‘Super-rich, me? Absolutely not’: Tony Blair says just lucky, despite lucrative business, property empire
Former UK Prime Minister Tony Blair has insisted he is not “super-rich,” despite reports that he can earn more than nine times the average British annual salary in a single day.
Remember the PFI Scandals, (Blair & Brown)
Ah !!! The Private Finance Initiative, (PFI). Lest we forget.
PFI is one of the greatest financial cock-ups in modern times. Recklessly committed to by a Labour government, all smitten by the spell of Thatcher John Major and their acolytes Blair and Brown.
The sell-off, (at knock down prices) of public owned building assets, to private enterprise was a disgrace then and is even more so now.
Selection of one deal from a huge number of sell-offs was difficult. But the contract quoted is atypical of arrangements put in place by the labour Government led by Blair and Brown:
Mapeley Steps, (a foreign owned conglomerate) purchased in excess of 1000 properties within the UK, from the Inland Revenue,
The Inland Revenue then signed off a PFI contract with the company committing government to handing over vast amounts of taxpayers money in rent money, (leasing back the formally government owned assets almost without limit of time.
Adding insult to injury Mapeley Steps, (having bought the properties at a knock down price) immediately transferred ownership, title and all other aspects of the contract to a Caribbean tax haven so that all revenue gathered from the UK government would be free of any form of UK tax liability.
Embarrassing indeed, but there’s more. The property sell off, included the entire HM Revenue and Tax Office estates UK wide, who, at the time of the sale were officially committed to the closure of tax haven loopholes. £Billions of taxpayers hard earned cash is being siphoned off to offshore trusts.!!!!!
Scotland needs to be rid of the spectre of these extortionately financially draining PFI schemes and this might need to be achieved through a contract buy-out. But long term financial and other benefits would be derived. An SNP government would be committed to finding ways of easing the financial legacy left to Scotland by an incompetent labour government supported by Tory offshore Trusts. Vote SNP/SNP in May 2016.
£billions of UK taxpayers hard earned taxes are being siphoned off to offshore companies under PFI contracts
Nowhere is government-corporate collusion in tax avoidance more worrying than in the UK Private Finance Initiative (PFI) industry.
HSBC and its ‘offshore’ Guernsey based offshoot HICL (HSBC Infrastructure Company Ltd) have been major players in the PFI infrastructure game from the outset, alongside other high street banks – most notably Barclays.
HICL – set up by HSBC and now ‘spun out’ – has an ownership stake in somewhere between 27 and 43 UK PFI infrastructure projects – mostly NHS hospitals (including Barnet, West Middlesex and Stoke Mandeville) and numerous schools.
The number of asset transfers is approximately between 27 and 43 PFI projects because the HM Treasury database which attempts to record the “secondary market” for the trading (also referred to as flipping) of “equity” ownership of PFI deals is: “hopelessly out of date.”
Many of publicly treasured infrastructure assets, paid for by UK taxpayers, are now in the hands of the super-rich and the bankers. They are held in PFI “special purpose vehicle” shell companies registered ‘offshore’ for maximum ‘tax efficiency’ in the tax havens of Guernsey and Luxembourg.
8 June 2011: H.S.B.C. Owns many UK state schools and NHS hospitals
H.S.B.C. and other investment funds are taking control of UK schools, hospitals, social housing and other vital pieces of public infrastructure via the Private Finance Initiative (PFI), a report by the European Strategy Services Unit (ESSU) has shown.
These funds are avoiding paying millions in taxes because they are registered in tax havens such as Guernsey and Jersey. At least 91 pieces of public infrastructure are now owned this way in the UK.
HSBC has a controlling stake in 27 PFI projects, which are predominantly hospitals and schools. It is also the outright owner of three NHS Hospitals, which are located in Barnet, Central Middlesex and West Middlesex.
