Land Banks

If you were a visitor from any other country, it would soon be evident that local government and other public agencies hereabouts are at crisis point. Whether one looks to the increasingly desperate complaints about policing (or lack of it !), and the response that poor policing is down to cuts; or one looks at the monumental disgrace of the unfinished Royal Hospital with the collapse of Carillion, the ultimate culprit is central government and its deadly commitment to austerity.

In local government, this crisis is most evident in the car boot sale of council assets, primarily land. For example, a Freedom of Information request to Halton Council has shown the widespread sale of council-owned land, some of it at giveaway prices. Little wonder, then, that there is resistance to the suggestion that Halton Council should repay penalised motorists caught in the penalty trap that is the Mersey Gateway bridge.

All across the city-region, the same tensions are surfacing, causing political controversy in each borough. We have witnessed Knowsley’s u-turn over flogging off its parks. St Helens felt the shock of an independent’s electoral success in Rainhill, marked by a  council dispute with local residents concerning greenfield site development. Right now, Formby fumes over new housing plans before Sefton Council, whilst there is ongoing anger over the route for the relief of congestion due to docks-bound traffic.

This last issue is especially noteworthy as once again, it seems that the demands of docks owners Peel outweigh those of residents. This is not lost on those who see how Peel are also a major beneficiary of the planned football stadium at Bramley Moore. Indeed, across in the Wirral, as the council flag up scores of potential building sites, to the consternation of many residents, Peel again rears its ugly head. Its failure to match up its ten-year old bluster, promising development and meaningful investment, has now led Wirral South MP Alison McGovern, to belatedly call Peel to account. Put up or move on from its massive, if unproductive, land bank, she demands.

In Liverpool, I am told that the council – or rather the mayor – is looking again at off-loading the magnificent Croxteth Hall. There are also well-founded fears of fresh incursions across the city into its parks portfolio. One can only wonder where this enthusiasm for asset-stripping might end. The public alarm over this sale of the family silver is real and politically dangerous, although the role of government in pressurising councils is national and there for all to see. It is recognised as a product of the Tory obsession with smaller government; but is it, many ask, the role of local councils to fall in line so meekly with this right-wing ideology?

There is certainly huge frustration within local Labour parties; and Labour currently controls all councils within the Liverpool city-region. So, Momentum gets oxygen from what it sees as the complicity of the local Labour establishment in pursuing national government’s agenda. That being the case, it bodes ill for many Labour councillors looking for reselection as Labour candidates early next year.

It also sets a marker for Labour MPs who show scant awareness of the depth of anger felt within constituencies at what many members deem to be ineffective representation in parliament. The parliamentary predicament of the present administration is far worse than that faced by the doomed Major government. However, Theresa May et al remain convinced that the fear of Labour’s current leadership will keep the Tory party together, and leave Labour in the wilderness. Yet many local Labour Party members look on in bewilderment as they perceive their elected representatives to be sitting on the fence in Trappist silence, divorced from both local sentiment and local priorities.

As politicians of all persuasions prepare for their summer break, they may wish to reflect on their original decision to stand for public office. Reticence on the issues important to their electorates – whether on local or national matters – simply leaves a huge opening for others to fill. Whether such political opportunists are from the hard left or the hard right, they will not be slow to fill the burgeoning political vacuum.

Advertisements

Days of Reckoning

Whatever happens within the city of Liverpool reverberates across the whole city-region. This is undeniable. As the city of Manchester is the driver within its own city-region, so is Liverpool within ours. Therefore, it follows that events within Liverpool’s controlling Labour group have consequences for us all. It has not always been this way – that is, a dominant and numerically overwhelming Labour council – nor will it remain so. Anyone who has spent any time in politics knows that the political tide does inevitably turn – sometimes in a small way, sometimes in a spectacular fashion.

