Britain has sold off more than half of its companies to foreigners, but does anyone really care?
When asked to think of a quintessentially British company you might instantly consider Boots the chemist, Jaguar Landrover, Mini, Selfridges, Harrods, The Savoy, Fortnum & Mason, Cadburys, the Dorchester, Debenhams, ASDA, MG Rover, P&O Ports, British Airports Authority, Corus (formally British Steel), British Energy, ICI and lottery operator Camelot. However, each of these businesses, and far too many more to mention, are now in foreign hands.
The long standing argument has been that foreign investment is a good for Britain. Indeed past labour, and conservative, governments have both been keen to erect the for sale signs, rubbing their hands at the windfall of much needed fund this bought into the economy. And indeed it did just that, in the short term.
What has not been considered has been that the vast majority of these companies, once sold, instantly move offshore and exploit every loophole imaginable allowing them to pay negligible, if any, tax. Soon after the takeover of Boots by an Italian conglomerate its headquarters where quickly moved from Nottingham, where it had been based for 161 years, to Switzerland. Before the takeover Boots paid £89 million in British tax each year. That figure has now shrunk to just £9 million. If we now consider that this same scenario might be happening in over half of our registered businesses is it any wonder that Britain is in economical turmoil?
But it does not end there, as of 2012, foreign corporations also controlled 39 per cent of all UK patents. This is far more than the percentage of foreign-owned patents in the U.S. (11.8%), Japan (3.7%) or even the European Union as a whole (13.7%). Meaning that Britain innovation is also being sold abroad with little regard for the future.
Perhaps this is the price we pay for operating in an increasingly globalised world? Well no – Britain is unique in having such a lax attitude to selling off its family silver.
Other countries adopt an ‘economic patriotism’, not seen in the UK, which involves putting obstacles in the path of foreign bids. Take France, for example, which continues to argue that it’s in the national interest to prevent key businesses falling into foreign hands. Like when the U.S. drinks giant PepsiCo made a bid for the French food firm Danone in 2005. In the end, the then President Jacques Chirac declared that the French yoghurt-maker was considered a ‘strategic’ company, so couldn’t be sold to a foreign firm. And then again when, in 2006, the takeover of energy firm Endesa by German owned E.ON was on the cards the Spanish used a similar tactic to block the deal going through. However, just one year later Scottish Power was easily snapped up by the Spanish investors.
More globally; India, Japan and the USA all have processes that allow them to block foreign ownership yet we in Britain are happy to sign over our crown jewels to the highest bidder.
So who or what is to blame? Well it seems to be a clear mix of government complacency and shareholder greed are at the heart of what has fuelled the continued downfall of British industry. But the worst thing is that there are no signs of a resolution anywhere on the horizon.
The concern is now that skills have already been lost, iconic brands have been asset stripped and rendered worthless and irreplaceable infrastructure as been sold off. We have had an overarching rule since we started our blog over 3 years ago – to remain optimistic in our reporting. In this case we are going to have to break that rule because we have to admit that, on the face of it, Britain might already be too late to save.
Our thanks to Alex Brummer (author of Britain For Sale: British Companies In Foreign Hands) for inspiring this post.
I couldn’t agree with you more, James. In my view, seeing as any political system that allows lobbying is officially classed as a ‘Corporate Oligarchy’, which legislates in the interests of the corporations that infect the halls of Westminster, then it comes down to the collective power of choice of the individuals to spend their money with corporations that choose to contribute to the society that they profit from.
In the age of consumerism, changing our shopping habits can change the world.
When you look into things further, like how our taxes pay for a subsidy called the TTIP agreement, which subsidises imports and exports (search for Helena Norberg-Hodge – The Economics of Happiness), systematically destroying localism and creating dependency on globalisation and centralisation, I see this is done for one purpose, to keep the money rolling in for them, without any consideration to the consequences or future ramifications.
