Reading · Change Everything

On Tuesday this week I’ll be joining Merton Greens in London talking Green Thinking and Change Everything, and on Friday I’ll be at the brilliant Diss Publishing Bookshop in rural Norfolk ditto.

Sitting on the library “new books shelf”, Vassal State: How America Runs Britain, by Angus Hanton, was an irrestible volume. It wasn’t going to be this week’s subject, but a report from the Financial Times, “Buying Britain: overseas buyers pile into UK companies” pushed it to the top of the pile, with the "value of acquisitions by foreign buyers now up to £128bn this year, “more than triple the level in the same period in 2025”. As ex-City minister (appointed by Gordon Brown) Lord Paul Myners said in 2021: “Britain is open for business in the same way that a car boot sale is open for business.” (p. 106)

Among the “highlights” reported by the FT:

“Tate & Lyle, a stalwart of the London market for close to 90 years, last Monday agreed to a £2.7bn takeover from US rival Ingredion. Days later, FTSE 100 energy group DCC said it would recommend a £5.7bn bid from US buyout firm KKR and Energy Capital Partners.”

And with those sales goes large amounts of tax revenue. They are robbing our society blind.

“Of the world’s top 50 countries, the UK has been losing more tax from the offshoring of profits than anyone else. One way to quantify the loss would be to say that, typically, US multinationals make 10% profit on their turnover, so that their combined UK turnover should be generating declared profits of about $70 billion. With the UK’s 25% corporation tax rate they should be paying $17.5 billion in UK tax, but typically in recent years they have been paying less than $10 billion. But this does not take account of the sales to the UK made direct from tax havens such as Ireland, Luxembourg and the Netherlands, which may well be more than double that number….When British politicians say they cannot afford to reduce hospital waiting list or that they are compelled to increase personal tax rates, some of this is a direct result of their failure to collect tax from multinationals.” (p. 124)

But it is not necessarily only their shareholders who benefit.

“As soon as the barely taxed revenue of US corporations leaves UK shores, often via tax havens, and enters the US, the IRS intercepts the cash and demands its share. The result is that profits which were not taxed by the British are then taxed by the Americans - effectively creating an ongoing transfer of wealth from the UK government to its US counterparts…. A similar loss is being suffered by all other national collectors around the world, and much of it is happening through the eight British-controlled tax havens. So Britain is not just losing tax revenue; it is acting as the Americans’ hand maiden in moving multinationals’ tax money from around the world into US government coffers.” (p. 133)

From the some 1,000 multinationals operating in the UK.

“They make up about 30% of the UK’s trading economy but the tax they pay on their profits makes up little more than 1% of the government’s total tax take. This is even more striking considering that US companies tend to be the most profitable ones. The problem has been steadily growing. According to Gabriel Zucman, a leading tax researcher at the University of California, in recent years at least 55% of foreign profits of US multinationals were redircted to tax havens, whereas in 1970 the rate averaged only 7%. A studying using HMRC data over a 15-year period showed that foreign multinational subsidaries were paying half the rate paid by comparable purely domestic companies in the UK.”

And yep, there’s private equity sucking up cash and destroying businesses again and again - and that means “US private equity”.

“Of the top 20 private equity companies, 17 are from the US. Virtually all of these are active in the UK… there are a host of ‘boutique’ private equity players often owned by the big US banks, such as the subsiduaries of Morgan Stanley, Citigroup and Bank of America. Even within this wide group of a couple of hundred playters, three-quarters are American. And in the last 20 years the UK economy has welcomed them to a feeding frenzy that has transformed by the UK’s commercial landscape … increasingly, Britain’s most successful businesses are private equity-owned, which means they are more cut-throat, less accountable and usually highly tax efficient. One study by the universities of Harvard and Oxford showed that, on average, during the first two years of owning a company private equity managers cut one in seven staff, reduced wages and raised prives in a process financiers call ‘margin expansion’.” (pp. 103-4)

For 2024, Hanton tallies some of the household name companies controlled by US private equity: “Morrisons, Travelodge, the AA, Alton Towers, Gatwick Airport, Biffa, Center Parcs and Burger King.” During the height of the Covid pandemic in 2020-22, he lists some of the sales: “housebuilder St Modwen, aviation supplier Signature and Bourne Leisure … owns Butlin’s Haven and Warner Leisure Hotels… infrastructure group John Laing (KKR), defence contractor Ultra (Advent), waste company Viridor (KKR) and housing developer Beechcroft (Carlyle).” (pp. 106-7)

Blackstone, infamous for its enormously destructive purchase from the state of 5,000 railway arches when as the Public Accounts Committee concluded the “government took a short-term decision to sell a profitable asset to plug a funding gap”, is a name that keeps popping up again and again.

