How we’re being fleeced by ‘foreign investors’

“Britain is open for business” is a mantra the Tories keep proudly repeating. What they mean is that the Government welcomes supposed ‘foreign investors’, believing that money flowing into Britain creates jobs and tax revenues.

There have been some spectacular cases of foreign investors benefiting Britain. Indian Tata’s takeover and turnaround of once struggling Jaguar/Rover has done wonders for creating jobs in Britain. Similarly BMW bought and saved the Mini, turning a failure into a massive success.

But I suspect that my readers are sufficiently worldly wise to know that ‘foreign investors’ don’t always come to Britain because they love us and because they have our best interests at heart. They usually come to take as much of our money from us as they can.

There seem to be two main ways foreign investors plunder Britain – “Buying the Brand” and “Milking the Cash Cow”.

Buying the Brand – American Kraft’s takeover of Cadburys is a perfect example of this. Kraft made an absolute promise to worried MPs that their takeover of Cadburys would not lead to job losses in Britain. But the ink had hardly dried on the takeover deal than Kraft began shutting British factories and firing British workers so they could move production of traditional British products to Eastern Europe where wages are significantly lower than in the UK

Milking the Cash Cow – this is perhaps the most blatant and iniquitous way foreigners fleece us. We see it most clearly in our utility companies – water, gas and electricity suppliers. These companies are wonderfully reliable cash cows – they all have virtual monopolies and produce huge amounts of operating profits every year. So they are hugely attractive to foreigners looking for easy billions.

Thames Water provides an excellent example of how the Goverrnment and our pathetically supine supposed regulators (Ofwat and Ofgem) allow foreigners to fleece us. In 2000, the company was bought by the German RWE for £6.8 billion. Over the six years of its ownership, RWE pocketed around £1 billion in dividends. It then sold Thames to an Australian company for £8 billion. So RWE made around £2.2 billion – about £30 million a month or £1 million a day -from its brief ownership of Thames. Yet during its ownership RWE was allowed to increase water bills well above inflation by claiming it needed the money to invest in reducing leakage. In addition to its exploitative high prices, for years Thames further increased its profits by selling off land and facilities to people like property developers. When asked why it had closed twenty five bulk water storage facilities, Thames explained, ‘all these sites were shut down when they became surplus to operational requirements following upgrades to our network’. At the same time as Thames was saying this, it had imposed a hosepipe ban due to a lack of water.

Then came the new Australian owners, Macquarie, sometimes called the ‘vampire kangaroo’. Under Macquarie the looting of Thames Water’s unfortunate customers really moved up a few gears.

Being pretty smart, Maquarie used Thames Water’s abundant cash flow to borrow money – £11.4bn. Supposedly these billions were for ‘investment in upgrading London’s water system’. In fact, Macquarie used much of this borrowed money to pay itself huge dividends year after year. Moreover, guess who lent these billions to Macquarie. Yup, it was companies owned by Macquarie and based in tax haven Jersey which were the lenders. So, Macquarie loaned itself billions at a very generous rate of interest. This had two benefits. Firstly, the interest payments were tax deductible. So, in the 10 years Macquarie has owned Thames Water, it has paid just £100,000 in corporation tax. Secondly, by loaning itself money at a high interest rate from companies based in a tax haven, Macquarie made much of its profits from owning Thames Water by lending money to itself and these profits were, of course, out of reach of the British tax authorities.

What has happened at Thames Water has been repeated at many other water, gas and electricity suppliers. Fifteen years ago, our water companies had debt levels of 20%. They are now over 80%. And, as with Thames Water, much of this borrowed money has been used, not to invest and create jobs in Britain, but to pay brobdingnanian dividends to rapacious foreign owners.

And now we’re begging the Chinese and French to build nuclear power stations in the UK based on a design that doesn’t work to then sell us electricity at three times the current price.

Britain is definitely open for business. Britain is open for foreign businesses to fleece us.