The completion date for the new Royal Hospital in Liverpool has again been put back – to when we do not know. The main contractors – megabuilders Carillion – which is a huge concern, is in all sorts of debt problems. Many commentators believe that, big although Carillion is, it may be only days away from a total collapse if it cannot persuade its bankers to reschedule its debts.
This is the background to many major construction problems today; and it should give pause for thought in those advocating a loan by Liverpool City Council for the construction of a new stadium for Everton Football Club. Let me remind you what is being proposed. Without reference to anyone, outside of the city’s magic circle of the self-appointed “great and good”, Mayor Anderson is proposing that the city of Liverpool should borrow about £350 million, and then lend it to the football club. Now, as an Evertonian myself, I would like to see EFC playing in a modern stadium, but not one financed by the local council tax payer.
Needless to say, we are being told that it would be a sound investment, returning an income to the city for years to come. Were we not told that that was the case when the Cunard Building was bought in the fiasco in which it was supposed to be a cruise line terminal? It is a repeat, on a grand scale, of the council purchase of the EFC training ground at Finch Farm. It is also a massive inflation of the subsidy given to Peel for Speke Airport, who coincidentally also own the site of the proposed stadium. What we should really consider is the risk involved – massive – and the ability of the council (and the mayor) to negotiate such an arrangement. After all, it is the council tax payer who will be expected to underwrite this proposal.
Other than the council, there are two major private companies involved in the proposed stadium deal – EFC and Peel. None of the principals who own and run these firms, and are involved in this deal, live in Liverpool. The two major individuals are both billionaires – Moshiri at EFC (who is a Monaco resident), and Whittaker of Peel (he also lives in a tax haven – the Isle of Man). Yet they hope that Liverpool residents will take on the risk of their project, and from which they will both benefit financially. Enter the champion of the council tax payer – Mayor Anderson. His sole business experience was as manager of the Munro public house, and he ran that into the ground. Normally, one would expect professional advice from the council’s senior officers. Currently, the council’s chief executive is under suspension, and facing criminal charges .The council’s finance director has left the council (and is reportedly now listed as a potential prosecution witness against the chief executive!). Nor has a chief planning officer been appointed to the current vacancy. The question arises as to who advises Mayor Anderson on this complex issue, other than his business friends who have a direct pecuniary interest. It is certain that Mayor Anderson does not have the skills required to navigate successfully around the wheeler-dealers of Peel and EFC.
A recent “Times” article pointed out that there was an increasing tendency for local authorities to take an “entrepreneurial” route to raise income in these times of austerity. Such an approach can be a huge mistake – I recall a Scottish council blowing all of its reserves some years ago by following a similar course. Whether it is a bridge, a golf course or a shopping centre, a capitalist venture is for capitalists, not for local authorities. They should not carry the risks associated with otherwise commercial developments. Local government’s prime responsibilities lie first and foremost with the provision of core services.
In the case of the stadium proposal, much is made of regeneration in north Liverpool. What this really means is the commercial development of the docks – a pretext for kick starting Peel’s stalled Liverpool Waters interests. The regeneration argument is the lever by which they might access funds (at a minimum cost) for a new stadium. The Treasury would find “regeneration” a more acceptable rationale than simply building a new stadium when their approval is sought by the council to borrow the necessary funds. However, the debate has gone on about regeneration in north Liverpool for over 25 years. That debate for me was characterised by two features. Firstly, the culture of the council was such that it was institutionally incapable of leading that regeneration. Secondly, its thinking paid no regard for the people of north Liverpool.
The cost of the proposed stadium has already shot up to £500 million; we can anticipate it rising further. There would need to be a special insurance premium to cover the council’s risk, and that would be costly. There would be Section 106 costs incurred. These and the extra insurance would bite into the supposed benefits accruing to the city. Most of all, we cannot foretell what lies in the years ahead, despite Mayor Anderson’s confident predictions. Did he not make equally fanciful claims for New Chinatown before it collapsed in scandal? In short, this madcap scheme has all the features of a potential disaster for local council tax payers.
When Tony Byrne confidently assured his fellow Liverpool councillors that he had the city’s finances under control thirty three years ago, he and they were blissfully unaware that – when government chose – they were to be surcharged and banned from office. Those councillors were jointly and severally liable for the prescribed loss caused to the city. Liverpool councillors should bear in mind this lesson from yesteryear when they come to vote on this outrageous subsidy to billionaires.