Thus, recent developments within Liverpool’s Labour group, and within the city-wide Labour Party, are of significance to us all. At first glance, it may be considered as solid a political edifice as one of the Three Graces; but appearances, as always, can be deceptive. The mayor, for example, has become increasingly as isolated as he has become regularly agitated. The recent loss of three leading members of his cabinet has left him with three formidable potential political enemies on the council’s back benches. It appears that he now recognises just how unpopular he is with both Labour Party members and the general public. Perhaps that is why he avoids both of these sets of the disenchanted whenever he can. Never the most industrious of politicians – he would be pushed to put in a two and a half day week – he has no political nous and no political strategy.

Changes in Liverpool’s constituency Labour parties are already preparing the ground for his demise. A recent notable sign of this has been the city-wide demand that he face a meeting of Labour Party members to explain his madcap scheme to borrow hundreds of millions of pounds to then lend to Everton Football Club. Next year, nominations will be called for the mayoral candidacy. That already seems to be a weighted contest against Mayor Anderson’s re- selection. Constituencies, branches, and affiliated organisations are lining up to see him off. I believe that there will be a parallel move to rid the city of the discredited post of elected city mayor. The old leader and council model of governance is viewed as far preferable to an all-powerful and unaccountable mayor.

Yet it is not just Mayor Anderson who faces political oblivion. My understanding is that rank-and-file Labour Party members, led by Momentum devotees, are seeking to cull during the re-selection process, those councillors whom they view as political deadwood. It remains to be seen how extensive this purge will be, and, more, importantly, whether or not it will help to effect change in the council’s prevailing but ailing culture.

Of course, before then, we can anticipate major court cases involving leading council personalities, both officers and elected politicians. Who knows where they will ultimately lead the city and the city-region. There is so much to spill out into the public domain, including the financial arrangements at the top of the ill-fated Liverpool Direct Limited. There is also the disgraceful – and continuing – scandal of the failed and fraudulent building projects, wherein both investors and contractors were ripped off, and council fees left uncollected. We may even see how much the council has spent on legal fees on behalf of departed chief executive Ged Fitzgerald, and the lawyers’ largesse disbursed on behalf of Mayor Anderson.

I know that this is not the most positive picture to paint of the city. A bright summer to date has lightened the gloom somewhat, as changes to the city’s skyline give an impression of progress. However, that is not the take of many on the current state of play. For example, how does one explain a recent gem whereby the council, in borrowing £200 million to repair potholes, incurs an extra £10 million of cuts (that is, additional to cuts already ordained) whilst that loan still has to be repaid with interest ? Is it any wonder that there is a popular perception that the current city council is a hotbed of ineptitude and corruption, unable or unwilling to provide the services which are its core business? Many may feel that that is an unfair characterisation, but, as my old mother used to say, the truth often hurts.

A Perfect Storm

Last week’s Panorama programme referencing Liverpool, set in train some of the notable events of recent days. Predictably, the BBC flagship was inhibited in its content by the threat of litigation if it said too much. In addition, many people are afraid, for whatever reason, to go on the record about the tragedy into which Liverpool is fast degenerating. I am told, for example, that fears for their jobs restrains many within the council from speaking out. However, enough was said on the programme, and sufficient connections made, for viewers to draw their own conclusions concerning the messy mix of the council, developers, and the local media. Hopefully, it might be the trigger for remedial action.

By action, I do not mean the absurd proposal of Mayor Anderson to seek “voluntary” declarations by developers of their good faith. The council is already duty bound to conduct due diligence on its deals with external partners. The whole point of due diligence – one of the areas in which the council is failing spectacularly – is to establish that individuals and their companies are reliable and trustworthy partners. Dishonest people lie as a standard business practice, or put up “clean” people as their proxies. When he first came to power, I pointed out directly to the mayor that he was dealing with dodgy people who were making claims about his probity. He did not like my advice, choosing instead to regard me (and others like me) as his sworn enemy.

