Kwasi Kwarteng: Shield against predators is too wide – UK spending too much time investigating foreign takeovers
- Kwarteng’s stance may alarm critics of overseas takeovers
- He said National Security and Investment Act had been a success overall
- Department for Business: Government only intervenes in small minority of deals
The UK is spending too much time investigating foreign takeovers that pose no threat to national security, according to former chancellor Kwasi Kwarteng.
As business secretary earlier this year, Kwarteng said he decided whether to block or sign off overseas deals every day. He told the Daily Mail that around half of the transactions he looked at ‘could have been waved through’ without scrutiny.
But his stance may alarm critics of overseas takeovers, who are likely to oppose any attempts to narrow the scope of the new rules.
Deal: As business secretary Kwasi Kwarteng allowed the takeover of firms such as Meggitt, which makes rocket parts
Kwarteng led the Department for Business from January 2021 until September, when he was promoted to chancellor.
He oversaw a change in the regime that evaluates foreign investment and buyouts.
At the start of this year, ministers were handed extra powers to intervene in takeovers after a series of swoops on major companies including defence groups Cobham and Meggitt set off alarm bells in the City and Westminster about the potential loss of UK jobs, technology and intellectual property.
Under the National Security and Investment (NSI) Act, investments and deals in 17 sensitive industries – including energy, artificial intelligence and advanced robotics – are automatically screened by the Department for Business to check if they threaten national security.
But Kwarteng said the remit is currently too wide. ‘Given there are literally hundreds of these things we review every month and the vast majority don’t have any real problem, there is a case for saying we should be more restrictive,’ he said.
‘Half of the things I looked at could have been waved through – the net you could argue is a bit too broad.’ He said the rules are ‘very loosely defined’ and could see a firm with no apparent links to the NSI Act have a connection that would bring it under its remit.
Critics have pointed out that, since the Act came in, a number of controversial investments and deals have also been waved through – including the sale of software giant Aveva to Schneider. But Kwarteng said the NSI Act – which brings the UK in line with countries such as Germany and the US – had been a success overall.
He said deals with smaller companies that would previously have slipped through the net are no longer doing so, as the thresholds have been significantly lowered.
This includes a tech firm called Pulsic, which Kwarteng ruled in August could not be taken over by a Chinese company.
‘There is no way under the old Enterprise Act we could have intervened in some of these deals,’ he said.
A Department for Business spokesman said the Government only intervenes in a ‘small minority’ of deals, with most cleared within 30 days.