“There is no place for dirty money in Britain”, so says UK Prime Minister, David Cameron, who has promised to crack down on dodgy offshore companies that buy up luxury properties in the UK. Cameron says he will introduce a public land registry of properties owned by foreign investors. Channel 4 News has access to the data which highlights the problem is particularly acute in London.
“London must not become a safe have for corrupt money from around the world”, says Cameron. “We need to stop corrupt officials or organized criminals using anonymous shadow companies to invest their ill-gotten gains in London property without being tracked down.”
The figures are staggering. Some £122 billion worth of property in England and Wales is owned by foreign companies. Around 100,000 UK property titles are registered to them. Most are in Greater London where almost 43,000 properties are owned by overseas firms. “There is no place for dirty money in Britain. Indeed, there should be no place for dirty money anywhere. That is my message to foreign forces. London is not a place to stash your dodgy cash”, he said.
Undercover reporters’ working as part of the Dispatches documentary, From Russia With Cash, discovered just how easy it is to buy property in London with no questions asked. Chido Dunn from Global Witness says that “the presence of corrupt money in the London property market props up corrupt regimes overseas and means that a lot of people are stuck in poverty and violence and don’t have access to education.
So concretely, how is Cameron proposing to deal with the problem?
In the Autumn, data will be released that will highlight which foreign companies are buying up property in England and Wales. Although the data already exists within the public domain, Downing Street says it will now be more easily available.
In Westminster, where one in ten homes are owned by foreign investors, Channel 4 asked Transparency International about the changes that are being consulted on. A TI spokesman said that if enacted, the proposals would require foreign owners to declare their interests at the same standard as UK companies. The unanswered question is why the discrepancy in the first place?
That aside, over last 10 years a suspected £180 million of laundered money has been investigated by the authorities. However, according to Global Witness, that’s merely the tip of a very large ice berg. What these new measures will do if enacted will be to identify where the corrupt money is and prevent it from coming in to the country in the future. Currently the government is able to identify who owns a property on an individual and company basis but crucially not who the real people are who hide behind these companies.
People can still use offshore companies to structure their investments in order to benefit from things like inheritance tax and capital gains tax. But, if the consultation process succeeds, people hiding money for a criminal reason will no longer be able to hide it in property.
This appears on the surface to be an important first step. The question is, should the proposals go through, will law enforcement be empowered to properly investigate the practice of money laundering in the UK?
In a speech to Muslims in Birmingham on July 20, Cameron said “that people can grow up and go to school and hardly ever come into meaningful contact with people from other backgrounds and faiths”.
But money laundering is a major contributory factor (as is the failure to tax property effectively) in house price rises which in turn results in the kind of social cleansing I discussed here. Any failure by Cameron to get to grips with the problem will increase the problem of social exclusion he claims he wants to redress.
As with much else in the area of social and economic policy, the UK government appear to be tugging at the coat tails of the United States. What applies across the Atlantic is of as much relevance in New York as it is London. But at least in the former, rent controls to some degree ameliorate the problem. That said, UK government policy is geared towards increasing the disconnect between the rich and poor in much the same way the United States is.
As George Monbiot astutely puts it:
“The rich disconnect themselves from the civic life of the nation and from any concern about its well being except as a place to extract loot. Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it.” We suffer the same curse: a ruling class whose wealth lies offshore, and which identifies more readily with a transnational elite than with the other people of this nation. On behalf of this elite, the government now gives away £93bn a year in corporate welfare: a sum bigger than the deficit. It champions the Transatlantic Trade and Investment Partnership; a graver threat to the interests of this nation than Islamic extremism presents.”
The failure to tax property effectively has fuelled a rise in house prices so severe that entire English regions are becoming almost uninhabitable to the poor. The situation is made all the worse by the announcement from the head of the National Crime Agency who said there is a direct link between money laundering in property and the massive rise in London house prices.