GKN: Proposed Takeover by Melrose

Rachel Maclean Excerpts

Tuesday 27th March 2018 Commons Chamber

[Greg Clark]

Everyone in this House, on both sides of the Chamber, agrees that GKN is a very important company that is crucial to vital R&D work and employs thousands of people across the country. That is why I consider it important, over and above my statutory powers—I have explained very clearly that this is without prejudice to the use of those powers—to encourage the bidder to set out much more clearly than it has done so far its intentions on many of the matters that the hon. Lady mentioned, such as research and development, being based in the UK, and a commitment to the length of tenure of this very important aerospace business. That seems to be an appropriate action at this stage in the proceedings.

Of course, this is a contrast to the sorry situation that arose—there are Members in this Chamber who will remember this—during the time in which the hon. Lady’s party was in government, when Cadbury was sold to Kraft and a plant that was expected to be kept open was closed forever. In response to that, when we came into government a regime was established that allowed legally binding undertakings to be given. I have said repeatedly in this House and to hon. Members that, given that that regime exists, I expect it to be used. I was not satisfied with the degree of commitments that had been given so far by Melrose, so I think that it was the right step, over and above my statutory powers, to set out those concerns in writing and to invite Melrose to respond to them.

The hon. Lady knows very well the statutory powers that I have. Again, they were passed when her party was in government, under the Enterprise Act 2002. The question of national security is a quasi-judicial one that will be addressed separately. It is not a subjective decision that I can take. It has to be based on a clear assessment. I make the commitment that I will take that assessment meticulously. There is a closing window for this bid, and it is right to use that window to obtain statements as to Melrose’s intentions.

The hon. Lady asked questions about the enforceability of the commitments. Melrose has said in its response that it is in discussion with the takeover panel. I regard that as the best way to lodge the commitments, so that they are enforceable with severe penalties, including contempt of court, if they are broken. The takeover panel monitors the adherence to the commitments after the event, were the bid to be successful. On security, the hon. Lady also asked about the company’s conversations with the US Administration. It is the case that the company took a decision to waive that condition.

The hon. Lady asked a question about commitment to the workforce. I have met the trade unions twice now. I specified in my letter to Melrose that I expected it to make a commitment to deal fairly with the trade unions in order to ensure that the future of the workforce is taken seriously, in lockstep with the trade unions. That is important. She also made a point about the avoidance of stamp duty. Clearly, any taxes that fall due ought to be paid.

I hope that the hon. Lady and the House—whatever their assessment of the bid—would, in recognition of the powers available, think that it is the right step to approach the bidder at this stage, before the timetable closes, in order to set out in a way that can be enforced for years to come, undertakings against which it can be held to account. That is the basis of my letter to the company.

[Rachel Maclean (Redditch) (Con)]

I thank the Secretary of State for his statement. Like many colleagues, I have a constituency interest in the matter. As he knows, because he has been kind enough to meet me, the global headquarters of GKN is in Redditch. Some 260 people, many of whom are my constituents, have been told that their jobs will go if this takeover goes ahead. I welcome the commitment that he has been given by Melrose to maintain the UK headquarters for a five-year period. What does he understand that this would mean for my constituents in Redditch?

[Greg Clark]

It is important that we recognise the benefits and valued presence of GKN in many parts of the country. It is a pivotal UK engineering firm, with a long heritage. The commitment that I obtained from Melrose was for that to continue, and that is what it has set out, but it is for shareholders to judge the decisions that the future management may make.