GKN

Drew Hendry Excerpts

Tuesday 24th April 2018 Commons Chamber

[Greg Clark]

Sanctions with regard to undertakings to the Takeover Panel are those for contempt of court, which include everything up to imprisonment.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

I thank the Secretary of State for advance sight of his statement.

The Secretary of State mentioned holding Melrose to the spirit and letter of its commitments, but traders have been short selling £725 million, or 17%, of Melrose stock, effectively betting against it making a success of GKN. What action will he take if there is any breach of the spirit or letter of the commitments?

The Secretary of State did not cover jobs in his statement. I asked him following a previous statement to what extent he would require assurances to prevent assets from being stripped and jobs lost, and not just those in the MOD or national security. What assurances has he had on the financial restructuring involved in the takeover, which will mean more debt and less investment at the core of GKN? How will that situation progress the Government’s industrial strategy, and can he explain how allowing the takeover will protect the skilled jobs that we require and tackle productivity issues?

[Greg Clark]

I am grateful to the hon. Gentleman for his questions. He will know that one undertaking that has been given is a commitment to at least five years of research and development investment, including participation in the joint industry bodies, which have been a successful part of our arrangements in the aerospace and automotive sectors and are an important part of our industrial strategy. That is a valuable commitment that I would have thought the hon. Member for Salford and Eccles (Rebecca Long Bailey) and he would welcome.

The previous GKN management criticised the commitment to retain the aerospace business, saying that it should not have been entered into given that the sell-off of GKN’s automotive business had already been agreed to. It constitutes a longer-term commitment than was made during the latter period of the previous ownership.

The hon. Gentleman will understand that in obtaining commitments from a bidder, I have to bear in mind commitments that the incumbent management have or have not made. No commitments had been made on the total number of jobs, and indeed the sale programme involved a majority of the business. One of the features of today’s results announcement was that the debt of the previous business was higher than anticipated, and the plans that the new management have set out include paying it down.