Private Profiteers

In recent years of government-induced austerity, there has been a loud and constant complaint of the effects of this misguided approach on local government. Of course, there have been cuts in government grant to local authorities year on year, which in turn has led to cuts in local government services. This reflects in turn the ever growing dependency of local government services on central government grant, rather than on income raised and controlled by councils themselves.

This is not a recent phenomenon – it has been a process stretching back many years. Just ask the Liverpool councillors who vainly challenged the Thatcher government on this back in the ‘80s. The result was their disqualification from office and their surcharge. It is a timely reminder that, when push comes to shove, central government controls the levers of power.

Thus, Halton Council was in a no-win situation in their search for a desperately-needed second Mersey bridge. If a deal was to go ahead, it was to be on the government’s terms – and so it transpired. I thought of this when I read the predictable – and justified – complaints of the travelling public concerning the tolls that have been introduced. Sadly, angry people are too often targeting the council when the situation is down to national government.

However, I do wonder whether the skills are available at elected council level for negotiating such deals. For example, Sefton Council has been criticised over the purchase of the Strand shopping centre. The focus was principally on the amount of “fees” associated with the purchase. We are bedevilled at all levels of society by “professional advisors” and “consultants”. I saw these leeching on national government when I was a minister. They had too cosy a relationship with senior civil servants, who often ended up working for them upon retirement from the civil service.

They attach themselves to anywhere and anything where money changes hands. There are the major international outfits – like Goldman Sachs, Price Waterhouse Coopers, Ernst and Young – as well as a myriad of lesser entities, already to shake down any enterprise including local government. Look at the books of any council and you will be amazed at how much is paid in one way or another to these sharks. I am mindful of the old definition of a consultant as someone who borrows your watch to tell you the time, and then charges you for the privilege!

Equally worrying is the mistaken belief that too many council leaders have that they are capable of judging business proposals put to them on an almost daily basis. Generally, they are wholly unqualified for the complexities involved – legal, economic and political. Thus, they tend to rely on the advice of their senior officers, or call in the dreaded consultants. Debacles like Liverpool Direct shows you where that can lead. Whilst officers are there to tender advice, it ought to be on the basis of carefully considered and constructed policies. The function of the officers is to implement the policies of the council, NOT to push their own schemes and business ventures.

Too often, business figures wine and dine political leaders, seducing them into support for their interests, not necessarily the same as the public interest. Flattery can go a long way with some. It has to be remembered that these business figures have a bottom line of profit, for themselves first and foremost. They often present a superficially attractive proposition, but it is down to ALL elected members to ensure that whatever is proposed, is in accord with official council policy, and commensurate with the interests of local council tax payers.

Recent revelations in the Paradise Papers, for example, illustrate links between Russian oligarch Usmanov, ostensible major shareholder in EFC Moshiri, and the owner of Peel, Whittaker. I speak of the proposed stadium at Bramley Moore dock. The concerns published about these “businessmen” must surely give pause for thought despite the understandable wish of EFC supporters to have a new stadium. This deal not only brings together people involved in tax avoidance, but is said to be contingent on some kind of guarantee from Liverpool City Council. I do not see how supporting billionaire tax dodgers in a purely private development is the business of any council, especially one in the financial situation of Liverpool. If ever a public-private deal merits intensive scrutiny, this one does.

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The Cuckoo in the Nest

I have been asked why, if I am blogging about the Liverpool City-Region, I have so much to say about Liverpool city, and relatively little about the other five boroughs. I would like to say that all is comparatively well in those boroughs, whilst Liverpool is a constant source of political concern. This would be partly true; but there are other reasons for a Liverpool focus which I would have thought were self- evident.

Whether others like it or not, the city is the region’s principal driver. As with Manchester, the city’s size and its name together give an extra dimension to its regional importance. It is not for nothing that in the two dominant regions of the north-west, the major print media take the names of their host cities – the Liverpool Echo and the Manchester Evening News. They reflect the prominence of their respective driver-boroughs.

Here in Liverpool, we have the additional quirk of an elected mayor. This alone merits extra attention, not only because of its exceptionalism, but also because of the disputed way in which the office was imposed without a referendum, and the continuously controversial character of the office holder. Mayor Anderson generates huge publicity for his personality cult, generally with an adverse public reaction.

For example, he has made yet another announcement on the proposed cruise liner terminal. This will apparently cost £50 million, but there is no mention of the source of this funding in a cash-strapped city. A cynical city asks whether it will join the long list of broken promises as the mayor continues to align himself with so-called “developers” rather than with the real needs of the city. Time will tell.