Couple this with the projections of job losses over the next twenty years, predicted by the likes of Bill Gates, due to automation and robotics, you can forget worrying about nostalgic heritage, because the proverbial poop will most definitely hit the fan.
Any politician who is not aware of this is either ignorant or a bare faced liar.
But we will always have hope, and my hope lies in the brotherhood of man (and sisterhood of womankind, of course).
Warm Regards,
John.
Perhaps the most worrying aspect of this does not seem to be common knowledge. For the first time in several hundred years this countries overseas investments are now outweighed by the assests owned in this country by foreign interests. This means that the invisible earnings from these overseas investments can no longer compensate for our on going trade deficit.
Somehow a way needs to be found to inform the public of the peril we are in if we allow this to continue. I do not think it is to late, new home grown companies can replace those we have lost, but unless we stop the flow and start turning these takeover bids and sell offs to out advantage by making mutual ownership the first port of call, they will simply not be able to grow fast enough to compensate.
We have somehow to stop this madness now!
I blame the EU controlling us and our MPs supporting it. We must vote out in the referendum to get back control of our country and have British laws that support British people and British businesses.
Oh dear, this is one subject that can keep me awake at night. The replies here so far, particularly by John Palaguta-lles and Mike make the case so very well. I do not have an education that would enable me to express my feelings and concerns so well, having left school at 15, but in my gut the rage is no different.
When the landed gentry needed us, and from their ‘National Trust’ great estates called us, from the workhouses we came running. We “the working class’, are not needed now, although just for the moment, those .credit cards’ allow so many of us to remain sleeping.
Very disheartening to hear all this and makes us feel very deflated when its almost out of our control to change attitudes. BUT but but ,we must not give up.Progress does take time, and you both have made significant progress to make us want again to have ‘ made in Britain’ a growing area for business.Look back from where you started, with fantastic results so far… Love reading your blog and please don’t ever stop campaigning , this issue is far too important to give up on.
so sad for the children of the future !
To me this tragedy is a call to arms. Too long have we held onto our heritage brands – which often don’t deserve our emotional stock; also acknowledging that new firms are also being sold off – know is the time for British people, young and old, to step up and build something new, to emerge with fresh ideas, quality products, and leading edge manufacturing facilities which produce items that Britons and citizens of the world desire.
Protectionism, especially as used by France, ultimately does not work. Of the examples mentioned above, ICI gave us the success of Astra Zeneca, JLR has done far better under TATA compared to the small mindedness of British Leyland and the rest. I think Britain has a poor record in management, for which ot could do well to learn from elsewhere. In the long run being open-minded and vigorously engaged in the world is what leads to progress and prosperity. Britain was the first industrialised trading nation and we should embrace this spirit rather than shrink away from it.
Hi Oliver. I don’t think anybody is suggesting that to be fair. The real problem comes when perfectly good well run and profitable firms are sold and we loose control of the destiny of the companies. Furthermore the new owners can choose to run the finances however they like, so even if, as in your examples the British manufacturing arm prospers, all that is produced here may not benefit us in the entirety it should, we simply do not know and cannot control it. We should have the self confidence to run companies for the long term not to sell to the highest bidders. I agree that being open minded lead to progress and prosperity which is why we had so many overseas investments that bought the invisible earnings I mentioned in my earlier post. Trade is a two way street and you have to be very carefull to make it work in your favour, not by the protectionism you rightly highlight but by a cultural belief in ourselves. A well run British company should not be looking to sell to a bigger overseas rival to expand (overseas or domestically) it should be doing it as a British run company the way we used to. There is a good news part to this story and that is the growing strength we have in SME’s, but those companies must keep the mentality that as they grow they expand themselves.
And as if by magic the Norton story appears, exactly what I am trying to say above really, thanks for posting, that has made my day.
good post. being open minded and loosing one by one is strange. the whole point is to better the situation. you cant loose all your classic establishments.