Wednesday, 2 September 2009

Gordon Brown The Granny Basher


Artwork by “Banksy”.

Channel 4 News carried a story on Tuesday 1st September News concerning the exploitation of the very elderly in retirement developments by the controlling financial operators maximising their income streams irrespective of the consequences to those affected. And all thanks to Gordon. So if your granny or grandpa, or ancient aunt or uncle is holed up in one of these flats, and hungry, cold, and stripped of their savings you know exactly who to blame.

Because of the protection given by English law and judges to the wealthy against criticism by the poor C4 has had its lawyers crawling all over the item for months. It was a carefully crafted piece, but inevitably left gaps. The moral behind the whole story is how much of ordinary life has now been handed over to speculators and high rolling financial engineers to do their worst as they seek to do their best for their personal trusts and accounts in tax havens and secrecy jurisdictions.

This is British fair play, 21st Century government style. I start with the bog standard simple matter of routine buildings insurance. You might imagine that all the spin about competition and the rest from Brussels and London might mean anything, but not in Gordon’s alternative universe. Imagine a company being able to run a subsidiary insurance company where the holders of the policies are compelled to buy them and have no choice, where the company does not spell out what is in the policy in writing to the policy holders, where cover conventional in other insurance company policies are omitted, where claims are made verbally to House Managers, who are agents of the company, who handle any paper work, and then determined at the company office by the company.

Better still, when the inevitable happens here and there and works need to be done, the company decides who is to do it, how it shall be done, what upfront charges might be made by contractors, what administration charges to impose on the bill, and when it comes to the actual work, the company determines what the level of costs etc. are in the bill. Should the company decide that it is not covered by the policy, and who can argue, the company will decree who is to pay the bill, and if the chosen ask questions, gently remind them that it is entirely legal, and if they do not come up with the money, they might be in default on the leasehold. Should they then be eligible for eviction, the property will be sold. How fortunate the company has its very own property sales subsidiary to ensure all is dealt with properly. The ancient policy holder, who may be disabled, terminally ill, or seriously vulnerable, is, let us say, at a slight disadvantage in the transactions.

It can get even better, the properties have security systems, much needed you may think in the Britain of today (thank you Gordon again). Once more the company has a dedicated subsidiary that provides this service and determines the charges, again no choice. These it is argued tend to be on the high side. However, the company asserts that it is a better service than the competition. Up to a point, Lord Foy. It is only the service the company is willing to provide. During the working day, normally the House Manager on site deals with matters, unless they have been called to a company meeting. Out of working hours it is the security system service that deals with emergencies and queries.

However, the security system, in line with the steep increases in charges, has been streamlined. This is called “efficiency” which to the company means that the take has been significantly increased. What happens on the ground is entirely another matter. Entrance to a development is controlled by the security service who in theory issues a code to key services to allow entry through the door controls. These, in line with normal safeguards, may change. What then can happen is that because of a failure in communication the key services cannot gain access and need to call up the security service. There is no fall back to deal with this situation, because the service has been made more “efficient”. So if emergency services turn up, especially ambulances, paramedics, or doctors, and they do not have the code they are not allowed in, there is no way of finding the code and the security service does not and will not communicate with the control offices of the emergency services.

As there has been a huge reduction in nursing and residential home places, thanks to Gordon’s “care in the community”, new regulations, and a property boom, there are many more people in retirement developments completely reliant on local care and medical services. Also, hospitals these days, thanks to Gordon’s PFI schemes and ”efficiency” wheezes, send people home as soon as possible, sometimes even straight from the operating theatre. The result is many more times that emergency services are called to developments. On a bad night in the early hours, there can be more milling about than at your average motorway pile-up if they can’t get through the doors. If some mad old interfering person actually lets the ambulance crews, paramedics and police in, the company will ask the House Manager to gently suggest to them that there are legal issues. Nice touch that, right out of the government’s magic bag. Not good, however, if granny has had a bad fall, a stroke, a cardiac arrest, or is going into a diabetic coma.

It is all quite legal, as are the accounts for the individual developments, a pity that the pressures of modern life lead to so many errors and misinterpretations that seem to push up the charges. What a pity granny hasn’t got a degree in management accounting to be able to work it out and make constructive criticism. Then, of course, a related company owned by the same people has the freeholds. Since the company took over, suddenly there is a raft of extra charges for this and that, it is alleged are outside the strict terms of the leasehold. No problem, if granny wants to argue she can always go to a tribunal or the courts. Of course, the legal charges will have to be met, and the company will be able to field a team of the most expensive and expert in the business.

The original concept of this form of retirement development was to provide a secure, comfortable haven for the not so well off and where there was much less to worry about, until the time came for them to need full scale care in specialist nursing homes. There was a decent profit in it, strangely at a much lower cost and with more people employed to deal with things. After a series of takeovers, they are now in the hands of off shore based property and financial companies who regard them as milk cows providing income streams for speculative ventures and large scale financial engineering based on high leverage and the securitisation of assets. As Gordon has decided to go digital on TV, there is more to be made. The charges for satellite and cable services are amongst the most expensive in the world.

Of course, Gordon will say he was not responsible for the credit crunch, if anyone it was granny in her retirement flat refusing to go on a consumer binge, take on credit card debt or buy equity release schemes from a financial and mortgage company owned by the other company who borrow from, oh, just keep going and going. Which is exactly what is happening. William Buiter in his Maverecon blog in the FT on Wednesday, 2nd September observed “The financial sector is too big throughout the overdeveloped world in part because much of it enjoys a free state guarantee against default on its unsecured debt. Retail deposits are explicitly insured, but at premiums that imply a taxpayer subsidy. Other counterparties of banks and other systemically important financial institutions also benefit from implicit default guarantees. The cost of capital to the banking sector is subsidised, causing the sector to be too large.”

Just what has this to do with granny? Well, the company that owns all these other companies is owned by a trust, linked via other trusts and companies, to related financial entities, that are in hock big time to RBS, yup, Fred The Shredders Own Financial Dragoons, and their Viking Icelandic friends. Fred has walked away with an annual pension of around two hundred times more granny’s annual income, kindly paid for by the government that is the taxpayer. One way or another granny pays. Bail out the billionaires and bash the grannies.

What have the owners of all these companies be doing lately? Sitting on their yachts with a bunch of fawning celebrities and politicians having fun in the sun? Who amongst our ministers and Members of Parliament, I wonder, are associated with them, and enjoy the fruits of the advice and consultancy facilities for which they are paid so handsomely into accounts in secrecy jurisdictions?

And where is granny? Lying on the floor waiting for the medics who are unable to get into the building?

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