Ed Miliband speaks to supporters at Redbridge on May 1, 2014. Photograph: Getty Images.
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Miliband challenges Cameron's hands-off approach on foreign takeovers

Labour leader denounces PM for acting as a "cheerleader" for the Pfizer-AstraZeneca deal and calls for a new public interest test.

In no major western country is it easier for a foreign firm to take over a domestic company than in the UK. If Britain is to move towards the "responsible capitalism" championed by Ed Miliband, this will need to change.

Aware of this, Miliband used his appearance on The Andrew Marr Show to challenge David Cameron's response to Pfizer's bid for AstraZeneca (the largest proposed foreign takeover in British history). He denounced Cameron for acting as a "cheerleader" for the deal and announced that Labour would bring in a new "public interest test" for such takeovers. Revealing that he had written to the PM on the subject today, he said: "No other country in the world would be waving this bid through, nodding it through on the basis of pretty weak assurance from Pfizer, who have a pretty dubious record when it comes to their record in this country and other takeovers.

"I'm writing to the Prime Minister today setting out how we adapt the public interest test in the future and how he, rather than being that cheerleader for this takeover with paper-thin assurances, should be actually championing British jobs and a British success story that is AstraZeneca."

In his letter to Cameron, Miliband rightly notes Pfizer's worrying track record, including its 2012 decision to close down its R&D facility in Sandwich (leading to the loss of 1,500 jobs) and its weak commitment to investment.

The Tories will probably seek to dismiss Miliband's proposals as crude state interventionism but it is harder for them to do so when figures such as Michael Heseltine, an economic adviser to the government (I recently interviewed him in his Treasury office) and Lord Sainsbury are also questioning whether the deal is in the national interest. Heseltine called earlier this week for the introduction of "reserve powers" to protect British companies when assets such as the country's science base are at risk. He said: "Foreign takeovers can often be hugely helpful and I have no doctrinal preoccupations - I've done enough takeovers of small businesses myself to know how valuable they can be. But the important point is that every other advanced economy has mechanisms of some sort on a failsafe basis to scrutinise foreign takeovers and we're the only country that doesn't."

With Pfizer responsbile for 6,700 high-quality jobs across eight sites in the UK, the stakes are high. By challenging Cameron to abandon his laissez-faire approach, Miliband has smartly intervened in a way that chimes with the public's increasing hostility to no-holds barred capitalism.

Here's the full text of Miliband's letter to Cameron.

Dear Prime Minister

I’m writing regarding the ongoing bid for AstraZeneca by Pfizer. This bid raises serious questions about a key sector of our economy. I know we share a commitment to the UK’s retaining it’s leading global role in pharmaceuticals and wanted to put in writing my concerns with this bid. I also wanted to propose areas on which we could work together to strengthen the oversight of takeovers involving UK firms and to suggest a stronger role by the UK government in this particular bid.

We all recognise that takeovers are an essential part of a functioning economy and can lead to greater efficiencies and better services for consumers. However we also all recognise that too often in recent years major takeovers have failed to deliver the promised benefits.

In this particular bid the stakes could not be much higher. Pfizer’s bid for AstraZeneca affects one of the UK’s most significant investors in R&D, a major contributor to our science base, and 6,700 high quality jobs in the UK. Despite those high stakes, the impression created in recent days has been of a Government cheerleading for this deal on the basis of a short letter with inadequate assurances.

I am strongly of the view that, when it comes to such a strategically important part of UK PLC, we need a more substantive assessment of whether this takeover is in the national economic interest before the UK government allows itself to be seen to be supporting it.

There are reasons to think that such an assessment would be of value. Firstly the company’s track record in the UK raises concerns, including their decision in 2012 to close down the world-renowned R&D facility in Sandwich, leading to the loss of 1,500 jobs. Secondly AstraZeneca currently spends a significantly higher proportion of its turnover on R&D than Pfizer – a crucial concern given the importance of pharmaceutical investment in R&D to the UK science base. Lastly there are concerns about Pfizer’s wider track record regarding the impact on research of previous takeovers.

For the future this case strengthens the view I have expressed in the past that we need to look again at the UK’s takeover regime. In particular there should be a stronger public interest test which encompasses cases such as these where strategic elements of our science base, with impacts well beyond the firm concerned, are involved. Should you wish to make changes to that effect the Labour Party will support you to make them happen.

However, more immediately we need to act swiftly in the case of this specific bid. I have seen the assurances you have received from Pfizer, but this merger would have an impact for decades to come, so it is not enough to have a few specific promises that only last for the next few years.

I note that you have opened up dialogue with the company about this bid and, while noting that this is a decision for the shareholders concerned, responded positively to the outcome of those discussions. I would hope that such a position, allowing the UK Government to be seen as cheerleading for the bid, would only have been taken on the basis of a thorough assessment of whether this bid is in Britain’s national economic interest. If you already have such an assessment I would be grateful for it to be made public to inform those taking this decision. If you do not have detailed advice of that sort I would call on you to put in place an immediate independent assessment to ensure that the implications for our national economic interest are fully discussed. Such an assessment would provide elements of the transparency and information that a wider public interest test would involve. ‎It would also be in Pfizer’s interest if their commitment to the UK’s science base is as strong as they insist. And it is only after such an assessment has been made that a British Prime Minister should decide whether to support such a bid – not by staging quick backroom conversations with one party to a deal.

