Royal Mail’s foreign takeover comes under scrutiny of MPs

The overseas takeover of Royal Mail is set to come under scrutiny from MPs on the newly formed Commons business and trade select committee.

Jonathan Reynolds, the business secretary, is expected to be questioned by the committee, chaired by Liam Byrne, the former Labour minister, when he appears before them next week.

The planned £3.6 billion acquisition of International Distribution Services, Royal Mail’s parent company, by EP Group, the conglomerate controlled by Daniel Kretinsky, a Czech tycoon, was struck in May, but the timing of the general election in the summer and the re-election of MPs to the select committee in the new parliament has meant there has been limited opportunities for Westminster to scrutinise the deal.

The questioning of Reynolds on Royal Mail, part of a wide-ranging hearing, comes amid a review of the takeover under the National Security and Investment Act and discussions between the Department for Business and Trade and EP over a series of undertakings and commitments.

IDS, whose board has recommended the 370p per share offer to shareholders, is scheduled to issue its interim results on Thursday and is likely to be pressed for updates on the deal.

Byrne, 54, who was re-elected chairman of the committee in September, said in an interview with The Times that the committee would consider whether to look into the takeover in depth.

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Labour in its election manifesto said it would ensure the takeover would be “robustly scrutinised and that appropriate guarantees are forthcoming that protect the interests of the workforce, customers and the United Kingdom, including the need to maintain a comprehensive universal service obligation”.

Byrne, who was a Treasury minister in Gordon Brown’s government, said the committee was planning an inquiry on the contentious employment rights reforms and would also look into the government’s industrial strategy, the future of the “Great British high street” and Labour’s trade strategy following the election of Donald Trump and the threat of a tariff war.

The collapse of ISG, the biggest construction company failure since Carillion, will also be scrutinised as part of plans by the committee to look at the draft Audit Reform and Corporate Governance Bill.

“ISG is just one in a long line of corporate failures where there has been a complete breakdown in the audit process,” Byrne said, adding: “British capitalism has been bedevilled by failing audits off and on for a long, long time.”

With the government increasing borrowing to invest in new energy and infrastructure projects in an attempt to kickstart economic growth, Byrne said he is in talks with Gareth Davies, the comptroller and auditor general at the National Audit Office, about increasing oversight of state investments.

“We’re going to have to devise new scrutiny methods to make sure that ministers aren’t wasting taxpayers’ money,” he said. “If the state is about to supply more investment to the British economy, the big risk that we run is that that money is wasted. So we’ve got to get the design of the fiscal instruments right.”

Parliament is “currently blind to the wisdom” of investment decisions “made under the cloak of commercial confidentiality”, he added.

“We’re going to have to fix that. The decisions may be immaculate, but I can’t assure you of that and I just don’t think that is good for a democracy.”