New assurances from Melrose are not enough, says shadow business secretary, Rebecca Long-Bailey
The Government will not intervene in Melrose’s £8bn takeover of engineering giant GKN, the business secretary announced on Tuesday.
Greg Clarke told the House of Commons that he would not block the deal on national security grounds.
Defence Secretary Gavin Williamson was among those to have raised security concerns about the deal because GKN works on a number of vital defence contracts.
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Melrose bosses take home annual pay of £42m each ahead of GKN takeover
Mr Clarke said Melrose had agreed a number of new undertakings with the Ministry of Defence, in addition to those he secured last month.
Melrose’s strategy is to buy up firms which it believes are underperforming and then sell them on for a profit within three to five years, often after offloading parts of the business.
Melrose has now pledged to inform the MoD if it intends to dispose of a part of GKN which might have national security implications.
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The government can then assess the potential purchasers and ensure that classified information remains secure and contractual obligations continue, Mr Clarke said.
This would allow the government to “ensure the continued maintenance of any capabilities with a national security dimension”.
He added that the MoD had undertaken a “comprehensive assessment” of the issues raised by the takeover and concluded that statutory intervention was not required.
Therefore his judgment was that “there are not reasonable and proportionate grounds to make a statutory intervention on the grounds of national security”.
Rebecca Long-Bailey, the shadow business secretary, said that the Melrose’s latest assurances were inadequate to protect jobs which are integral to the UK’s defence industry.
“Sadly, the government's failure to address the short-term horizons of Melrose may damage the capability of a business to deliver contracts which may last 10, 15 or 20 years,” she said.
At least 88.5 per cent of GKN shareholders have now backed the controversial bid.
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