GKN: Proposed Takeover by Melrose

Debate between Julian Lewis and Andrew Griffiths

Thursday 15th March 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)]

It is a great pleasure to serve under your chairmanship, Mr Stringer. I think that gives me nine minutes to cover the points and address the issues raised by hon. Members, so, to coin a phrase, I will crack on. I congratulate the hon. Member for West Bromwich West (Mr Bailey) not only on securing the debate but on the thoughtful, clear tone in which he made his contribution. He has no constituency interest but raises this issue because he cares passionately about the UK economy and our manufacturing industry in particular. I applaud him for that.

The context is important. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) said we want to be a nation of makers, and it is important to recognise that we have just seen the longest consecutive period of growth in manufacturing in the UK for 50 years. I am therefore pleased to report to the House that manufacturing is in rude health. The United Kingdom is a successful open economy and the Government’s industrial strategy, which has been discussed at length today, will build on our strengths and address our weaknesses to create a Britain fit for the future.

A key part of the UK’s dynamic economy is our mergers regime. Mergers and takeovers can bring benefits to both consumers and the UK economy. I can report to hon. Members that the UK has the third-highest foreign direct investment stock in the world, behind only the US and China. That investment means jobs in growing sectors and opportunities to develop skills, and it helps companies deliver products and services at competitive prices. Mergers and takeovers also provide important opportunities for companies to grow and innovate. Many of the UK’s most successful companies have grown through mergers and takeovers, both in the UK and abroad.

The UK’s merger regime is highly regarded the world over due to its design. The regime, based on transparent rules administered consistently by expert bodies, recognises that decisions are primarily a matter for the shareholders and restricts the role of Ministers to transactions that raise public interest concerns. As a result, the regime offers clarity for businesses and maintains investor confidence.

For example, the takeover code, administered by the independent Takeover Panel, provides a robust framework to ensure that takeovers of listed companies are conducted in an orderly manner with fair treatment of the shareholders. The Takeover Panel has repeatedly strengthened the code. Its most recent changes, which came into effect on 8 January 2018, require bidders to make earlier and fuller disclosure of takeover plans and to give companies subject to a bid more time to prepare their response—the question that the hon. Member for Newcastle upon Tyne Central raised earlier. Those changes have applied to the bid by Melrose.

[Dr Julian Lewis (New Forest East) (Con)]

I apologise for coming late to the debate. While what the Minister says is absolutely beyond question, does he accept that where the defence of the realm is concerned, certain other considerations must also apply?

[Andrew Griffiths]

I thank my right hon. Friend, who as always makes a salient and sensible contribution to the debate. I agree with him wholeheartedly that the defence of our nation is the most important point in any of these decisions.

As hon. Members have heard, the Enterprise Act 2002 grants Ministers statutory powers to intervene in mergers that give rise to public interest concerns only on the grounds of national security, financial stability or media plurality. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised the issue of that financial stability. It is the financial stability of the country’s economy as a whole. This Government take very seriously our responsibility to protect national security in particular, and we are robust in assessing any possible public interest concerns and carefully considering when those powers should be exercised. If necessary, they will be exercised.

I appreciate that there has been much speculation about the potential use of those powers in this case. However, as we heard earlier, public interest interventions are quasi-judicial in nature. It is therefore important that Ministers act, and are seen to act, impartially, on the basis of an open mind and of the evidence available. For that reason, it is not appropriate for me to comment on their use in this individual case. As hon. Members might expect, my right hon. Friend the Secretary of State and I have taken a close interest in events. He has spoken to the chief executive officers of both GKN and Melrose to understand their intentions and to make it clear that he wants an open line with the companies, consistent with his potential statutory role in the process.

The bid, however, is primarily a commercial matter for the parties concerned, and we wait to see how things develop. GKN shareholders now have until 29 March to decide whether to accept the Melrose bid. It has become clear that, regardless of whether the takeover by Melrose is successful, GKN will not be the same company we know today. Beyond the potential sale of the Driveline, both GKN and Melrose have outlined plans to sell the powder metallurgy business and other non-core businesses. There remains the distinct possibility that, irrespective of which party ultimately controls GKN after the resolution of the bid, it will choose to sell all or parts of GKN’s current business to foreign companies.

On 13 March, Melrose wrote to the Business, Energy and Industrial Strategy Committee at its request, setting out the company’s position on pensions and post-offer undertakings. In addition to the conversations held between the Government and the parties involved, the hon. Member for Newcastle upon Tyne Central, who raised the question of Unite, will be pleased to know that the Secretary of State has been in close contact with the union.

I know that some hon. Members have concerns about GKN’s pension schemes. Individual cases are a matter for the independent Pensions Regulator, but the Government are aware that the parties are in discussions with the pension trustees, who have made their expectations clear. The hon. Member for West Bromwich West raised the issue of R&D investment; Melrose has told the Business, Energy and Industrial Strategy Committee that it supports R&D and will maintain the level of investment in R&D that GKN has spent in the past, which I think was 2.2% of sales between 2014 and 2016.

The hon. Gentleman also mentioned the question of how France and Germany could block takeovers. The reality is that they cannot. The UK’s takeover rules are based on EU takeover rules, which apply to all European countries and limit the ability of national Governments to block mergers unless they are based on national security, financial stability or media plurality grounds. France and Germany would also be unable to block a takeover of that kind due to EU takeover rules.

My hon. Friend the Member for Redditch (Rachel Maclean) is a doughty fighter for her constituents, and I know how passionate she is about this issue. She asked whether we are confident about the assurances Melrose has given about the UK headquarters. Under the takeover code, companies can make legally binding post-offer undertakings, and that is an important element. The hon. Member for Paisley and Renfrewshire South raised the question of pensions. Of course, it is a matter for the Pensions Regulator and it would be inappropriate for me to comment; however, the Government understand that the Pensions Regulator is in discussion with all parties.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I hope I got that right—asked what assurances we can give that Government R&D investment will stay in the UK. I can tell him that Government grants to support R&D are awarded on the basis of R&D carried out in this country, so the conditions of any contract with Government would mean that those responsibilities would transfer to the new company.

