikely to make much headway.
Separately, Ofwat’s review of Thames Water’s pricing plans – the key to unlocking new capital investment in the troubled utility – is effectively on hold.
Overuse of debt financing has hampered investment by Britain’s privatized water companies. But it has not stopped large payouts to investors and is one of the factors behind excessive wastewater spills, as an investigation published tomorrow in The Mail on Sunday will reveal.
Weak and inconsistent regulation of privatized public services is a persistent issue in recent years, raising questions about whether Thatcher’s revolution, copied around the world, was a mistake and whether public services, which are natural monopolies, should remain in the hands of the State.
Everything changed?: UK prosperity requires a government that values law enforcement
Rail, water, energy and the Royal Mail’s universal service obligation clearly play an important role in all of our lives.
In the budget battles fought between the Treasury and other departments, requests for large capital expenditure, such as renewing hundreds of kilometers of century-old water pipes, would stand no chance against the funding needs of the NHS, state pensions and the schools in ruins. .
The Labor Party recognizes this. Keir Starmer’s state-owned Great British Energy is intended to be a device for attracting three times the amount of private investment for every pound of state capital.
The answer, then, to addressing the persistent problems of privatized companies is better, more integrated thinking. In the case of water, the three different authorities (Ofwat, the Environment Agency and Defra) do not coordinate well.
In telecommunications and postal services, Ofcom has proven to be an effective regulator, attentive to technical problems. The government’s delay in a deal on postal services is one of the factors that exposed the Royal Mail to foreign ownership.
The tendency of UK boards to give in at the first whiff of cordite and bow to foreign or private equity takeovers has diminished. A number of listed companies, including Wood Group, Anglo American, Hargreaves Lansdown and, in the recent past, Direct Line and Currys, have delayed, opposed and scared off marauders.
What is more worrying are the deals that slipped under the net. The UK allowed its defence, security and innovation to decline.
A combination of a ‘London discount’, a weak pound, complicit management and the Government’s lack of concern saw sectors of the defense sector – Cobham, Ultra Electronics and the satellite company Inmarsat – fall into foreign hands.
Valuable pharmaceutical, software and artificial intelligence companies have been acquired, including Aveva and Dechra Pharmaceuticals. The rest of British Steel fell into the hands of the Chinese Jingye.
The National Security and Investment Act of 2022 was intended to prevent these types of travesties, which have had a lasting effect on our ability to grow, innovate, and tax collection.
Unlike its American equivalent, the Committee on Foreign Investment (CFIUS), the British watchdog rarely barks.
Today, it could have a big say in the sale of both cybersecurity specialist Darktrace and Royal Mail owner IDS.
President Biden recently invoked CFIUS to slow or even halt a Japanese acquisition of US Steel on national security grounds.
Britain has proven to be a reluctant user of similar powers. He only flexed his muscles to prevent chip maker Newport Wafer Fab from falling into Chinese-owned hands.
There is a reluctance to put up barriers to foreign acquisitions because they suggest the country is not open for business.
The result has been a dangerous erosion of our technological advantage and command and control of vital businesses.
Conservatives have too often neglected the public interest by failing to stiffen the backbone of regulators and police takeovers.
The Labor Party, in opposition, has hardly done better. The UK’s prosperity requires a government that values law enforcement.
