Demonstrating in Defence of Capitalism

My family has been resident in the London borough of Haringey since the early 1970s. For those readers outside London, Haringey is a socially diverse area of north London, encompassing one of the wealthiest postcodes in London, N6 (Highgate is home to politicians and millionaire celebrities), as well as some of the most deprived neighbourhoods of the UK (most notably Tottenham, the location of much social unrest and rioting a few years ago). Last night I found myself in the unusual position of demonstrating alongside members of the Socialist Workers’ Party, Momentum and the Green Party. The reason? Haringey Council’s creation of the Haringey Development Vehicle (HDV). You know something is amiss when the hard left and a solitary libertarian unite to protest against the same thing!

So what is this HDV? According to Haringey Council’s own website,

“….the HDV will be a 50:50 partnership between Haringey Council and a private partner, Lendlease, a leading property group which has been chosen following a lengthy selection process. [Italics mine – more about this selection process later…] The way the partnership will work is that Haringey provides some of its council land to be developed and Lendlease matches this with cash and its development expertise.”

So far, so cronyistic. Nothing new there, then. I think I’m preaching to the converted on this blog when it comes to advocating for free markets in all things. Unfortunately, the HDV is that ugliest of things: a “public-private partnership”. That such an enterprise continues to be regarded as a capitalist solution to the economic stagnation in Haringey points to gross misunderstanding on the part of the public about what capitalism and free markets actually are. I demonstrated against this partnership to make a stand for free market ideas. If the HDV comes into effect, it will be a £2 billion exercise in turning the public further against the principles of capitalism…because incompetence and financial mismanagement are the only outcomes that I foresee.

It’s no secret that local councils have had their budgets slashed – and I am all in favour of pruning back the excessive bureaucracy of underperforming state structures, especially in Haringey, which has some of the highest council tax rates of any London borough but some of the worst social outcomes for residents.

What’s specifically wrong with the HDV?

The HDV is meant to be a 50/50 partnership, but we as residents have not had access to any clear documentation on the duties and liabilities of each partner. Previous disasters with other PFI council schemes in London, such as the £15 million failure of the Paddington Health Campus, give taxpayers just cause to be wary of such opaque initiatives. When these things inevitably go wrong the council, and therefore the taxpayer, foot the bill. The army of consultants and executives from the private provider walk off with the funds. Oh, and that “lengthy selection process” that the council website told us about? Last summer, the council website published a shortlist of just three bidders for a whopping £2 billion contract: Lendlease; Morgan Sindall with Affinity Sutton and Circle; and Pinnacle with Starwood Capital and Catalyst.

Really? Only three tenders for one of the biggest building contracts in London? Haringey residents have not had access to documents detailing why, out of the three tenders,

Lendlease has now been picked for the contract.

According to Councillor Zena Brabazon,

“There are massive issues of risk, due diligence, democratic accountability, impact on people’s homes, tenants, leaseholders and 508 businesses renting from the Council whose leases/license/contracts will be transferred to the HDV private limited liability partnership.

Interestingly, Haringey has signed up to central government’s “Transparency Code” – and even Westminster has advised councils to eschew Commercial Confidentiality in public procurement processes. Why, then, have we not had access to documents detailing why the other two tenders were rejected? In the interests of competition, why has the sale of council assets not been thrown open to the market, rather than putting them all under Lendlease’s control?

This looks like it could be a protracted 20-year process of unaccountability and ultimate business failure. All because the basic principles of competition and due diligence are alien to our culture where government bails out its private partners. The HDV is not a minotaur, half government, half private enterprise. I fear it’ll be more like Medusa, with the taxpayer having to foot the bill to cut off all those snakes of unintended consequences.

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