Who makes the calls for Airwave?

The UK emergency service radio system now belongs to Australian-managed private equity. This may not be the best of connections

With Airwave's acquisition by Macquarie from Telefonica, our police, ambulance and fire brigade communications have taken another step from their days as a division of the Home Office towards an existence as a pure investment vehicle. Macquarie is an Australian public company, but this acquisition was by two of its private equity funds as part of its strategy to buy up European infrastructure. Following the money behind Airwave has just become a whole lot harder.

The key safeguard for Airwave and its users is the assumption that any investor will be motivated to maximise profits, and that this will ensure efficient operation. Mostly, that works well for normal operations — and normal investors. Private equity investors tend to look towards the next sale as the major revenue opportunity.

What happens when things become abnormal? Almost by definition, the emergency services are there to get involved when normal no longer applies. No amount of planning can predict all catastrophes, and it's the work of a moment to think up possible scenarios where a great deal of extra expense over some time is needed. That may not benefit the bottom line. With each change of ownership towards more distant owners with more diverse interests, effective legal responsibility becomes more diluted with promises. And with private venture capital, it can be hard to judge even the value of the paper on which such promises are written. There are no particular questions about Macquarie's corporate probity, but business is business.

We are also moving into a world where capital is used as another arm of state control. Certain investors have ulterior motives. Economists and energy experts are increasingly worried about Russian moves towards locking down gas and oil supplies to Europe through state-owned companies with a taste for acquisition, and China is becoming expert in state technology deals. Knowing exactly who is buying what and for what reason should be the minimal state of awareness.

The UK no longer thinks it can or should run enterprises purely because of their economic or political importance: a good thing. Its concerns for our wellbeing are independent of who employs us or sells us our coal. But where one company holds a monopoly over our entire civil protection structure's ability to operate, then basic social responsibility demands more, not less, involvement from regulators and politicians. In this case, the sole safety provision on control appears to be a 10-year undertaking to its core customers, all state organisations, not to sell Airwave without agreement. There is no shortage of recent history illustrating the pitfalls of relying on undertakings in deals between private finance and public concerns.

Private equity capitalism works for its investors in part because of its heightened isolation from the sort of state oversight that regulates public companies. If we cannot even name the entities who ultimately control the effectiveness of the people on whom we depend — and who control us — then something somewhere is going dangerously wrong.

Further reading: Macquarie's official presentation on the Airwave acquisition.