What is the truth about Council’s airport purchase?

jla

Liverpool Airport in which the Council does not have a stake!

For some time my Lib Dem colleagues and I have been concerned about the purchase by the Liverpool City Council of ‘shares in Liverpool Airport’ that was announced earlier this year. My colleague Cllr Andrew Makinson raised this on two occasions and amazingly got different answers about what exactly we had bought.

In March 2016 the Council was very clear about its purchase. The extract below is from Liverpool Express an official council mouthpiece which parades as an independent blog. It made clear in the extract below that the council had bought a stake in the airport. Well and good you might think. Whether you think that the purchase was a good one or not it was clear what we had bought into – we now had a 19.9% stake in the airport.

“Council invests in future success of Airport

March 15, 2016

Liverpool City Council has formally signed an investment deal with Liverpool John Lennon Airport to help it continue to grow into the future.

The airport has seen an increase in passenger numbers, airlines and destinations served over the last year and now the council has become part of two joint venture companies to invest funds on the basis that it will make a commercial return.

The council has acquired a stake in the airport in the form of shares and the investment will be used to further improve facilities for passengers and airlines and maximise the opportunity for the Airport and City Region to be a key gateway for the Northern Powerhouse”.

Unfortunately the Council’s statement in Liverpool Express was incorrect. As can be seen by the answers given to me at the September council meeting below the Airport is owned by Liverpool Airport Ltd. We have shares in another company Liverpool Airport Intermediate No 1 Ltd. We have 19.9% of the shares in this company which is an interesting figure. If we had 20% of the shares we would have a right to have a director in the company. At 19.9% we can only have a share if the majority shareholder allows us to.

Question to the Mayor of Liverpool

By Councillor Richard Kemp, CBE

 

Question

My colleague Councillor Makinson has been given two different explanations of our relationship with Peel Holdings and Liverpool Airport.

Would the Mayor confirm:

  1. The name of the company in which the Council has a 19.9% stake.
  2. Is this the Company which owns the assets of the airport?
  3. Is the remaining 80.1% owned by a UK based Peel Company or an offshore one.
  4. If the Company is a UK based one what body is its ultimate owner?
  5. Has an independent review been taken of the intra and intercompany charges between this company and the others within Peel which will establish the profitability of the company on an ongoing basis?

Answers

  1. Liverpool Airport Intermediate No. 1;
  2. The assets are owned by Liverpool Airport Ltd;
  3. The company is registered in the UK;
  4. The ultimate owner is Liverpool Airport Finance Ltd;
  5. Yes.

So who does own the other 80.1? It’s yet another company called Liverpool Airport Finance Ltd. All these three companies are UK registered for tax but I have no idea which company is the ultimate owner of Liverpool Airport Finance Ltd or indeed Liverpool Airport Ltd. Nor could I hope to find out.

The facts are that all these companies are ultimately owned by some part of the massive Peer Holdings chain. As the indefatigable former Labour MP Peter Kilfoyle points out in his report ‘Liverpool or Liverpeel’ this company has more than 480 interlinked companies with some HQs in a number of countries which operate very tax beneficial schemes for companies of the likes of Peel. They exist to maximise tax avoidance.

Tax avoidance, as distinct to tax evasion, is not illegal. There are sometimes good reasons why an international company will need to keep some of its cash offshore to be ready for investment and trading opportunities in a global market.  But tax avoidance is the most common reason for such complex and multiple operations.

This whole affair seems to raise four basic questions?

  1. Why does a company of this size need the relatively small amount of money which the council has put in?
  2. Why did the Council say it had bought a stake in the Airport when it clearly has not done so?
  3. Did council officers actually know what they had bought when they issued the Liverpool Express note and associated press release.
  4. Should a supposedly Socialist (or indeed any other type of council) invest in a company which is part of such a complex structure set up for tax avoidance and other purposes?

Lib Dems would not have made this investment. We want John Lennon Airport to succeed but do not feel that taxpayer’s money (and we all bear the risk in this) should have been put into this Company. We can think of many high quality Liverpool based and UK taxpaying firms which would have been a more appropriate place for the council to put up risk capital for long and medium term investment.

Perhaps one day we will get some answers to these questions which I will be tabling at the next Council meeting. Watch this space!

Advertisements

About richardkemp

Leader of the Liberal Democrats in Liverpool. . Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
This entry was posted in Liverpool City Council and tagged , , , , , , , . Bookmark the permalink.

2 Responses to What is the truth about Council’s airport purchase?

  1. John manning says:

    Like to know who sanctioned such a purchase? How much was invested? What is the dividend expected? What benefits are derived from the share ownership? Why was this subsidiary company selected instead of the principle holding company? What is the value of the shares now? Has the purchase made money? In whose name are the shares held?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s