21/07/2016 07:22 BST | Updated 22/07/2017 06:12 BST

The Sale of ARM Raises Serious Questions About the Government's Strategy for British Industry

It's the nature of the world we live in today that we know more about the multi-million sale of a centre forward to Chelsea than we do about the multi-billion sale of one of the UK's finest tech companies.

This week ARM, a global success story, was sold. Based in Cambridge, the high tech capital of the UK, the company sold 15billion microchips last year, generating a revenue of $1.5billion. As a world-leading designer of microchips, ARM is at the vanguard of the technology underpinning the "Internet of Things" - widely expected to be the next technological paradigm.

The company is a mine of intellectual property with huge growth potential. If our country is to be successful in the decades to come, it is precisely this sector whose explosive growth and dynamic entrepreneurialism we need to be nurturing.

And we should not forget that ARM's roots lie in British public funding. The company received support for the universities and research institutes that made Cambridge-based ARM and its predecessors possible. And ARM was a spin-off from Acorn Computer, whose BBC-backed computer helped create the modern PC market.

But this week's sale of ARM to an overseas buyer has highlighted the need for stronger policy levers to give strategic direction to British industry.

The Prime Minister began her tenure with a commitment to reinvigorate British manufacturing by intervening in strategically important sectors. This was heartily welcomed by the Labour Party, who have long been advocating such an approach. Yet already we see her Chancellor rolling over in the face of this buy-out, claiming that selling the British company ARM would turn it into a "global success story".

Of course, there is comfort in the fact that Softbank, the company who have bought ARM, have said they are prepared to make a legally-binding commitment to double the number of jobs at ARM. But it is cold comfort.

There is, after all, no precedent for such a commitment being enforceable in British law. It is hard not to recall Kraft reneging on its promise that there would be no job losses following its takeover of Cadburys in 2010. We cannot be complacent in assuming that these commitments will endure. When Hewlett Packard took over British software firm Autonomy in 2011, at a cost of £7.4billion, it led to 20% redundancies, including that of its founder, and the loss of its intellectual property. Softbank has attracted some criticisms for its own acquisitive approach.

Labour will closely monitor the Takeover Panel to ensure that Soft Bank's commitment on jobs are legally watertight and long-lasting. But this is not enough.

Even if this particular deal does avoid the job losses and asset stripping that have become typical of recent takeovers, ARM's future will now be determined by the strategic decisions of a Japanese conglomerate which has no reason to put the interests of British industry first. This raises serious questions about the Government's promise to adopt an active industrial strategy. Such promises are meaningless if the Government is not prepared to intervene to maintain its capacity to shape the direction of Britain's industry.

The fact is that, under current legislation, the Government of the day has very little power to ensure that corporate takeovers accord with Britain's industrial strategy.

For too many communities, and for too many companies, workforces and even whole industrial sectors, globalisation feels like a runaway train which travels too fast and to an unknown destination.

In the aftermath of the Brexit vote, it is time that Parliament gave government new powers to intervene in strategically-significant takeovers when it is in the public interest. The present legislation allows intervention only in matters relating to national security or media concentration.

This definition of the public interest desperately needs updating to fit with the emerging consensus that Britain needs an industrial strategy that serves the interest of stakeholders rather than just shareholders. I will spend the summer consulting with a range of industry representatives about how to incorporate such a commitment into Labour Party policy.

Of course, rebuilding our economy and creating the environment for long term prosperity after the destructive austerity years will take more than a new statutory framework for mergers and acquisitions. The Government are failing to provide the clear-sighted strategic support that successful innovators need from government, and which countries like Germany, Finland or the US do so well. The history of ARM shows that Britain did this once, and Labour believes we can again. This week, the Shadow Chancellor pledged to set up a National Investment Bank to mobilise £250billion of investment where our current financial system is failing.

Without such decisive interventions, Britain will not only fail to create world-leading companies in strategic sectors in the future, it may even find its current place in such sectors eroded as our best companies are cherry picked by overseas investors with an eye on a quick buck rather than a long term plan. The Government needs to start doing more than pay lip-service to the importance of Britain's industry, and set out a clear plan to nurture and promote Britain's place in strategically important sectors.

Jon Trickett is the shadow business secretary and Labour MP for Hemsworth