Labour hits at UK sell-off

Almost two-thirds of all inward investment into the UK in 1995 involved existing British businesses being taken over by foreign companies, the Labour Party claimed yesterday.

Of the pounds 14bn invested in the UK last year, about pounds 8.5bn, or some 60 per cent, came from takeovers. These included the sale of Seeboard, the regional electricity company, for pounds 1.6bn to US utility Central & South West and the acquisition of South Western Electricity by Southern Company of Georgia for pounds 1.1bn.

Stephen Byers, Labour's shadow employment minister, said: "The Tories constantly claim the UK attracts inward investment because we have no minimum wage and have opted out of the Social Chapter.

"These figures show such claims are misleading and are simply deceiving the British people ... the reality is that the majority of inward investment comes from foreign investors making rich pickings of what is left of British industry.

"Our nation's assets are being sold abroad, with profits being siphoned off overseas. The Government applauds this as inward investment - what a misuse of the English language."

Labour's survey, taken from official UK Balance of Payments statistics and a parliamentary answer by Greg Knight, the Trade Minister, shows that since 1985, the proportion of inward investment resulting from takeovers has risen steadily from 15 per cent to 60.1 per cent last year.

The figures come days after the US power generator, CalEnergy, won its bitterly contested pounds 782m hostile takeover bid for Northern Electric. Other recent foreign takeovers of British companies include the agreed pounds 1.3bn bid for East Midlands Electricity by Dominion Resources, the Virginian power supplier, Trafalgar House's acquisition by Kvaerner, the Scandinavian conglomerate, for more than pounds 900m and the recommended deal for London Electricity by New Orleans-based Entergy for pounds 1.3bn.

Analysts believe the inevitable further restructuring of UK utilities will lead to thousands of job cuts, although this would have been inevitable irrespective of who owned the companies concerned.

Mr Byers said: "The Government is constantly claiming that inward investment creates jobs in Britain. That is certainly not the case when utilities are taken over by foreign firms."