MPs to question American and European corporates to bolster defences against foreign takeovers

 
James Nickerson
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UK General Election 2015 - Miscellaneous Week One
Wright indicated we need to protect our "crown jewels" (Source: Getty)

MPs will quiz bosses of American and European corporates on how the UK can bolster its defence against foreign takeovers.

The business select committee will launch an inquiry into Prime Minister Theresa May's industrial strategy and what it could end up meaning for business.

The committee is expected to use the summer to draw up the list of international firms that it will seek to hear evidence from come October.

Iain Wright, chair of the select committee, said: "Foreign direct investment has helped this country and boosted our competitiveness but to what extent do we say we have crown jewels and we are not going to get rid of them but protect them?"

One line of inquiry is whether the UK should adopt European-style arrangements that allow employee representatives onto the board of companies, thereby allowing workers to have a vote on strategic decisions including takeovers.

Read more: Eyebrows raised at UK government's new department for industrial strategy

It is thought that the bosses of large industrial companies such as Bayer, Siemens, Daimler and Aegon may be invited by MPs to give examples of how employee representation works in practice, according to the Telegraph.

Mark Littlewood, director general at the IEA, was unimpressed by the prospect of MPs questioning bosses.

He said: “As industrial strategy rises up the political agenda, we must be wary of a slippery slope of politicians intervening in business decisions. Legal frameworks need to be holding companies to account, rather than a host of MPs grilling bosses at select committee hearings.

“Politicians should not be picking winners nor determining which takeovers occur. These must remain decisions for the market.”

Read more: Forget populist executive pay curbs: Prime Minister May should embrace these six policies to revitalise growth

However, the Confederation of British Industry (CBI) said that if the business select committee, and the government, are exploring what a UK industrial strategy should ultimately look like, business will welcome that.

A spokesperson said: “The welcome renewed focus on industrial strategy is needed to support growth across the whole of the country and to boost our trading performance, helping the UK to secure a sustainable industrial future.

“It is important that Westminster engages with businesses, whether domestic or from overseas, to help determine how this can be successfully achieved while maintaining the UK’s reputation for being open to investment.”

London First agreed, stating that the inquiry is welcome as it gives business an opportunity to help define what the industrial policy looks like.

On the specifics, David Lutton, head of competitiveness at London First said: "London has been very successful in attracting FDI. In fact, the most successful city in Europe, by a long distance. We wouldn’t want to see any knee-jerk policy interventions that put this investment at risk.

"In so far as one might want to put conditions on foreign takeovers, I’d query whether worker representatives are the solution. The German and French models of corporate governance are very different from the UK one, so I don’t think you can just lift and apply one aspect and expect the same results."

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