Nick Clegg attracted some mocking laughter from MPs – including Gordon Brown – during PMQs today for daring to question the Cadbury’s takeover. How come the government couldn’t stop RBS, which is state-owned, part-funding the Kraft takeover, he asked?
Last month, Lord Mandelson declared that the government would mount a huge opposition to the Kraft takeover of Cadbury’s, so why does the Royal Bank of Scotland, which is owned by this government, now want to lend vast amounts of our money to Kraft to fund that takeover?
Brown’s reply was scathing:
If the right hon. Gentleman is really suggesting that the government can step in and avoid any takeover that is taking place in this country overnight, and then tell a bank that it has got to deprive a particular company of money by government dictate, his liberal principles seem to have gone to the wall.
Why then was Lord Mandelson free to voice his concerns about the Kraft bid for several weeks in the run-up to the deal being signed?
The business secretary, a former avowed free marketeer, declared in December that there would be “huge opposition” to a foreign company trying to make a “fast buck” from a UK takeover.
“If you think that you can come here and make a fast buck you will find that you face huge opposition from the local population . . . and from the British government,” he said.
As the FT said the next day:
His comments marked a government intervention almost unheard of in Britain in recent years, where ministers have tended to steer clear of becoming involved in take-over bids unless there are serious competition concerns.
On Monday night, as news of the takeover was breaking, Mandelson’s spokesman told me that the issue is was “matter for the shareholders and the company”.
The business secretary’s earlier quotes had been general commentary about how shareholders should take a long-term view, he said.
But – given that Mandelson never had the power to intervene in the issue – weren’t his comments just populist bluster? My colleague Andrew Hill has rightly branded the business secretary’s approach as “non-interventionist intervention”.
In that case, it is not Clegg’s Liberal Democrats who are left looking rather foolish but the government?
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You can see the same forces at play with the issue of RBS bonuses. Lord Myners has on several occasions railed against the fact that banks are still paying out billions to star bankers this winter – just months after government bailouts of the sector. He has said so in the strongest possible terms.
But earlier this month Myners effectively admitted that the government won’t stop RBS paying out £1bn or so of bonuses, as expected. (Although as one cabinet minister reminds me, the RBS bonus pool still hasn’t been announced yet).
As reported in the FT:
“Lord Myners, the City minister, has signalled that the government will not stand in the way of state-backed banks paying large bonuses to staff as he recognised the need for them to compete in the global market.
Speaking at the Scottish affairs committee yesterday, Lord Myners said it was important that Royal Bank of Scotland was able to recruit and motivate staff. We are going to see major banks paying very high bonuses, and if we want RBS to play in a global world it has to equip itself appropriately,” he said.”
In other words, ministers are spinning around so fast it’s impossible to know which they are facing.
Jim Pickard
Kiran Stacey