His refusal – or inability – to recognize the scale of the corruption in the city, and his resultant failure to do anything about it, is matched only by the ”Echo’s” myopia with regard to local civic reality. This one time seeker of truth hit a new low last week, brazenly claiming for itself the credit for raising awareness of the scandal of the many failed development projects and the scams associated with them. Nothing could be further from the truth. In fact, it has consistently praised these same con artists and their fraudulent activities despite the pleas made to the paper by concerned citizens and investors. Private individuals have dug out the truth about these so-called “developers”, NOT the Echo.

In fact, what we have in Liverpool is a perfect storm for corruption. This has three major elements: an inept administration; a dysfunctional council machine; and a woefully inadequate local media. This does not mean that there are not many individuals who are committed councillors, able and willing public servants, or honest journalists. On the contrary; but they are overwhelmed by a culture which either ignores or fails to appreciate the abnormality of the city’s governance.

For many years, I have noted and commented upon Liverpool City Council’s institutional incapability of administering major projects. Unlike comparable cities like Manchester, Leeds and Sheffield, LCC has repeatedly failed to get to grips with the larger development needs of the city. A major part of this is down to a civic culture which is focused on the needs of the council as an organization, and its personnel, rather than on the needs of the population it is supposed to serve.

Nor is this just a recent phenomenon. This introspective culture has been around for over 150 years. It is for historians to explain this Liverpool “exceptionalism”; but in today’s world, it is a major drawback. I do not expect Mayor Anderson to understand the importance of this. Even if he was intellectually capable of doing so, his ego would not tolerate it. His wholly misplaced self-belief has, however, exacerbated that pre-existing problem. Having concentrated so much power in the administration in his own hands, he is simply unable to use them in a coherent and constructive way for the benefit of the city as a whole. Crooked developers see that. They and their allies within council structures take full advantage of this fundamental weakness at the heart of the city.

Thus, changing the people at the top – like the mayor, for example – whilst it would be welcome, would not of itself resolve the issue. Nor would a change in the structure – like abolishing the mayoralty, and reverting to a council leader and committee model of governance – be a panacea, although this would also be welcomed by many. Yet without a change in the civic culture – a much more difficult objective – I fear we will continue to have cycles of corrupted local government in the city.

Not Me, Guv

In a letter to the “Echo”, Mayor Anderson states unequivocally that it is not the business of the council to get involved between private companies. For once, I find myself in agreement with him on this issue, but with one caveat. That is, that what he says and what he does are entirely different -even contradictory – matters. On the basis of his letter, it is difficult to tell whether his odd take is down to stupidity, incompetence, or both. After all, this is the man who has regularly paraded himself as an entrepreneur and a facilitator, passing smoothly between the public and the private sectors.

There is no better example of his confusion than his eager involvement in the proposed new Everton Football Cub stadium. Essentially, this is a private sector deal between EFC and Peel, both private companies. That is, until the mayor plonked himself in the middle, offering to facilitate cheap finance for the project with the Liverpool council-tax payer carrying the risk. He needs to decide once and for all where his priorities lie – as mayor, having consolidated extraordinary powers within his role, this is no small matter.

If the Bramley Moore stadium is a goer, it is reasonable for LCC and the Combined Authority to see how they might help the project with ancillary works, like road access. Any support must be within the existing parameters within which those two bodies operate, and in accord with other demands and priorities. It is neither reasonable nor responsible for LCC to be placed as the fulcrum for such a private sector project if there are more pressing demands facing the local public sector.

This issue arises as the BBC’s “Panorama” programme goes to air on Wednesday. It will be raising the sorry state of failed developments within Liverpool and elsewhere; and, remember, what happens in Liverpool reverberates across the city-region as a whole. However, I suggest a note of caution. I believe the programme’s prime target is the Tory notion of a Northern Powerhouse. Looking at the scam artists who have been at work in Liverpool is only a part of their brief. That is sad for us as Liverpool seems to have suffered far worse than elsewhere at the hands of the crooks behind the massive frauds involved – perhaps as much as ninety million pounds! – and this raises more questions.

