Jeremy Corbyn has accused the government of putting the profits of speculators before the interests of staff at one of Britain’s oldest engineering firms, which is the object of a hostile takeover deal that has been labelled an “abuse of capitalism”.
On Thursday, shareholders in GKN, which made cannonballs for the Battle of Waterloo and Spitfires for the second world war, voted to accept an £8.1bn offer from Melrose, a firm that specialises in turning around failing companies and selling them on at a profit, and which has been labelled an “asset stripper”.
Some of GKN’s shareholders had bought into the company only a few days before backing the takeover, prompting the Labour leader to call them speculators looking to make fast cash out of the deal.
“The Tories have put the interests of City speculators over people’s jobs. Labour would have stopped the takeover of GKN and, in government, we’ll make our economy work for the many, not the few,” Corbyn said.
Referring to the front page of Friday’s Daily Mail, which called the deal an “abuse of capitalism”, he added: “You know things are bad when the Daily Mail calls out a rigged economic system.”
You know things are bad when the Daily Mail calls out a rigged economic system.
— Jeremy Corbyn (@jeremycorbyn) March 29, 2018
The Tories have put the interests of city speculators over people's jobs.
Labour would have stopped the takeover of GKN and in government we'll make our economy work for the many, not the few. pic.twitter.com/J8U7rmK9BI
There were calls for the government to block the deal on national security grounds because of GKN’s status as a defence contractor, including from Labour’s Rebecca Long-Bailey, who wrote to Greg Clark, the business secretary she shadows, on Friday.
“This deal from its inception in January of this year has raised issues of national security. These have been recognised across political parties, by trade unions and other commentators,” she wrote, in a letter seen by the Guardian.
“Among the concerns are the fact that defence contracts are long term and are undermined by the short-term business model pursued by Melrose, the potential breakup of the business and the loss of jobs and skills.”
She added: “The history of GKN has been intertwined with our own industrial and military history … The takeover puts at risk the firm and its proud heritage. It not only endangers our national defence but our industrial strategy too.”
On Friday morning, Clark acknowledged he had a statutory duty under the Enterprise Act 2002 to consider the national security implications of the deal, but refused to pre-empt the deliberations. He told BBC Radio 4’s Today programme the assessment needed to be carried out “properly and thoroughly”.
Addressing concerns that the takeover had been waved through by speculators, Clark said: “Those shareholders that bought their shares very recently of course bought them from other shareholders that chose not in effect to back the continuing management.”
Later on Friday, Corbyn issued a further call to the government to halt the takeover: “This is about people’s jobs, national security and our whole industrial strategy.” He said Clark should “step in and act in the national interest”.
Clark said the government’s approach, as set out in its industrial strategy, was non-protectionist.
He said ministers would not “pick winners as was done in the past and subsidise or protect them”, saying the government would instead seek to “ensure that our business environment is one in which there is competition, in which no incumbent is immune from the challenge of being kept efficient and strategically focused”.
Vince Cable, the leader of the Liberal Democrats, was the business secretary when Kraft took over Cadbury in 2010 and, at the time, called for a change in the law to prevent hedge funds and other short-term investors influencing takeovers.
On Friday, he said: “We need to move to a system with two classes of shareholders so that short-term holding for speculation cannot be given the same weight in making judgments about the long-term future of a company.”