The banking corporation controls the projects through an offshore subsidiary, HSBC Infrastructure Company Limited, which is registered in Guernsey. This means HSBC and its shareholders pay no tax on the dividends they receive.
This model of ownership is becoming increasingly common. Established in 2006, HSBC Infrastructure was the first offshore fund of its kind but there at least four others now registered.
Why does it matter?
Put simply, who would you rather was in charge of your hospital, a local health authority or a bank?
The NHS, for all its flaws, is organised around some noble principles such as universal access and the highest possible quality of treatment, but private ownership could seriously threaten these. HSBC is concerned only with its profitability.
The ownership of hospitals by banks and offshore investment funds sharply reduces accountability and transparency so monitoring the performance of PFI hospitals becomes trickier. The veil of ‘commercial confidentiality’ prevents government from understanding and thereby solving any problems that arise.
HSBC can’t make any changes to signed PFI contracts it purchases but if this trend continues we could end up in a situation where the majority of our public infrastructure is owned by an oligopoly of offshore investment funds and banks. This would give them disproportionate market power and could give them real influence on the provision of public services in the UK.
Most of all, HSBC’s ownership of public infrastructure is another indictment on the PFI system itself, which has consistently proven itself to be inflexible, bad value for money and difficult to regulate.
PFI contracts are legally protected from cuts, which ensures their sustained profitability. When faced with shortfalls in revenue, PFI contracts force hospitals to re-shape around contractual needs, rather than clinical ones. This means that front-line services like beds, doctors and nurses are cut before non-essential items like maintenance and service work.
NHS building assets sold off to the private sector
Usually several companies agree to form a single bidding entity (known as a Special Purpose Vehicle (SPV).) the SPV contracts to provide, construction, maintenance and services of the assets over their lifetime, (usually up to 30 years).
Companies in the SPV are free to sell their equity stake in the contract in a secondary market. Frequently, after the construction phase of a project is complete, the risk associated with the project plummets and the project can be re-financed, making it attractive to investors.
Construction companies have been exploiting the foregoing to earn themselves a small fortune. Reports are that Construction giant Carillion plc sold its stake in 24 contracts for £278 million, making an average profit of 40%. When considered against Carillion’s average operating profit between 2003-2009 of 1.2% this figure is astonishing.
Other construction companies are enjoying similar levels of profit in the secondary market and reports estimate they have made in excess of £350 million in profit between them.
The contracts represent a sound investment and are being snapped by banks and offshore investment funds in a market that has swollen over the past decade.
Although PFI is paid for ultimately by the public purse, there is no regulator in the secondary market or mechanism by which the public share any of the massive profits being reaped.
Mortgaging the NHS
Last August the BBC revealed the extent of repayments the NHS is committed to after more than a decade of PFI hospital building projects.
The NHS will pay £65.1bn to private contractors for 103 schemes originally valued at £11.3bn. Some local NHS trusts’ PFI repayments now take up more than 10% of their annual turnover with many contracts lasting around 30 years.
The figures show that the NHS’s annual payments are rising. Currently, the health service pays £1.25bn per year. But, this figure rises annually until 2030 when it will reach £2.3bn. payments are due to continue until 2048.
With fees rising every year, all that taxpayer cash being handed to private companies is money not being spent on patient care or hospital staff. And, as budgets are cut and NHS trusts are forced to look for “savings”, these payments will make closures and cuts more likely.
Education – Glasgow
In Glasgow, the 3ED consortium, (involving the Miller Group construction company, the Halifax bank and Hewlett Packard computers) signed off on a contract with Glasgow City Council to construct and retain operational control of the Council’s school buildings for 30 years.
The city council rents the buildings from 3ED for an annual adjustable fee initially at £40.5 million.
600 ancillary staff were removed from Council employment and transferred to a private employer.
At the end of the 30 year contract the assets will return to city council control.
3ED will recoup, at least £1.2 billion – three or four times the initial outlay of £220-400 million.