For example, why is it that the scale of developer dereliction is greater in Liverpool than elsewhere? Why are the fraudsters responsible so blatant and seemingly confident here, in their repeated efforts to fleece gullible people with Liverpool- based scams? What action has been taken by Merseyside Police and the district auditor to look into these matters? Why has the local media been so reluctant to publicise the sorry state of affairs which passes for governance relating to planning, development and regeneration within the city?

Mayor Anderson knows full well that the council has responsibilities in these areas of fraud. LCC freeholds are involved, and the council has dealt repeatedly with serial scammers who pose as legitimate developers. He knows that due diligence ought to be exercised, to ensure that the council is dealing with fit and proper persons. Instead, LCC has given a nod and a wink to companies bought off the shelf, with no track record, and run by people with records of bankruptcy and criminality.

I have said it before, perhaps more in hope than expectation. There will come a point when the appropriate authorities (flawed as they may be) will have no choice but to take action and intervene in the management of the city of Liverpool. It might be the hitherto ineffectual district auditor, the police, or even central government, but it will happen. When it does, mealy-mouthed excuses and Pontius Pilate-like prevarication, will cut no ice. Personally, I believe that the sooner that day arrives, the better.

Inside Information

No sooner had I posted my blog “Investment Blues” than fresh information was made available to me, illustrating some of the points which I had tried to make. The information to which I refer, comes from Liverpool City Council’s NDR debtors list, which shows what they are – and, as yet, are not – seeking to recover.

I have two entries before me naming member companies of the Signature Living Group. You might recall that I was showing that many of these “developers“ sit atop a hydra-like collection of companies. In this case, there are two in question. The Signature Living Arthouse Square Ltd is in default with the council to the tune of £79,629, and has been summonsed for that sum. Signature Living Hotel Ltd has an outstanding debt of £89,439, for which no summons has yet been issued.

The latter figure is particularly interesting as I understand that the debt relates to the car park at what was once known as Millennium House, and is now the flagship Shankly Hotel. It is worth recalling the sale of the then council headquarters to Signature Living. Its sale value at the time was twice reduced to a knockdown price. What few understood was that the sale price included two cash cows – a refurbished (at council expense) gymnasium, and a car park. Interestingly, the current debt is listed as a retrospective charge. This, of itself, raises questions as to what exactly the debt is for, when was it incurred, and why it has now surfaced as an “unsummonsed outstanding debt”?

Now, far be it for me to suggest the Signature Living have done anything illegal. It is common practice for some businesses to run up debts and to be late payers. Nor is it unusual – if regrettable – that member-companies of a group go into forced liquidation as has Signature Living Contractors. However, I have a hearty detestation of those who cynically collect profits from an insolvent company whilst genuine investors, suppliers, sub-contractors, and employees pay the price. What concerns me even more is the interaction such scoundrels have with public bodies like Liverpool City Council.

When Millennium House was originally sold, I raised questions with the district auditor (Grant Thornton’s), the then chief constable, and the police and crime commissioner. I was struck by the sublime indifference of each to the concerns expressed; so much so that I questioned my own judgement in querying these matters at all. However, subsequent experience and events have convinced me that I was right to do so.

Groups like North Point Global, PHD 1, Pinnacle, Bilt, and others still active, have all shown that senior council figures are either unable to deal with them, indifferent to them, or conniving  at their activities, at the expense of the tax payer and legitimate business. Much of this is in turn due to the lack of transparency and accountability in the council and its dealings. After all, the figures I have quoted refer to just one of the council’s partners (I nearly added “in crime” but that may be considered libellous!!). We know that the total amount of recognised debt to the council is huge without knowing the true cost of the depredations of these companies. I must note, however, that the ordinary citizen would be persecuted for a parking fine or for a missed council tax payment.