Ed Miliband

George Eaton is political editor of the New Statesman.

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Who is the EU's chief Brexit negotiator Michel Barnier?

The former French foreign minister has shown signs that he will play hardball in negotiations.

The European Commission’s chief Brexit negotiator today set an October 2018 deadline for the terms of Britain’s divorce from the European Union to be agreed. Michel Barnier gave his first press conference since being appointed to head up what will be tough talks between the EU and UK.

Speaking in Brussels, he warned that UK-EU relations had entered “uncharted waters”. He used the conference to effectively shorten the time period for negotiations under Article 50 of the Lisbon Treaty, the legal process to take Britain out of the EU. The article sets out a two year period for a country to leave the bloc.

But Barnier, 65, warned that the period of actual negotiations would be shorter than two years and there would be less than 18 months to agree Brexit.  If the terms were set in October 2018, there would be five months for the European Parliament, European Council and UK Parliament to approve the deal before a March 2019 Brexit.

But who is the urbane Frenchman who was handpicked by Commission President Jean-Claude Juncker to steer the talks?

A centre-right career politician, Barnier is a member of the pan-EU European People’s Party, like Juncker and German Chancellor Angela Merkel.

A committed European and architect of closer eurozone banking integration, Barnier rose to prominence after being elected aged just 27 to the French National Assembly.  He is notorious in Brussels for his repeated references to the 1992 Winter Olympics he organised in Albertville with triple Olympic ski champion Jean-Claude Killy.

He first joined the French cabinet in 1993 as minister of the environment. In 1995, Jacques Chirac made him Secretary of State for European Affairs, teeing up a long and close relationship with Brussels.

Barnier has twice served as France’s European Commissioner, under the administrations of Romano Prodi and José Manuel BarrosoMost recently he was serving as an unpaid special advisor on European Defence Policy to Juncker until the former prime minister of Luxembourg made him Brexit boss.“I wanted an experienced politician for this difficult job,” Juncker said at the time of Barnier, who has supported moves towards an EU army.

 

Barnier and the Brits

Barnier’s appointment was controversial. Under Barroso, he was Internal Market commissioner. Responsible for financial services legislation at the height of the crisis, he clashed with the City of London.

During this period he was memorably described as a man who, in a hall of mirrors, would stop and check his reflection in every one.

Although his battles with London’s bankers were often exaggerated, the choice of Barnier was described as an “act of war” by some British journalists and was greeted with undisguised glee by Brussels europhiles.

Barnier moved to calm those fears today. At the press conference, he said, “I was 20 years old, a very long time ago, when I voted for the first time and it was in the French referendum on the accession of the UK to the EU.

“That time I campaigned for a yes vote. And I still think today that I made right choice.”

But Barnier, seen by some as aloof and arrogant, also showed a mischievous side.  It was reported during Theresa May’s first visit to Brussels as prime minister that he was demanding that all the Brexit talks be conducted in French.

While Barnier does speak English, he is far more comfortable talking in his native French. But the story, since denied, was seen as a snub to the notoriously monolingual Brits.

The long lens photo of a British Brexit strategy note that warned the EU team was “very French” may also have been on his mind as he took the podium in Brussels today.

Barnier asked, “In French or in English?” to laughter from the press.

He switched between English and French in his opening remarks but only answered questions in French, using translation to ensure he understood the questions.

Since his appointment Barnier has posted a series of tweets which could be seen as poking fun at Brexit. On a tour of Croatia to discuss the negotiations, he posed outside Zagreb’s Museum of Broken Relationships asking, “Guess where we are today?”

 

 

He also tweeted a picture of himself drinking prosecco after Boris Johnson sparked ridicule by telling an Italian economics minister his country would have to offer the UK tariff-free trade to sell the drink in Britain.

But Barnier can also be tough. He forced through laws to regulate every financial sector, 40 pieces of legislation in four years, when he was internal market commissioner, in the face of sustained opposition from industry and some governments.

He warned today, "Being a member of the EU comes with rights and benefits. Third countries [the UK] can never have the same rights and benefits since they are not subject to same obligations.”

On the possibility of Britain curbing free movement of EU citizens and keeping access to the single market, he was unequivocal.

“The single market and four freedoms are indivisible. Cherry-picking is not an option,” he said.

He stressed that his priority in the Brexit negotiations would be the interests of the remaining 27 member states of the European Union, not Britain.

“Unity is the strength of the EU and President Juncker and I are determined to preserve the unity and interest of the EU-27 in the Brexit negotiations.”

In a thinly veiled swipe at the British, again greeted with laughter in the press room, he told reporters, “It is much better to show solidarity than stand alone. I repeat, it is much better to show solidarity than stand alone”.

Referring to the iconic British poster that urged Brits to "Keep Calm and Carry On” during World War Two, he today told reporters, “We are ready. Keep calm and negotiate.”

But Barnier’s calm in the face of the unprecedented challenge to the EU posed by Brexit masks a cold determination to defend the European project at any cost.

James Crisp is the news editor at EurActiv, an online EU news service.