 After all, there is no other local civic leader who so unashamedly chases headlines.  Nor is there another council so sidelined from effective governance by its leader as is Liverpool City Council. Thus, whilst other boroughs tend to get on  with the business of providing core services in these times of austerity, Liverpool councillors are peripheral to the quixotic decisions of Mayor Anderson as he blunders on, lost in a mistaken belief in his own abilities.

Mind you, if the local media was in any way effective in monitoring our local councils, rather than just pouring out meaningless pap, we might learn of issues which deserve a public profile within the city-region. The fact is that the local media is solely in the business of infotainment.  As a result, a blanket of silence covers the activities of the other councils. All that surfaces is the blindingly inept way in which Liverpool is run, and the corruption that feeds off poor governance.

Also, the honest truth is that, nationally, no one really cares what happens here, unless there is a political threat of some sort emanating from here, or a political advantage to be gained. The success story in the north- west for national leaders is down the M62 in Manchester. This has been the case before, and it means that any change up here will be largely down to the city-region itself.

It is vital to understand just how interdependent the six boroughs are. The whole concept of a city-region with a metromayor is that we sink or swim together – economically, politically and administratively. One sick borough can infect the rest. That is why the metromayor must have the powers appropriate to dealing with any borough or ego which threatens the well-being of the city-region as a whole. In turn, the metromayor must be prepared to exercise those powers when the situation demands it.

Fantasy Football

There is no city-region more immersed in football culture than is Liverpool. Even neutrals, or those averse to the game, recognise the importance of the national sport to the city’s profile and its major contribution to the local economy. More people visit the city for football matches than will ever come in cruise ships. Thus, proposals for a new stadium for Everton Football Club are important to us all.

However, a very unusual proposition has been put forward that Liverpool City Council should effectively guarantee the financing of that new stadium.  Many are perplexed by this. Liverpool sought no civic guarantees of which I am aware for their recent major build. EFC is, after all, a private company, with a billionaire major shareholder, Mr Farhad Moshiri.  Recent revelations in the Paradise Papers make this proposal even more questionable.  Let me explain.

Not so long ago, millions of documents, known as the Panama Papers, were leaked, revealing how the rich and powerful avoided paying taxes, using clever financial instruments and tax havens. Now an Isle of Man company called the Appleby Trust has suffered a similar leak of millions more hitherto secret documents, leading to fresh revelations. These have been called the Paradise Papers. Those named refer to Mr Moshiri, his Russian associate named Alisher Usmanov, and Everton Football Club.

Russian oligarch Usmanov shared a 30% stake in Arsenal Football Club with Moshiri until a deal was done transferring all the Arsenal shares to Alisher Usmanov. The Paradise Papers show that in fact, Usmanov, not Moshiri, may be the real owner of the 49.9% stake held in EFC. This would not be too surprising – Usmanov already has bought the naming rights for the training ground of EFC via his company, USM Holdings. However, it would be a major breach of football’s governing rules for Usmanov to have shares in two clubs.

It gets worse. The whole deal for buying into EFC was overseen by another Isle of Man–based company, Bridgewaters. This company administered Moshiri’s purchase in the name of a company called Blue Heaven Holdings. This firm is based in Bridgewaters’ office in the Isle of Man. It has two directors – one an employee of Bridgewaters; the other an employee of USM Holdings. I should also point out that Bridgewaters was responsible for anti-money laundering checks on Russian money in the Isle of Man. It was also responsible for due diligence on the EFC share deal, yet the leaked papers say that Usmanov had taken ownership of Bridgewaters in 2011. There are massive conflicts of interest in these matters which demand examination and explanation.

There is yet another troubling question. A major beneficiary of the stadium project would be another company ultimately based in the Isle of Man tax haven – that is, the owner of the Bramley Moore site, the Peel Group. It listed as its agents in the Isle of Man, none other than the Appleby Trust. Thus, the three principal actors in the proposed stadium deal – Moshiri, Usmanov and Peel –were intimately linked through the Appleby Trust. The odd one out is Liverpool City Council. Sefton Borough Council may have appeared in the Paradise Papers, but there has been no mention of Liverpool City Council – at least, not yet.

Even the authorities in the secretive Bermuda tax haven expressed worries about the Appleby Trust and money laundering. Why, then, is Liverpool – or rather, its mayor – so eager to provide cover for a project which features so many questionable entities? The council should exercise the greatest caution, and step back from these highly dubious people and their schemes.