ALEX BRUMMER: Retreat on foreign deals is not in the public interest

Business groups pushed on an open door when they persuaded Kwasi Kwarteng that legislation to scrutinise and block foreign deals for UK companies on national security grounds was too tough.

The Business Secretary is a believer in red tooth and claw capitalism and less than enthusiastic about any regime which rolls back the UK’s open markets.

His main proposed change is that the threshold for notifying the Government on deals be raised to 25 per cent in foreign ownership from 15 per cent. 

Security fears: Business Secretary Kwasi Kwarteng is a believer in red tooth and claw capitalism and less than enthusiastic about any regime which rolls back the UK’s open markets

This would mean a substantial reduction in the number of transactions reported to the authorities. Kwarteng also returned to the initial list of 17 sectors requiring inspection and narrowed the definitions, seeking to avoid the Danone effect, when France blocked a bid for the yoghurt champion on national security grounds.

One understands why Kwarteng wants to prevent a snarl, with up to 1,800 deals expected to be caught by the original proposal. 

But one of the core reasons for introducing the legislation was to throw sand in the wheels and to prevent British science, technology, R&D, intellectual property and patents fleeing these shores before anyone notices. 

Britain has loaded takeover rules in favour of the bidder, allowing agreed offers such as the £24billion by Softbank for Cambridge-based Arm Holdings in 2016 to be rushed through in the blink of eye.

Recently, private equity bids for aerospace pioneer Cobham and satellite innovator Inmarsat deprived Britain of control of valuable technologies when it needed it most as the UK left the EU’s Galileo programme.

The most recent quoted firm to fall into overseas hands was unloved security giant G4S. Its fate, fought over by private equity rivals from Canada and the United States, was decided on price alone. 

At no point was there discussion about the impact on employment, pensions, prison management or security at the Hinkley nuclear complex. 

There is nothing per se wrong with overseas bids. BMW’s ownership of Mini and Rolls-Royce Motors, Tata’s control of Jaguar Land Rover and Akzo Nobel’s purchase of ICI all worked for the good of the country.

The purpose of the National Security and Investment Bill is to make sure that no deal takes place without thorough scrutiny. If that means that unfettered capitalism is checked, then so be it. Kwarteng should not have brushed aside the broader public interest.

Cyber force

Darktrace wants to put as much distance between its initial public offering (IPO) and that of Deliveroo.

The food delivery firm float flopped after the shares were over-hyped, questions were raised over employment conditions of riders and it chose to issue two classes of shares.

Deliveroo also sought to bathe itself in a tech halo when there was concern that the systems deployed weren’t anything special.

Poppy Gustafsson, chief executive of Darktrace, and her advisers are choosing to eschew the dual shareholding structure used by Deliveroo and favoured on Nasdaq.

Instead, they have opted to go for a regular listing. They noisily make the case that it is a genuine high-tech offer, embracing the artificial intelligence expertise of Cambridge University to provide systems which can help firms and organisations gird themselves against the scourge of cyber-crime and hacking. 

It has acquired 4,700 clients across the globe and built up revenues of £145million but is still a loss maker.

The shadow lurking comes in the shape of its biggest investor, Mike Lynch, who is fighting extradition to the US.

Indeed, many of the brilliant AI minds working for Darktrace have associations with Lynch’s former company Autonomy, which became a legal and audit quagmire after it was sold to Hewlett Packard.

Advisers to Darktrace have sought to ethically wash it of its past connections by recruiting a team of independent directors headed by veteran chairman Gordon Hurst, Tory grandee Lord Willetts and former BT chief Peter Bonfield. For the sake of the City’s reputation let’s hope it proves enough.

Hard labour

Amazon has had more success in suppressing worker rights than Uber in the UK. A high pressure campaign to crush unionisation at its Bessemer, Alabama, warehouse won the day. 

But Amazon still needs to address complaints about long hours, Big Brother-style management in the warehouses and inadequate Covid protocols.

Founder Jeff Bezos better clean up his act if he doesn’t want his creation to be clobbered by labour-friendly Joe Biden.