“Including the staff at acquired companies, Blackstone employed around half a million people around the world by 2024. It contols more than 200 large enterprises, and within that collection the UK offered a rich seam of bargains: listed companies, government assets and family firms. Blackstone has had a hand in the purchase and sale of scores of UK enterprises, including Legoland, the NEC in Birmingham (the UK’s largest event space), Madame Tussauds and Blackpool Tower.” (p. 102)

Yes that’s the Blackstone that built the Southern Cross chain of care homes into England’s largest provider, with 31,000 residents, through “agressive expansion”. Five years after it ended its association, loaded down with debt through ‘sale and leaseback’ of homes, saddled with endlessing rising rent contact, the company went down. By that time, one in three of its 581 centres had been served with improvement notices by the Care Quality Commission. (pp. 104-5)

Another typical private equity purchase was of Sophos, a British (formerly controled from Abingdon, Oxfordshire) cybersecurity business sold to Thoma Bravo in 2020 for £4 billion. “Almost as soon as Sophos was bought the job cuts began… reduced the overall headcount, with claims that more jobs disappeared in the UK than elsewhere…. Just like many other private equity purchases, a premium had been paid and that was best justified by making the company leaner, and maybe a little meaner.”" (p. 102-103)

So who benefits from all the cash?

“Private equity groups use other people’s capital and charge heavily for their efforts. The traditional model was dubbed ‘2 and 20’, meaning they took an annual fee of 2 per cent of the funds under management and on top of that they got 20 per cent of any profits. In recent years that means their total fee has worked out annually at 6 per cent of the funds they control. Although the level of those fees has come under pressure, private equity is still phenomenally profitable - but largely for the owners of the private equity companies themselves. While bosses such as Schwarzman [Blackstone] have amassed huge personal fortunes, their investors - who are mostly pension savers - have done much less well. According to Oxford professor Ludovic Phalippou, rewards for outside investors in private equity funds are often the same as, or lower than, returns from owning traditional listed shares, mainly because of the high fees.” (p.115)

And the UK loses huge amounts of tax revenue that it should receive from these multinational companies.

So how do they dodge taxes? Tax havens of course. Take US multinationals out of the Swiss GDP figures and they fall by about 27%. Singapore drops from 32nd to about 58th on size of economy similarly, and Ireland from 26th to 57th, cutting the scale of the supposed economy by about two thirds.

“The economies of Luxembourg and the Netherlands are similarly bloated by US corporations tax manouevres. Until 2021, the 14 million UK residents who subscribed to Netflix were invoiced from the Netherlands, and the billions of pounds of Apple’s UK sales continue to be routed through Ireland… US multinationals represent 25 of Irelands top 50 companies and even at low tax rates they contribue 80% of Irish corporation taxes… they employ a large chunk of the population, about 172,000 workers, or one person in 14.” (p. 122)

It is astonishing how much the UK, like a baby sister turning always to her elder for solutions, turns to the US under pressure. Take Covid:

“Britain’s government spending after six months showed that American companies were picking up over half of all the Covid-19 contracting…. In May 2020, Honeywell of Charlotte, North Carolina, won a deal to supply 70 million face masks. Hologic of Marlborough, Massachusetts, won a £150 million contract for testing kits, and another £68 million was given to Thermo Fisher of Waltham, Massachusetts. When the ‘Test and Trace’ scheme required call centres, these were operated by Sitel of Miami Florida. Testing kits were largely delivered by Amazon and ID checks were made by the consumer credit company TransUnion, of Chicago, Illinois. Brake Bros, owned by Sysco of Texas, shared a £205 million untendered contract to deliver food boxes to vulnerable people who were isolating during the pandemic. The company also received a £600 million government loan at 0.5% annual interest under the Covid Corporate Financing Facility.” (p. 140)

And that only reflects what happens from day to day in the NHS. Hanter provides a long list of diagnostic, recordkeeping, pharmaceuticals, as well as actual healthcare, in which again and again US firms dominate.