We all know that it is in the nature of our society that there will be rogues – and rogue outfits – who will constantly try it on, in both the public and the private sectors. Indeed, there are those who will abuse the voluntary sector – just look at the unresolved scandal of the council-owned football car parks. However, most councils try to ensure that the public purse is protected as if it is their own personal funds involved. Liverpool’s administration gives the opposite impression, treating public funds as the private spends of a drunken sailor.

Investment Blues

Developers really are shameless, especially in Liverpool.  For example, as Signature Living seeks planning approval to turn Kingsway House in Hatton garden into yet more flats, Her Majesty’s Custom and Excise petitions to have Signature Living Contractors wound up, on the basis of their failure to meet their tax commitments. Needless to say, the Signature Living Group without doubt will continue to pay handsome dividends to its directors.

It is no accident that such companies are generally part of a “group” or partnership, or party to a Special Purpose Vehicle (SPV). They have many faces, and more lives than the proverbial black cat. Legally, each company may be seen as an independent concern, although they and others in their group share the same directors, the same accountants, the same lawyers, the same offices. To the layman, they are the same entity. What their owners and/or directors know –and rely on – is that they are not the same entity in the eyes of the law. Far too often, one arm of these deceptive octopuses is chopped off, only for the rest to carry on, and their operators to cruise on without a care in the world. Those who suffer are gullible investors and unwary sub-contractors who are left to carry the financial can for such unscrupulous con artists.

Yet it is not just the private sector which is without shame. This week has seen in Liverpool the annual jamboree known as the International Business Festival. To listen to the mayor, his faithful sidekick, Gary Millar, and his senior salesman, Max Steinberg, Liverpool is an investors’ paradise. Try telling that to those conned over the many failed projects in the city, including New Chinatown. The biggest investor in Liverpool appears to be the council tax payer, via the funds poured into Liverpool Airport, the Finch Farm training ground, the Cunard Building, and riverside terminal facilities. If the mayor has his way, we could even end up as the major investor in EFC’s proposed new stadium.

Investment from elsewhere? Well, this past week has seen the annual report into foreign investment into the various towns and cities of the UK which is published by EY (Ernst Young), one of the world’s big five “bean counters”. Each year, they list the success stories in the competition to attract overseas investment; for Liverpool, the 2017 report does not make the best of reading, despite the steady stream of guff spewed out of the mayor’s office and fed to the public by the Echo.

Liverpool came seventeenth in the national league table for direct foreign investment in 2017, behind such places as Coventry, Barnsley, Reading and Warrington. The north west region as a whole increased foreign investment by 17%, led by the ever successful Manchester which was, in turn, second only to London. Liverpool, however, fell back by 10% on its 2016 figure. Warrington, just fifteen miles away, increased its foreign investment in the same period by a massive 400%!

As I recall, the mayor and his mouthpieces have “bigged up” Liverpool’s economic success for years now, although the data to justify the claims is hard to come by. What, for example, has resulted from the mayor’s trip to Birmingham, Alabama? How about his freebee to Surabaya in Indonesia? What of the many trips by him and Cllr Millar to China?  The only result of the latter seems to have been a host of angry and disenchanted investors who have been ripped off by so-called developers.

 It is one thing to be positive about the city and what it has to offer, presenting it to the world with the objective of attracting investment and thus creating jobs and prosperity across the whole city-region. It is quite another to fly in the face of reality, promoting a false prospectus. Currently, in cahoots with the Echo, every plan, dream or aspiration is trumpeted as a done deal. Inflated figures and unrealised objectives inevitably lead to disillusionment and cynicism in the local community, in business, and in potential investors.

It would serve the city better if the mayor’s office and his acolytes, together with his allies in the local media, were to leave bloated and unrealistic claims to the snake oil salesmen who seem to have proliferated in the city in recent years. When the mayor spoke to the IBF about the threat of robotics and artificial intelligence (AI) to jobs, perhaps he was thinking of his own future and that of his colleagues. After all, even a crude form of AI in the Cunard Building is better than none at all.

