The Last Chance Saloon

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.

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Happy New Year!

The year 2017 flickered out on a sour note for Liverpool City Council. The courts had found against them in an action brought over the disastrous New Chinatown debacle. All hoped for a happier 2018, only to be disappointed at the outset by the ACC car park fire. Only time will tell if questions on outdated building regulations – specifically, a requirement for sprinkler systems in such public facilities – will be positively answered.

Yet already there appears to be the potential for possible problems for the council. As the owners of the car park, there will be a huge cost involved in its demolition and replacement. Will insurance cover this? In addition, the lawyers seem to be circling – who knows what they will come up with. Such are the perils which face large organisations in times like these. We can only wait and watch.

However, as the ACC is owned by Liverpool City Council, I checked over the company. It gave me an interesting insight into the way in which major public projects are run, and by whom. I began by looking at who sat on the board of directors. These total eight in number.

The chairman of the board is Mr Ian Ayre, a familiar name to football fans across the city-region.  Mr Ayre resigned as chief executive of Liverpool FC on the 24th of February last. Five weeks later, he took up the role of director – and chairman – of ACC on April 1st. Curiously, he gave Companies House his place of residence as “Germany”.  Alongside him on the board are Mr Ged Fitzgerald, suspended chief executive of Liverpool City Council, and the former chief executive of Lancashire County Council, Mr Phil Halsall. Both of these gentlemen are currently on police bail, facing charges of conspiracy and intimidation.

Of course, there is no show without Punch – Mayor Anderson has a seat on the board, along with Councillor Wendy Simon. The composition of the board is completed by the ACC’s chief executive, Mr Robert Prattey, and two “professional” directors, Mr Gerald Andrews and Mr Gregg Stott. Bear in mind that all companies of this nature require a board to run it. It is standard practice to split representation on it between the public and the private sectors. It is, after all, a substantial commercial enterprise.

In its annual report for 2017 filed with Companies House, ACC listed an annual turnover of £25.8 million, although a loss for the year of £582,000 was recorded. Like many financial reports, that of the ACC bamboozled an accounting ignoramus like myself. I suspect that there are many who, like me, come over all faint when considering such documentation – in this case, 42 pages long. So I look to the professional auditors for their approval or otherwise. In this case, they are Grant Thornton, who are also the district auditors for LCC amongst other councils and public bodies on Merseyside.

I did manage to pick out two very interesting entries – interesting to those who value “transparency and accountability”. The first of these was listed as “directors’ emoluments”- that is, wages to you and me. For 2017, they added up to a glorious total of £521,847. Before you gag, note that £264,224 of this went to “the highest paid director”. Who this is, we are not told; but, whoever it was, also picked up £23,858 in pension contributions.

Once the highest paid director is taken out of the equation, we are still left with an average “emolument” for each of the remaining directors, of about £36,800.It is hard to believe that this is actually the case, but that is what the published figures say. Indeed, further on in the report, it is noted that £1,662,777 was paid to “key management personnel”. The ACC promotional video lists eighteen people as senior managers in the chief executive’s team. Are these the recipients of this magnificent largesse? If so, it would average out at £92,390 per head.

There are not many on Merseyside making such money, particularly with an employer like the ACC reporting a loss. Can anyone out there enlighten the rest of us on this phenomenon?

Changing Times

I noticed that Sefton Council listened to residents, and reversed their previous decision to merge children and family centres. Good on them – heeding the views of electors. Similarly, St Helens Council disciplined one of their number after residents complained about his behaviour. This is another example (at least, on this occasion) of a listening council.

There is nothing wrong in actually listening to what residents are saying; on the contrary, if the council is wrong on an issue, it is in that council’s own interests to right that wrong, admitting its culpability. Even Liverpool’s mayor and the ubiquitous Lawrence Kenwright , appear to have accepted that their public spat over who was doing most for the homeless, needed to be resolved. Mind you, to the jaundiced observer, these two publicity junkies will have ulterior motives for their newly-found co-operation.

Meanwhile, government ministers were congratulating themselves on a “landmark airline deal” with China emphasising Manchester’s share in it. Chinese tourist numbers shot up this year, rising 47% in the first six months. Their spend of £231 million in the same period, showed an increase of 54%. Manchester Airport has increased its export trade to China by 265%! It is now running at £200 million per month. Inward investment from China has doubled, whilst the Chinese tourist spend in the region as a whole is now running at £140 million.

However, Liverpool City-Region is yet to show any comparable figures in capitalising on its traditional ties with China. Remember, Liverpool has the oldest Chinese community in Europe. The city itself is twinned with Chinese mega-city, Shanghai. However, we have baggage. We are tarnished by the debacle of New Chinatown, and the hosts of Chinese investors who feel defrauded and betrayed by Liverpool-based scams.

