Chinese puzzle for Mogg
AFTER rushing into action in their first 48 hours in office, the Liz Truss economic and business teams have been granted some thinking time by the nation’s days of mourning.
among the conundrums is what Jacob Rees-Mogg will do at the Department for Business, Energy and Industrial strategy (BEIs). He is off to a flying start with an energy strategy. But the complicated stuff around support for big power companies is unresolved.
as for the package for smaller enterprises, all we know is that the Prime Minister wants to keep local pubs safe. The delay in deciding the funding available is probably fine with pubs busy in the coming days as toasts to Queen Elizabeth II’s life are made.
Rees-Mogg comes to the job with commercial experience from his fund management firm somerset Capital Management.
It would be best if the BEIs boss was a clean skin without any financial arrangements which could be questioned. High up the list for the new incumbent on Victoria street ought to be overseas takeovers.
In Rees-Mogg’s previous job of making Brexit work one imagines he was all for them. Inward investment post-Brexit lifts confidence, helps the capital account of the balance of payments and speaks to Tory values of red in tooth and claw capitalism.
But there are dangers. The degrading of Britain’s aerospace and defence sectors has seen companies ranging from submarine sonar maker Ultra Electronics to aerospace firm Meggitt fall into private equity and american ownership respectively.
Rees-Mogg’s predecessor Kwasi Kwarteng talked a good game about scrutinising such deals. But in the end, the BEIs has been a participant in getting deals done. It has negotiated outcomes on R&D, headquarters, employment and security, which history shows are hard to enforce.
REEs- MOGG, despite somerset’s involvement in Russian investment, opposes UK technology falling into Beijing’s hands. a serial chairman of FTsE companies sold to foreigners told me recently that Britain has to beware China’s malign goals. Beijing’s objective in putting investment cash into western economies is to export the know-how, R&D and patents to China.
Before leaving for the Treasury, Kwarteng referred the proposed takeover of semi-conductor pioneer Newport wafer Fab by Nexperia – a Dutch subsidiary of Chinese company wingtech – to a probe under the UK National Investment & security act.
There will be other big decisions. The proposed merger of satellite pioneer Inmarsat and its american rival Viasat is all but done. Not much has been said as to the wisdom of letting a company – with valuable communications and tracking tech – from falling into a ‘friendly’ foreign hands.
Once it is out of British orbit, decisions about future investment are more likely to be taken in the ‘national interest’ of an overseas power.
an early future test could be the £8.5bn bid by French electrical giant schneider for its minority interest in UK software group aveva, founded in Cambridge in 1967.
The deal would see the FTsE lose yet another tech stock. Just as worrying, schneider has a joint venture with China, raising questions as to the safety of proprietary software.
If Rees-Mogg wants to ensure that UK tech is managed in the public interest he should ensure this deal is scrutinised. Britain cannot afford to see its best and brightest tech sold for a mess of pottage.