How ministers could pull plug on buyout to protect national security
CABINET tensions over GKN broke into the open last night as Defence Secretary Gavin Williamson indicated its sale could threaten national security.
Business Secretary Greg Clark yesterday confirmed he was not opposed to the takeover by Melrose in principle – but acknowledged that the Government had yet to assess fully the national security implications.
Mr Williamson has previously raised concerns, telling MPs last month: ‘What I want and the department wants is a reassurance about the future of the military side of the business.’
Last night a Whitehall source said Mr Williamson still had ‘significant reservations’.
The source said: ‘It might not be a done deal just yet.’
Mr Williamson’s concerns are said to focus on fears that Melrose could sell off vital elements of GKN’s business in the future.
GKN makes components for critical equipment including F35 jets and Typhoon aircraft. The Ministry of Defence is said to be concerned this part of the business could be sold abroad if Melrose breaks up the company.
Under competition laws, it is only on national security grounds that the GKN deal could be halted. Mr Clark told MPs this week he would have four months to assess the situation if Melrose succeeded in gaining control.
He said he had only ‘narrow grounds’ to intervene, adding: ‘I will make an assessment following receipt of advice from the MoD and other agencies.’
Government sources last night said the MoD would now be asked to set out any national security concerns. If serious issues are raised then ministers will try to negotiate further ‘legally binding’ guarantees with Melrose.
If they cannot get these guarantees then Mr Clark could refer the deal to the Competition and Markets Authority, which could lay down stringent conditions – or even block it altogether.
Sources said the MoD’s formal response was likely to take ‘weeks rather than days’.
This week Melrose made a ‘legally binding’ commitment not to sell off GKN’s aerospace division for five years. But critics said the pledge was ‘not worth the paper it was written on’.