Mental Health Unit (Burton)

Debate between Julian Lewis and Andrew Griffiths

Monday 19th December 2011 Commons Chamber

[Andrew Griffiths]

The hon. Gentleman makes a valid point, which I hope to come to later in my speech. He has served his community well over many years and he properly understands the needs of families, particularly the most vulnerable in our society.

Removing those beds from the Margaret Stanhope centre will bring the median down to 11.5 per 100,000 people, compared with the median of 27.5 across the country. That is putting lives at risk, and we are not prepared to put up with it in east Staffordshire.

The Audit Commission report also talked about occupancy rates, saying that the median occupancy rate across those 46 trusts was 90%. I requested the occupancy rates from South Staffordshire PCT—I think it took five weeks to winkle, or drag them, out of the PCT. I was provided with the figures for April 2010 to August 2011. I examined them and found that, with the beds at the Margaret Stanhope centre still in place, the occupancy rate across the PCT was 87%.

[Dr Julian Lewis (New Forest East) (Con)]

This debate gives me such a sense of déjà vu, because a few weeks ago I initiated a debate about how Southern Health NHS Foundation Trust, which has a bed occupancy rate of over 90%, wants to close 35% of its acute beds. Like my hon. Friend, it took me a long time to get the statistics from the trust. When I asked for them to broken down in a different way, the breakdown showed twice as many beds being vacant as the first lot of calculations did. In other words, the trust has not got a clue what its own statistics add up to, yet it is intent on closing beds. Accurate statistics must be central to any consideration, and I think that my hon. Friend and I ought to go and see the Minister about this, if he would be willing to see us.

[Andrew Griffiths]

My hon. Friend makes an incredibly important point. He has been vociferous in campaigning on behalf of his local residents—as I am attempting to do—and I share his concerns. None of us is a backwoodsman, and none of us wants to ignore the facts, but the facts that are being presented to us by the PCTs are not the facts. When we dig down and look at the assertions that the PCTs are making, they simply do not add up. I shall give the House further evidence of that later.

For the six months during which we were able to examine the occupancy rate, we found that it was already more than 90%. In June 2010, it exceeded 100%, yet the PCT is telling us that it can safely remove those 18 beds from Margaret Stanhope with no impact on mental health provision in my community. I simply do not accept that.

House of Lords Reform

Debate between Julian Lewis and Andrew Griffiths

Monday 27th June 2011 Commons Chamber

[Andrew Griffiths (Burton) (Con)]

Thank you for calling me, Mr Deputy Speaker, in this important debate. By speaking today, I am breaking a little pledge that I made to myself: I assured myself, when I was elected just over a year ago, that rather than be tempted to speak in every one of the interesting and exciting debates that we hold in this Chamber, I would limit myself to those debates concerning a particular constituency issue, or where my constituents were particularly concerned. I wanted to be the voice of the people of Burton and Uttoxeter, and in order to do that I was going to champion their views in Parliament.

By speaking in this debate, I am breaking that pledge, because not a single constituent has contacted me to discuss Lords reform. Not one e-mail, either pro or anti, not one telephone call, not one letter and not one person attending my surgeries has brought the burning issue of Lords reform to my attention. That is why I am so concerned to speak in this debate, because not only has that not happened in the past 12 months of my being an MP, but it did not happen in the previous four years, when I was busy knocking on doors and kissing babies as a parliamentary candidate. Indeed, in the 10 or 20 years that I have been an active member of the Conservative party, campaigning regularly, nobody has ever raised the issue of Lords reform with me.

[Dr Julian Lewis]

In support of what my hon. Friend is saying, let me point out that in response to a Liberal Democrat comment in The Southern Daily Echo in favour of House of Lords reform, I wrote an entire column saying why the House of Lords should remain appointed and not be elected in any way, shape or form. Not only was not a single blog post or letter of dissent directed towards me, but nothing was put in the paper, which only goes to show what a non-issue this is, in either direction, for the electorate.

Rural Broadband and Mobile Coverage

Debate between Julian Lewis and Andrew Griffiths

Thursday 19th May 2011 Commons Chamber

[Andrew Griffiths]

I absolutely agree. There are examples in my constituency, particularly in outlying villages, where one person gets a decent broadband service and their next-door neighbour gets sporadic access, if any. The inconsistency of provision is a major problem for a large number of people not just in my constituency but, I am sure, across the country.

[Dr Julian Lewis (New Forest East) (Con)]

Even in Hampshire, where the county council has invested heavily in its public services network, it is calculated that by 2015, 20% of people and businesses will still be unable to get access that is anything other than very slow, if they can get it at all. We are talking about 25,000 businesses and 112,000 people.

[Andrew Griffiths]

My hon. Friend is exactly right, and at a time when we have a global economy and the internet provides access to employment, contracts and business, it is simply unacceptable for people to be denied that facility. I know that the Minister is passionate about the subject, but we desperately need to see some movement forward.

In opening the debate, my hon. Friend the Member for Penrith and The Border talked about the trade-off between the auction price and the cost to UK plc as a trading organisation. If we asked people in my constituency about that trade-off, I think they would say, “Give us faster broadband now”. I hope that the Minister is receiving that message loud and clear.

We talk about rural broadband, but in my constituency there are villages such as Anslow and Tatenhill that are only 1 mile or 1½ miles outside the central Burton area but whose internet access is incredibly sporadic or in many cases non-existent.