Office of National Statistics reveals that more than half the shares in our companies are held by overseas investors
Britain is not up for sale. It has been sold already. Extraordinary figures from the Office of National Statistics this week reveal that, for the first time, more than half of the shares in Britain's companies are now owned by foreigners.
The transformation in the ownership of Britain's biggest companies, once controlled by the great pension and insurance companies such as Prudential and Pearl on behalf of small savers, has been swift and dramatic.
Anthony Sampson's 1962 bestseller, Anatomy of Britain, which examined political and financial power in the UK, hailed the rise of "the mighty Pru" as the largest single investor in the UK.
He also quoted a report from the "Wider Share Ownership Council" in the same year, which said that 3.5 million people, or 7% of the population, held stocks and shares – more, even, than in the US.
By the end of the 1960s, pension funds, insurance companies and individuals owned 67% of all the shares on the stock market. But today they are just minnows next to the global hedge funds that really control Britain's companies.
Pension funds in the UK now own just 4.7% of the shares quoted on the London Stock Exchange, and individuals another 10.7%. Meanwhile, the proportion of Britain's companies owned by foreign individuals and institutions has soared from 6.6% in 1969 to 53.2% today. Margaret Thatcher promised a shareholder democracy in which we all had a stake in the companies that control our lives, but it wasn't just her selling the family silver, it was being flogged on Wall Street.
The idea that the FTSE 100 is a barometer of our national wealth and prosperity, if it were ever true, is now absurd. When the stock market goes up, or when a company makes bumper profits, TV pundits like to say that means the pension funds of millions of British people will benefit. But in reality, the people benefiting are the controllers of hedge funds and other vehicles which now really own the stock market.
Does it matter that shares in the likes of BP, Tesco, Glaxo or Vodafone are mostly held by foreign owners? Arguably, the decline in pension fund ownership of UK shares has been mirrored by a rise in holdings by the British of companies abroad. Back in 1962, after all, there wasn't even a Chinese stock market to invest in. Now British funds own billions of Chinese shares.
The national accounts, though, take a hit. British equities are renowned by global investors for the relatively high dividends they pay – money that is now transferred out of the country, albeit offset by the dividends we receive from abroad.
More of a worry, though, is the connection between big business in the UK and the people who actually live and work here. Take a small high street shop, which hires local people and whose proprietor lives in the community. The wages and the profits remain in that community. Then see it pushed out of business by a supermarket, which pays the minimum wage and draws the profit up to head office to be distributed to shareholders. At least the money stays in the country, possibly benefiting your pension fund. Now it doesn't even stay in the UK, but is sucked out abroad.
Is this the voice of a sad Little Englander railing against rotten Jonny Foreigner? After all, globalisation is a virtually unstoppable force and has brought many benefits, not least the surprisingly large amount of foreign direct investment into the UK. Yet we are far from a global level playing field. China, for example, has strict foreign ownership rules, Britain virtually none.
When our companies are controlled from abroad, we lose a sense of common interest with the people who actually live here. Foreign shareholders have no interest in the schools and hospitals here that are paid for from corporation tax, and they will do their utmost to avoid tax by squirreling the money through one offshore tax haven to the next. Global capital scoffs at the idea of "national champions" – perhaps explaining why Britain now has so few.
Yes, as a country, we are "open for business", probably more so than any other country in the world. But on a cost-benefit analysis, how much has it really helped us?
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