Ed Miliband, the shadow business secretary: ‘Every month that goes by when ministers don’t legislate on these issues leaves us more vulnerable to losing vital economic interests’ © Ben Stansall/AFP/Getty

Labour will on Tuesday call for the UK’s company takeover regime to be strengthened to prevent strategically important entities from being broken up or moved overseas by foreign buyers.

Under the 2002 Enterprise Act ministers can intervene in a deal only on competition grounds or if it is problematic in one of four areas: national security, financial stability, media plurality or pandemic resilience. Even then, the size of the deals must be above broad turnover or market share thresholds.

Ed Miliband, the shadow business secretary, argues there should be a new, fifth category to enable ministers to “call in” or investigate deals that contravene the government’s industrial strategy.

Labour is asking for an amendment to the National Security and Investment Bill, which on Tuesday will have its second reading in the Commons. The legislation will ensure that all deals with national security ramifications in 17 sectors will have to be declared to a new unit within the Department for Business, Energy and Industrial Strategy.

The amendment calls for any significant deals that jeopardise the government’s industrial strategy to also be investigated.

Mr Miliband said that while the new investment bill brought the UK in line with other countries on national security, it left it with significantly weaker powers on corporate takeovers in other areas.

He added that without the amendment, UK companies would be left without the protection enjoyed by those in France and the US, where the government can block the acquisition of companies considered strategic.

Mr Miliband said the government should have done more to prevent the takeover of Arm Holdings, the Japanese-owned UK tech company which was bought in September by Nvidia of the US. He believes Arm is a “key national asset” which could be shifted overseas by its new owner, with negative consequences for jobs.

He also pointed out that existing powers have proved inadequate to protect vital economic interests — for example when US pharma company Pfizer attempted to buy UK drugmaker AstraZeneca — a deal that fell through over the price tag rather than any government intervention.

“It’s right that the government is bringing the UK into line with other countries to give itself powers to protect national security, but this bill is a missed opportunity to do so on wider industrial strategy,” Mr Miliband said.

“Every month that goes by when ministers don’t legislate on these issues leaves us more vulnerable to losing vital economic interests.”

Labour on Tuesday will also call on ministers to clarify whether or not they have obtained legal assurances about Arm.

Jensen Huang, the chief executive of Nvidia, has promised “legally binding” assurances on keeping jobs and preserving Arm’s headquarters in Cambridge, similar to the pledges given by Japan’s SoftBank when it bought the group in 2017. But the precise mechanism by which Nvidia would be held to its promises is unclear.

Oliver Dowden, the culture secretary, has considered investigating the Arm takeover on grounds of national security — the company has some defence clients — but he has not made a decision.

Mr Miliband said Labour had established ministers did not meet representatives of Arm Holdings, SoftBank or Nvidia in 2019 or 2020, despite reports that the Cambridge-based company was facing a potentially controversial sale. 

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