Last week, with a whimper but not a bang, the Council published its long-awaited report on fractional investment. It was approximately 2 years after the Task Group first met and 14 months after it last met. Not exactly a rapid response to a scandal which has shamed our City globally.
Firstly, as a member of the Task Group I welcome the majority of the proposals within it, indeed I suggested some of them. In particular I welcome two things:
- The increased clarity that is recommended about the relationship between developers and the Council. This is not just a matter for individual councillors but for the Council as a whole. Some of the fractional developers have been either main sponsors or strong partners to the Council in lavish MIPIM promotional activities in Cannes and London.
Frankly, this is a recommendation that should be unnecessary. Councillors and Councils should be well aware of the Nolan Principles which were established after the Parliamentary scandals of this Century’s first decade. The old saying, “you judge a person by their friends” is amplified when councillors from controlling groups and their officers are in positions where by doing things or not doing things they take decisions which could influence vast amounts of money.
- All council purchases and disposals of assets must be made much more transparent. We need to put in place an overarching body that can oversee the strategic principles of the Council in public and the individual and commercially confidential details in private. These assets do not belong to the Council. We hold them in trust for the people of Liverpool. We can make good decisions to buy or sell assets or bad ones but either way we need to be accountable.
Too often these transactions are hidden away on false grounds of commercial confidentiality. There have been a number of transactions lately just below the level at which they would need to be reported. That worries me.
However, we should not forget that many of the recommendations that are being recommended here are not new ones. They have already been put in place by our Chief Executive, Tony Reeves, who took immediate efforts to clean up a system which had, at kindest, failed to bring to Liverpool the quality developers that we need.
There are four main faults with the report:
- It does not explain why Liverpool has been the epicentre of the fractional investment scandal in England. There are more failed fraction investment developments in Liverpool than in the whole of the Country. As we work to the same laws, both planning and otherwise, there must be reasons why either the planning system or the regeneration department of the Council failed so spectacularly.
Labour say that there is no proof of this. Of course, there is. Reports have been in main parts of the mainstream printed and visual media. Local media have regularly exposed the issues and a special mention should eb made of the Scottie Press who have done some excellent work here. Doctoral theses have been written on the subject and above all we know that there is no other City in the Country where the Police and Tax authorities supported by the Council have spent more than 18 months heavily investigating a range of developments, developers and their agents. There is no other City where up to £1 billion has been lost, wasted or misapplied.
If any Labour Councillor doubts that they can simply talk to their colleagues in local government through the Local Government Association and find out for themselves. These problems have occurred on Labour’s watch and Labour needs to find out why.
- It has been hideously delayed. It is well over a year since the Group had its last meeting and since then more scams have come forward to replace the fractional investment model which is no longer being promoted. In that time more people have been trapped in dodgy financial schemes by Liverpool based business people. I have been regularly offered implausible investments by London based agents in the past 12 months. I’ve been offered property bonds, housing bonds and development bonds all of which are as iffy an investment as the factional investment model because they all place the risk with the investor and not the developer.
- It is incredibly weak on the role of professional bodies such as the Law Society and the Royal Institute of Chartered Surveyors to police its own members. It was clear to me that there was no effective control over unscrupulous professionals whose actions throughout fell below what the public expect when they put their financial investments at risk. Too often we have seen that so-called professional bodies have been a trades union and mutual support agency for scallies rather than defenders of standards which the people of the Country can rely on.
Most professionals are straight as a die and act with great integrity using the professional codes of their professional body linked to their academic learning. They need to put pressure on their academic bodies to raise their game.
- It offers no support to the people all over the world who have lost anything between £500 million and £1 billion. We should be doing far more as a council to help them with seeking redress through the criminal and civil law systems. We cannot get them their money back but we could be working with the Solicitors who are delivering class actions for investors.
We could be working with the Trades Unions and Small Business organisations whose workers and companies have lost vast amounts.
We could be putting pressure on the administrators of failed development to try and get reputable developers in rather than have revolving doors of the mates of those that have failed.
Our Council has wasted a huge opportunity to show that it has changed and that investors can begin to come to Liverpool with confidence. A year ago, we could have shouted from the roof tops that a line had been drawn with the past and Liverpool had changed. Even now we can make the case for this but clearly the controlling group on the Council chooses not to.
I have my own ideas why that is – perhaps you do too!!