Tag: democratic accountability

Select Committee says governance code for large companies with social impact is crucial, following inquiry into collapse of BHS

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Philip Green

The Work and Pensions Committee have called for new duty on company directors to have regard to pension schemes and for Insolvency Service reports to be published in the public interest. 

On 28 April last year the Committee launched its joint inquiry into the collapse of British Home Stores (BHS) and the origins of its huge pension scheme deficit. BHS was a private company but the effects of its collapse spanned widely: not least to its thousands of employees and pensioners.

The three month inquiry examined corporate governance in Sir Philip Green’s companies, which are privately held and ultimately owned offshore by Lady Green. It found a near-complete absence of the constructive challenge that is the hallmark of good corporate governance. Green, a “dominant personality”, ran his companies as a personal empire with boards taking decisions with reference to a shared understanding of his wishes rather than the interests of each individual company.

An extraordinary and scandalous tale unfolded in which the greedy main players took lavish rewards at the expense of the employees and pensioners of the company. Inter-company loans and property deals, related-party transactions and the hurried disposal of BHS to a wholly unsuitable buyer all proceeded with woefully inadequate checks and balances. The poor corporate governance in Green’s companies was epitomised by the complacent performance of Lord Grabiner, a director of several of the Green empire subsidiaries.

In July last year, MPs catalogued a litany of failures culminating in an “at any cost” disposal of the company and pension deficit to a wholly unsuitable “chancer”. In their inquiry report about BHS, the Work and Pensions and Business and Innovations and Skills Committees concluded that Green chose to rush through the offloading of a beleaguered high street institution, which was losing money and encumbered with a massive pension fund deficit, to a buyer who he was clearly aware was “manifestly unsuitable”, with Green forced to finance the sale himself.

Though the ownership of Dominic Chappell and his associates was “incompetent and self-serving”, the ultimate fate of the company was sealed on the day it was sold. Advisers were paraded by both sides as an “expensive badge of legitimacy for people who would otherwise be bereft of credibility” while the Taveta group directors (owned by Green’s billionaire wife, Tina Green) failed to provide a semblance of independent oversight or challenge in a corporate group run as a personal fiefdom by a single dominant individual.

MPs heard hours of oral testimony and considered thousands of pages of written evidence in the inquiry, which began when BHS crashed into administration just 13 months after the ill-advised and under-funded sale to Chappell. The Committees said that the evidence at times resembled a “circular firing squad”, with a series of key witnesses appearing to believe they could absolve themselves of responsibility by blaming others. Green himself “adopted a scattergun approach”, liberally firing blame to all angles except his own.

The unacceptable face of capitalism

The report documents the systematic plunder of BHS at the cost of the 11,000 jobs and 20,000 people’s pensions now at risk.  Green, Chappell and the respective directors, advisers and hangers-on who all got rich or richer are all culpable, with the losers being the ordinary employees and pensioners.

The Committees said this is “the unacceptable face of capitalism” and that the story of BHS begs much wider questions about the gaps in company law and pension regulation that must be addressed. The two Committees turned to those question in subsequent inquiry hearings.

The headline figures that Green bought BHS for £200 million and sold it 14 years later for £1 cannot disguise the true picture. He did not invest in the company and then “unfortunately” failed to make it succeed. Green systematically extracted hundreds of millions of pounds from BHS, paying very little tax and fantastically enriching himself and his family, leaving the company and its pension fund weakened to the point of the inevitable collapse of both. Lady Green is still being paid tens of millions of pounds of tax free repayments on the loan that was engineered to sell BHS from one Green family business to another, and will be for some years to come.

