The wheels of commerce spin ever faster with a rush of FTSE 350 takeover bids. But the General Election campaign will usher in a period of regulatory purdah.
The effort by Czech billionaire Daniel Kretinsky to swallow International Distributions Services (IDS), owner of the Royal Mail, is unlikely to make much progress in such circumstances.
Elsewhere, Ofwat’s review of pricing plans from Thames Water, the key to unlocking new equity investment in the troubled utility, effectively is on hold.
Overuse of debt financing has hobbled investment by Britain’s privatised water utilities. But it hasn’t stopped fat cat payouts to investors and is among the factors behind unconscionable sewage spills, as an investigation in The Mail on Sunday tomorrow will reveal.
Weak and inconsistent regulation of the privatised utilities is an enduring theme of recent years, raising questions about whether the Thatcher revolution, copied around the world, was a mistake and whether public services, which are natural monopolies, should stay in state hands.
All change?: UK prosperity demands a Government which values enforcement
Rail, water, energy and the universal service obligation for the Royal Mail clearly play an important part in all of our lives.
In the budgetary battles fought out between the Treasury and other departments, requests for big capital spend, such as renewing hundreds of miles of century-old water mains, would not stand a chance against the funding needs of the NHS, state pensions and crumbling schools.
Labour recognises this. Keir Starmer’s state-owned Great British Energy company is intended as a device to draw three times the amount of private investment for every pound of state capital.
The answer, then, to dealing with lingering issues from privatised companies is better and more joined-up thinking. In the case of water, the three different authorities – Ofwat, the Environmental Agency and Defra – co-ordinate poorly.
In telecoms and postal services, Ofcom has proved an effective regulator, alert to the technical issues. Government foot-dragging on a settlement for postal services is among factors which exposed the Royal Mail to overseas ownership.
The tendency of UK boards to roll over at the first smell of cordite and submit to overseas or private equity takeovers has diminished. A series of listed companies, including the Wood Group, Anglo American, Hargreaves Lansdown and, in the recent past, Direct Line and Currys have delayed, opposed and seen off marauders.
What is more concerning are the deals which squeezed under the net. The UK allowed its defence, security and innovation to be diminished.
A combination of a ‘London discount,’ a weak pound, complicit management and Government insouciance saw swathes of the defence sector – Cobham, Ultra Electronics and satellite firm Inmarsat – fall into overseas hands.
Valuable AI, software and pharma firms including Aveva and Dechra Pharmaceuticals have been snapped up. The rump of British Steel fell to China’s Jingye.
The 2022 National Security & Investment Act was meant to avert such travesties, which have had a lasting effect on our growth capacity, innovation and tax take.
In contrast to its American equivalent, the Committee on Foreign Investment (CFIUS), Britain’s watchdog rarely barks.
At present, it could have a big say on the sale of both cyber-security specialist Darktrace and Royal Mail owner IDS.
President Biden recently invoked CFIUS to slow or even stop a Japanese takeover of US Steel on national security grounds.
Britain has proved a reluctant user of similar powers. It only rippled its muscles to prevent chipmaker Newport Wafer Fab falling into what was Chinese ownership.
There is a reluctance to put up barriers to foreign takeovers because they suggest the country is not open to business.
The result has been a dangerous erosion of our technological edge, and command and control over vital enterprises.
The Tories too often have neglected public interest by failing to toughen the spine of regulators and police takeovers.
Labour, in opposition, scarcely has been better. UK prosperity demands a Government which values enforcement.