May Reneges on Key Leadership Pledge

18/07/2016 16:35 | Updated 18 July 2016

The Japanese firm Softbank is to take over British chip designer ARM with no objection from the government, despite Theresa May's recent questioning of the wisdom of takeovers of British companies by overseas entities.

Before she became prime minister, May suggested that a government under her premiership would be readier to intervene in foreign takeovers that were not in the national interest. However, the ARM takeover tests not only the detail of her campaign promises, but also the spirit in which she entered Downing Street. In the speech following her appointment, May swore that her government would govern in the interests not of the wealthy, but of the poor and insecure, saying, "When we take the big calls, we'll think not of the powerful, but you."

May has argued that this deal does satisfy the national interest test because Softbank intends to double the size of the workforce, currently 3000-strong, at the Cambridge site of ARM over the next five years. The government has also claimed that the takeover bid proves the strength of the British economy after Brexit.

However, Robert Peston has derided this as "spin", pointing out that takeovers of this kind are detrimental to the current account deficit, which has already reached historic proportions and is, in his words, "one very important reason why the UK is economically fragile post Brexit". Peston accused May and Chancellor Philip Hammond of having been "captured by Treasury orthodoxy", in apparent contravention of their promise to listen to the people over the elite. He added that if foreign investors were keen to invest in the British economy, it was not because of its strength but a result of the devaluation of the pound.

At the time of writing, this story had not been analysed in detail anywhere else in the press. The BBC mentioned in passing the conflict between the deal and May's recent comments, but generally swallowed the government line about the national interest. Media critics of the current Labour leadership under Jeremy Corbyn bemoaning the loss of a parliamentary opposition might note that for a government to be held to account, there also needs to be active press scrutiny.