There is also the memory of the proposed International Trade Centre in the Wirral. I would not be surprised if you had forgotten about this woeful tale. This project was said to be a joint effort involving Peel, Wirral Council, and Stella Shiu, a supposed entrepreneur whose office was, according to the Financial Times, a shack in the Chinese countryside. It was a complete washout – no-one has held up their hands over this farce. It remains another warning to genuine overseas investors to be wary of putting money into the Liverpool City-Region.

Nevertheless, there are some chinks of light. Although there is, once again, bitter factional in-fighting within Liverpool Council’s Labour group, there are some more enlightened members of it who recognise their leadership problem. They are determined to rectify this when the mayoralty candidate selection comes around. They know that if they do not sort it out, Momentum may well do it for them.

There is, of course, a wider perspective than individual authorities, and that is the city-region, run by the Combined Authority. Councillors on several authorities, as well as rank-and-file Labour Party members, have tumbled to the fact that a disproportionate ratio of investment projects, has favoured Liverpool at the expense of the other authorities. Their leaders on the Combined Authority are increasingly irked by the attempts of Mayor Anderson to lever ever more of their supposedly joint resources, to backfill the gaps in Liverpool Council’s ragged accounts. Worse still, these gaps are often due to the mayor’s promotion of “events”, in his pursuit of a failing “bread and circuses” approach to city leadership. Time to go, Joe!

Being Heard

Because of concerns expressed within the borough, Knowsley Labour council decided on a review of its stated intention to sell off 10% of its parkland for new house building. I believe this to be practical local democracy. Even in these tough times of austerity where difficult decisions have to be made, it is entirely right to be seen as wholly transparent and fair in all council activities. There was a similar revisiting of a council decision in St Helens when there was a proposal to build on green belt land in Rainhill.

In recent days, there has been widespread publicity about an open meeting in Hoylake, organised by local Labour MP, Margaret Greenwood. The hot issue there is another local council proposal. Apparently, there is an intention by Wirral Council to develop a golfing resort which has aroused local opposition. Again, we see an example of local people calling local politicians to account as part of the accepted democratic process.

Next week, Liverpool Council, in the person of the mayor, will face a backlash concerning its fitness to manage St George’s Plateau in an appropriate manner. This stems from the failed Hope and Glory concert fiasco. Yet again, it is the right of citizens to express their views on any administration, regardless of its political persuasion. Administrations come and go; the people remain.

What is different about Liverpool’s predicament is that its fitness is being questioned by the members of the Wavertree Constituency Labour Party. This is very telling, especially given reports from the meeting where the decision to challenge the council took place. Even more revealing was the administration’s reaction to the Wavertree members’ decision – a reaction which took the form of an email to members of Wavertree CLP from Mayor Anderson.

Whoever has the privilege of running a council, must be prepared to face “the slings and arrows” of elected office as readily as they usually accept praise and weasel words for their efforts. Whatever their brand of politics, all citizens have a right to their views and to be heard – including Labour Party members in Labour redoubts like here in the Liverpool city-region.

On the occasion of the particular meeting of Wavertree CLP, the local councillors were vociferous in their opposition to the decision of their own party rank-and-file. Unfortunately for them, they were way out of touch with local Labour opinion. This of itself should sound a warning to local councillors who appear oblivious to the growing dissatisfaction of a wider public with the way in which the city is being mismanaged. The Hope and Glory debacle is only one example of this.

Needless to say, the mayor has waded in, in his usual “bull at a gate” style.  As he said in his missive to members “this is simply embarrassing”.  It is, Mr Mayor, it is.  He is an embarrassment to so many Labour Party members as he smears them, suggesting that those who are tired of the administration’s mismanagement are “entrists of long standing”.  He implies that these same people are against the Labour Party when all they are doing is making their views understood by an administration which denies them either transparency or accountability.

“I still have to call for unity”, wrote the man who insisted that he would not work with metromayor, Steve Rotheram; who also ranted that he would not have anything to do with Walton MP, Dan Carden; who took his ball home when he was not elected chair of the Combined Authority. By unity, he means doing as his whims dictate. Does he not realise that the Labour Party rank-and-file have memories, too?

It was simply insulting for him to tarnish those Labour members who oppose him as troublemakers – those who, he claims, “blindly attack this council (which is) to attack our values as a Labour Party”. Thus, in his arrogance, the mayor – for he effectively is the council – claims that he embodies Labour values! For me, nothing could be further from the truth.  For so many Labour members, he is the antithesis of Labour values, as his style and methods repeatedly illustrate.

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.

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.