London is one giant pantomime this summer. Just look to the politicians and journalists, hot-breathed with excitement, horse-trading and haggling over who gets to be the Tories’ next head prefect. But if you want the truth about how power and money operate in the UK today then ditch Rishi Sunak and Liz Truss, and head to Manchester. Yes, Manchester: the comeback city that traded cotton mills for skyscrapers, and is now cheered by the Financial Times and George Osborne. The metropolis that taught the world so much about industrial capitalism 200 years ago now offers another harsh lesson about its 21st-century, financialised version.
Go a few minutes east of the city centre, and walk from New Islington into Ancoats. Block follows block of newly built and freshly converted flats and houses, many lining a lovely marina that glistens in the July sun. You can rent or buy these places right now, as long as you don’t mind how much some look like pile-em-high student boxes and that they all cost a packet. This is what post-industrial regeneration looks like, right? Redbrick in tooth and claw. But note something: almost 1,500 of these homes come from just one developer, and in that lies an entire sobering story.
Launched in 2014, Manchester Life was hailed as a “£1bn deal” between the city council and the Abu Dhabi-based owner of Manchester City football club. The local authority had swaths of brownfield and Sheikh Mansour, the club’s owner, ranked among the richest men on the planet. Working together, the result would be homes for people who desperately needed them and pots of cash. The council’s then leader, Richard Leese, promised “a world-class exemplar of regeneration”.
Meanwhile, human rights groups warned Manchester council about its powerful new business partner. The Abu Dhabi United Group investment fund is formally separate from the kingdom, but its owner, Sheikh Mansour, is the deputy prime minister of the United Arab Emirates and brother of Abu Dhabi’s ruling crown prince. In April, journalists at Der Spiegel magazine published documents suggesting that the state of Abu Dhabi had facilitated payments to Manchester City. At the very least, the investment fund is closely linked to what Amnesty International has described as “one of the most brutal police states in the Middle East”. To dissent in the UAE is to rot in jail, in a regime with proportionately more political prisoners than anywhere else in the world. Low-paid migrant nannies or builders are, Human Rights Watch says, “forced labour”. Yet such facts did not deter the council’s Labour leadership from going ahead.
It was a huge advance for Sheikh Mansour who had, only half a decade earlier in 2008, bought a struggling football club. Now his investment fund was entering a joint venture with the British state (albeit at local level), getting its hands on prime real estate and shaping the city’s very geography. Those of Vladimir Putin’s oligarchs who trousered chunks of London could never dream of such a glittering prize.
As one of the rulers of an autocratic kingdom that has an appalling reputation for repression and an addiction to oil revenues, Sheikh Mansour stood to gain so much from this partnership. It was the council that held almost all the cards: the hectares of publicly owned land, the planning regime, the public subsidies. Yet somehow, according to new research shared exclusively today with the Guardian and authored by academics at Sheffield University, it was Sheikh Mansour who pocketed almost all the winnings. The report says that nine sites were sold to the sheikh at a fraction of their value, and well below what other plots nearby fetched (the council says it used independent experts using standard valuations, although it won’t give any more details). They were on leases lasting 999 years, well beyond the norm. And the fund shifted what had been public assets to companies registered in Jersey.
That walk along the water from New Islington into Ancoats now passes blocks of privatised land owned in an offshore tax haven, which yields millions upon millions for a key member of the wealthy elite running a surveillance state halfway across the globe. One of the greatest cities in the world has sold itself to a senior figure in a brutal autocracy – and not even for a good price.
This is the devastating implication in the first thorough study of the Manchester Life scheme, which is a product of months poring over company accounts and planning applications. The city council is sometimes keener to criticise its critics than to hear what they have to say: Leese, its leader for 25 years until 2021, once responded to those calling for more affordable housing as “middle class tosspots and I hate them”. So let us knock on the head any personal attacks: the experts have all lived in the city for decades, I am one of the independent and unpaid advisers on the advisory panel, and this is a report issued squarely in the public interest.
Among a political establishment still scratching its head over how to level up, Manchester is celebrated as a pioneer. Its Labour leadership has been praised by Conservative administrations, while Osborne called its chief executive, Sir Howard Bernstein, “the star of British local government”.
Bernstein ran the council for nearly two decades until 2017, and sat on the board of Manchester Life. Yet its success has come at a high price for the little people who just happen to live in the city. Not only have the assets they owned been sold cheap, they have got little back. The nine developed sites have no social or affordable housing, which the council’s planning officers justified with statements such as: “There is already a high level of affordable housing in the immediate area.” The same council admitted earlier this year that nearly 4,000 of the city’s children sleep each night in temporary accommodation.
At the Manchester Life developments, a two-bed flat is considered a bargain if it goes for £369,000 – a price that puts it off limits to couples working full-time on an average salary. As for tax, the sums paid to the Exchequer seem risible. One of its main subsidiaries earned more than £26m in the five years to 2021, but, the researchers found, paid less than £10,000 in tax – an effective rate of just 4p on each £100 of revenue. Manchester Life told me that its subsidiaries “pay all UK corporation or income tax due on rental income and profits”. It would not, however, disclose how much tax it pays or on how much revenue.
It is right to say that New Islington and Ancoats are vastly more pleasant areas than they were even five years ago – but the big question is who has won from redevelopment and who has lost. Putting hard numbers on that is tricky when so much of the information about Manchester Life – a venture using public assets and public subsidy with a public authority – is kept strictly private.
I asked the report’s authors to calculate how much the council could have earned from this deal. Looking at examples of other land deals and other local councils, their conservative estimate is £33m, plus up to £1.7m a year in rent. Both the council and the joint venture described that sum as “speculative”. The council also said it expected more money to come through an overage or profit-share arrangement, although it did not provide any details of this agreement nor are they on public record. But for comparison, that £33m would more than cover what the city pays in a year to put up families in temporary housing.
Sheikh Mansour will presumably know exactly how much Manchester Life is netting him – and can look forward to 10 centuries of rental income from the land in this great city. He seems content with the arrangement. A few months after Bernstein retired from the council, he was appointed as the senior strategic adviser for City Football Group, owned by Sheikh Mansour. I asked the council what procedures it followed on Bernstein’s subsequent appointment with such an important business partner. It could not tell me.
Perhaps the nicest of the Manchester Life developments is Murrays’ Mill, a conversion of one of the world’s first steam-powered cotton mills into flats. It stands in the heart of Ancoats, alongside Bengal Street. My family is originally from Bengal, a region that once wove the best textiles in the world, muslins so fine that the French sighed over their perfection. It was the East India Company’s entry point into the riches of south Asia.
To look at such names carved on to brick is to remember how Manchester came to its industrial wealth and Britain to global preeminence, from cotton picked by enslaved people and through destroying foreign industrial competition, even criminalising the sale of Indian textiles. But today it symbolises something else: a country celebrating its receipt of capital from other states under the shabbiest of terms as a triumph. The difference is that Indians were under no illusions about what had befallen them.