A moral duty to act on the pension schemes

  • When Green bought BHS the pension schemes were in surplus. As these schemes declined into substantial and unsustainable deficit he and his directors repeatedly resisted requests from trustees for higher contributions. Such contributions were not charitable donations: they were the means of the employer meeting its obligations for deferred pay. Green had a responsibility to be aware of the growth of the deficit and he was aware of it. That there is a massive deficit is ultimately his responsibility.
  • The Committees say Green must act now to find a resolution for the BHS pensioners, a “moral duty” which will undoubtedly require him to make a large financial contribution. Green’s failure until now to resolve the pension fund’s problems contributed substantially to the demise of BHS, along with chronic under-investment and the systematic extraction of hundreds of millions of pounds from the increasingly ailing company.
  • The Arcadia board cited a variety of explanations for pausing Project Thor, ranging from Christmas to the Scottish independence referendum and instability in Ukraine. In fact, the primary reason was Green’s resistance to TPR’s moral hazard requests. He did not wish to respond to requests for information regarding historic dividends, management charges, sale and leaseback arrangements, inter-company loans and the use of BHS shares or assets as collateral for company purchases. At best this demonstrated a lack of willingness to act to secure the pension fund’s future.

Incredible wealth followed by retail demise

  • In his early years of ownership, Green cut costs, sold assets and paid substantial dividends offshore to the ultimate benefit of his wife.  The so-called “King of the High Street” failed to invest sufficiently in stores or reinvent the business to beat the prevailing high street competition. The Committees found “little to support the reputation for retail business acumen for which he received his knighthood” and say “we don’t doubt that Green had some affection for BHS – to an extent it created him. Now it could also bring him down” 
  • Green’s family accrued incredible wealth during the early, profitable years of BHS ownership. Over the duration of their tenure, significantly more money left the company than was invested in it. There is no evidence of improved turnover, market share, or major increase in investment that might be expected from a leading retailer. BHS was involved in a number of transactions with a complex web of companies, many registered offshore: whether BHS benefited financially from these transactions is far from clear. What is clear is that the Green family did.
  • The report documents the ways Green was able to boost BHS’s profitability in the short-term while ultimately fatally undermining its ability to survive. The early years improvement in BHS’s profitability appears to have been achieved primarily through cost-cutting measures and squeezing suppliers. Crucially, BHS’s turnover remained flat through much of Green’s tenure and declined in the latter years. Green initially cut costs but he did not grow the business.
  • One mechanism of (tax-lite) cash extraction to other Green family companies was through the sale of property: in 2001, BHS Group sold ten BHS stores for £106 million to Carmen Properties Ltd – a Jersey-registered company owned ultimately owned by Lady Green – as part of a sale-and-leaseback arrangement. BHS Ltd then paid rent to Carmen for the use of these properties. They were ultimately sold back to BHS as part of the sale to RAL for only £70m (with the proceeds of the sale going to Lady Green as the sole beneficial owner) but, over the lifetime of the sale-and-leaseback arrangement, rent of £153 million was paid by BHS to Carmen.

Egregious failures of corporate governance

  • Green’s rush to drive through the sale of BHS – “a chain that had become a financial millstone and threatened his reputation” – was the culmination of a sorry litany of failures of corporate governance and greed.  Regulatory concerns were circumvented, advisers were heavily incentivised to progress the deal. Dominic Chappell, his friends and associates were enticed by the personal rewards on offer without taking any personal risks. The Committees published for the first time with their report the Due Diligence reports produced by Olswang (and associated RAL Board minutes), which show their advice against the purchase and express concern that RAL were reliant on Green making good his unwritten assurances. (RAL= Retail Acquisitions Ltd.)
  • The complacent performance of Lord Grabiner as the non-executive Chairman of the Taveta group boards represented the apogee of weak corporate governance. It was his responsibility to provide independent challenge and oversight. Instead he was content to provide a veneer of establishment credibility to the group while happily disengaging from the key decisions he had a responsibility to scrutinise. For this deplorable performance he received a considerable salary. It is permissible in law for a director to delegate certain functions to other persons, but if a director allows himself to be dominated, or manipulated by one of their number, he may have gone beyond the boundaries of what is proper. He could be found to be in breach of duty and subject to disqualification. All directors of Taveta and RAL have serious questions to answer about their performance in those roles.
  • Green faced a considerable challenge in finding a credible buyer for a business that was consistently losing money and had a pension scheme with a large and growing deficit. It was clear that Chappell’s team were out of their depth, woefully short of the requisite experience and expertise, notably lacking the credible senior retailer Green once insisted on. They brought no new money to the deal, took no personal risk, could offer no equity and had no means of raising funds on a sustainable basis. Ultimately, Chappell and RAL failed all of Sir Philip’s nominal tests for a buyer. They were manifestly unsuitable owners of BHS. It is inconceivable that someone with Green’s experience seriously considered otherwise.