“Very roughly, then, about 40% of UK health spending, apart from staff costs, is already with private suppliers, and around half of that is with North American companies… A future of medicine involving big data, AI and genetics will, very likely, be dominated by US companies…. It will be easy … to click into the NHS network because it has already been reshaped to fit more neatly with American business models.” (pp. 152-3)

And that’s a cross-government problem particularly with IT that, slowly, is starting to get more attention, after in 2011 a House of Commons Public Administration Committee report Government and IT, a recipe for rip-offs, noted how the UK was already “over-reliant on a small ‘oligopoly’ of large suppliers, which some witnesses referred to as a cartel.” It went on to say: “The government needs to break out of this relationship. “ But of course since then the situation has got much worse: “The problem with too much foreign procurement is that this lack of resilience becomes self-perpetuating: if you have not given contracts to domestic companies, they will not be there when you most need them.” (p. 160)

But it goes well beyond IT. The Crown Commercial Service does a huge amount of government buying, £27 billion annually (about £1,000 per household) but has no UK-supplier preference and does not even record the national source of purchases, unlike the US (through the Federal Procurement Data System) and the EU, which makes it a requirement for member states. (p. 169)

Then there’s UK employment. Hanter dispels the common claim that the number of Brits working for US firms matches the number of Americans with British bosses, usually put at about 1 million each. He reckons the figure for UK workers is double that.

“Look at the IRS statistics for other European countries, which show that American countries employ more Brits than the total of all of those whom they employ in France, Germany, Italy and Spain combined. As well as a loss of control, British workers are significantly less well paid than German or French workers.” (p. 187)

In trying to keep up on islands in which public services have been slashed away by austerity and companies extract wealth instead of paying their workers fairly, a lot of the cost is born by individuals just struggling to survive.

“The most expensive mainstream borrowing is by credit card (typically 22 per cent annual interest) and the British have much more credit card debt than the Europeans: the French have half as much, the Germans two-thirds and the Italians only a quarter. These debts are mostly via American corporations such as Visa and Mastercard….Average debt as a percentage of disposable income may seem high in the US at 101 per cent; for Italy it is 110 per cent, and in Germany it is 11 per cent. But the UK takes the prize for personal indebtedness,with an average debt of 149 per cent of disposable income. The British consumer is quick to latch on to new forms of borrowing, of which the latest is ‘BNPL’ - ‘buy now pay later,’ - dominated by market leader Klarna. The company is owned by US investors, led by Sequoia Capital of Menlo Park, California.” (p. 97-8)

Hanter concludes with the thought that much of this is a Thatcher legacy, but, although an ardent Atlanticist, “she might be horrified to see how her idea of ‘popular capitalism’ with citizens as shareholders, has collapsed, with private shareholdings shrinking year by year. In her second full year in office, 1981, only 3.6% of UK shares were owned overseas. By 2020 that number was more than 56%.” (p. 223)

A hashtag I find myself rolling out again and again is #WarOnTidiness. In the anti-biotic 20th-century we wanted to stop life existing altogether (lichen on pavements, ivy on walls, “weeds” - or rather wildflowers - in monoculture fields), and to create straight neat lines when nature flourishes with curves and uneven edges. The cultural basis of this prejudice - and a colonialist, racist prejudice it often is - is beautifully set out by Jeffrey Hoelle, author of Cultivated Plants, Hair, and the Aesthetic of Control, on the New Books Network Anthropology channel. What’s really innovative about the book is how he links the treatment of the Amazon with the way in which we are pushed to treat our bodies - particularly how women and people from minoritised communities are pushed to “tame” their bodies. “Cultivation” is an ideology, an imposition of control, and understanding that has to be a start of resistance. (Something feminists of course have long understood.)

A fascinating account of yam cultivation in Papua New Guinea, which in traditional understanding (as so many places) the effort is seen as cooperative, between the planet and the human animal.

“Working there involves a careful choreography of movements, observations, and tactile engagements—twining vines around tutors, harvesting ripe plants, transplanting shoots—all mainly with the hands, interacting gently with every one of them individually. Tools like digging sticks and bush-knives are used minimally; the human body itself is the primary interface. Actions that invite plants also include speaking, singing, blowing on vines, and applying special substances on the path of the growing tuber.”

You might call it mindful growing, that respects the plant, rather than extracts its output. And its not hard to see how it might well produce better results, and a better life.

Oil crops - particularly palm oil and soybean - have spread around the world like a virulent rash at terrifying speed, industrial monocultures often replacing rich biodiversity. Yet apparently for the first time, researchers have tallied the combined costs of crops that mostly go to wholly unnecessary, and frequently unhealthy uses, from factory farming to cosmetics. "Between 1995 and 2020, biodiversity loss rose by around 80%. But this is not primarily caused by global population growth....EU, China, US together account for >80% of impacts"

Photo by allPhoto Bangkok on Unsplash

A positive note, long after other countries did it (Wales and Scotland 2023, Australia 2013), England is to make a full formal apology to the women and children affected by forced adoption, which until 1976 saw an estimated 185,000 babies taken from unmarried mothers. Campaigning works, eventually: I worked with some of those affected to make this apology Green Party policy in 2011.

What did you think?

Change Everything No 90: Vassal status - how US multinationals extract wealth from the UK at every turn

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