A city-wide clear out is required, and ought to be initiated within the city before outside agencies feel compelled to do it for us. A healthy start to a fundamental change of approach would be the release, in full, of the CIPFA report commissioned by the former Finance Director, into the mayor’s proposals for the city council’s involvement in the financing of a Bramley Moore stadium.

Russian Oligarchs

Recent revelations about the owner of Chelsea FC – Roman Abramovich – set me thinking about what could happen with regard to Everton FC’s plans for a new stadium. Abramovich is close to Russian president Vladimir Putin, and has been having great difficulty in renewing his visa for the United Kingdom. Connections have been made between the sources of his huge wealth and the desirability of allowing him further residence within the United Kingdom in these tense times in Anglo-Russian relations.

As a result, he has pre-empted any attempt to bar him entry by applying for Israeli citizenship (he is a Jew, and can easily do so under the Israeli “right to return” law). This would not only give him ten years’ tax-free status in Israel for his massive overseas income; it would also enable him to visit the UK without a visa. More immediately relevant to local concerns, he has halted his planned investment in a £1 billion new stadium for Chelsea FC.  I will explain the possible connection.

Another oligarch resident in London, and involved in football club ownership, is Alisher Usmanov. Also a friend of Putin, this multi-billionaire is the second biggest share holder in Arsenal FC. However, his attempts to buy out that club have been thwarted by its American owner, Stan Kroenke. Thus, Usmanov is said to have been looking elsewhere to fulfil his football ambitions. This is where matters become interesting for the people of our city-region, because his business partner is Farhad Moshiri, principal shareholder in Everton FC. Indeed, their joint company USM, based in the tax-dodging British Virgin Islands, is the sponsor of Everton’s training ground at Finch Farm (you may recall that the freehold for this facility was bought at tax payers’ expense by Mayor Anderson in another flight of football fancy).

Last year, a company called Appleby which has a base (amongst other off shore favourites) in the Isle of Man – another haven for tax dodgers – had its confidential files compromised, and they became known as the “Paradise Papers”. This company exists to help the rich and the super-rich to avoid paying tax, and to keep their affairs hidden under a cloak of secrecy. Unfortunately for them, the leak of the papers blew their cover.

Many big names were shown to use these morally reprehensible services, including those of Moshiri and Usmanov, via their involvement in Blue Heaven Holdings, registered in the Isle of Man. The strong suggestion was that Moshiri’s buy-in to EFC was facilitated by Usmanov’s money. Needless to say, both Moshiri and Usmanov denied this. If it was the case, Usmanov would have been in breach of rules prohibiting anyone having a major shareholding in more than one football club. However, there remains intense speculation that Usmanov might yet emerge as the owner of EFC, once he has disposed of his Arsenal shareholding.

You might ask what all of this has to do with the city-region. Well, it would have major implications for the city-region, for EFC, and for its proposed new stadium. For example, what would happen if there was to be a continued crackdown on Putin’s cronies domiciled in the UK?  What if it was applied to Usmanov as it appears to have been to Abramovich? It may seem far-fetched at the moment as he is not an official stakeholder in EFC. Yet, if Abramovich is the yardstick for the good faith of Russian oligarchs in football, it would not augur well for EFC and the city.

I realise that some fans do not give a hoot as to who might own EFC as long as they have a huge bank balance and a willingness to dip into it. However, Liverpool council tax payers would have great concerns if they were being used to provide guarantees and carry risk via loans to such people. After all, the track record of Russian oligarchs is characterised by supreme indifference to those mug enough to allow them to exploit their gullibility. Remember too, that council tax payers across the whole city-region are also expected to indirectly subsidise infrastructure ancillary to the proposed stadium by way of Combined Authority grants. Self-evidently, such money spent on this mammoth project cannot be spent on the needs of the surrounding five boroughs.

I simply ask whether or not you would be prepared to put your trust in a Russian oligarch, particularly given the city council’s abysmal record in invigilating major projects? I certainly would not. A new stadium?  By all means, but keep the council out of its financing.