Collapse under incompetent and self-serving RAL

  • The report documents the true numbers behind the sale. The board of Taveta Investments Ltd was presented, two weeks after the event, with a rosy picture, while the reality was very different. The balance sheet included cash for immediate liabilities, property deals that took many months to materialise, funds that went to RAL never to return and equity that was a loan on punitive terms. It was patently obvious that there was not enough cash in BHS to give it a realistic chance of even medium term survival.
  • RAL’s failures include some blame for the pension scheme, which they accepted responsibility for with a “negligent and cavalier disregard for the risks and potential consequences”, negligence which “continued into their incompetent and self-serving ownership of the company”. In putting his “home team” first, Chappell and his fellow directors were personally enriched as BHS failed around them. Two directors jumped ship on the day that RAL acquired the business with personal financial rewards that it would take many BHS employees decades to  earn. The others continued to profit handsomely from their positions without fulfilling their requisite responsibilities.
  • In effect, Chappell “had his hands in the till”. His description of £2.6 million that he personally took, in addition to an outstanding £1.5 million family loan, as a “drip” in the ocean is an insult to the employees and pensioners of BHS that he let down.

Chairs’ comments

 Frank Field MP, Chair of the Work and Pensions Committee, said:

“One person, and one person alone, is really responsible for the BHS disaster. While Sir Philip Green signposted blame to every known player, the final responsibility for up to 11,000 job losses and a gigantic pension fund hole is his. His reputation as the king of retail lies in the ruins of BHS. His family took out of BHS and Arcadia a fortune beyond the dreams of avarice, and he’s still to make good his boast of ‘fixing’ the pension fund. What kind of man is it who can count his fortune in billions but does not know what decent behaviour is?”

Iain Wright MP, Chair of the Business, Innovation and Skills Committee, said:

“BHS’s demise has created many losers, particularly the 11,000 staff facing the loss of their jobs and the 20,000 pensioners facing significant reductions to their pensions. The actions of people in this sorry and tragic saga have left a stain on the reputation of business which reputable and honourable people in enterprise and commerce will find appalling. The sale of BHS in March 2015 is crucial to its eventual collapse a year later. The sale of BHS to a consortium led by a twice-bankrupt chancer with no retail experience should never have gone ahead; and this was obvious at the time. The reason it did, however, was Sir Philip Green. He was determined to get the deal done, no matter that the buyer could not deliver what BHS needed. There was a complete failure of corporate governance, with Sir Philip bulldozing the sale through, without proper oversight or challenge from his weak and impotent board.

While BHS staff face uncertain job prospects and pensioners worry about their future entitlements, it’s clear that a large cast of directors, advisers, and hangers-on enriched themselves off the back of BHS, including Dominic Chappell and his fellow RAL directors. Chappell took no risk and put no money into the venture and yet gained huge rewards as BHS crumbled around him. His failure is bad enough but that he effectively had his hands in the till is an insult to the employees and pensioners of BHS that he let down so badly.”

In response to the Government’s consultation on corporate reform, the Work and Pensions Committee’s most recent report says that the corporate governance and reporting requirements for public listed companies should be extended to private companies that have an important social impact: large private companies and those with over 5,000 defined benefit pension scheme members.

It also says that company directors should have a new duty to pension fund trustees, as the representatives of pension scheme members, in addition to those stakeholders they are already obliged to have regard to. Allied to the more substantial recommendations on pension law and regulation in its December 2016 Report, the Committee concluded these changes would reduce the chance of another company collapsing in the manner of BHS.

The key themes that emerged during the inquiry included:

  • lamentable corporate governance in what was a large private company
  • a paucity of publicly available information about the state of the company and its pension fund
  • the absence of a voice in the running of the company for those who relied on its success for the security of their pension saving.

Committee recommendations

Holding company directors to account

  • Public listed companies are required to comply with the Financial Reporting Council Corporate Governance Code and its reporting requirements or publicly explain why they are not. This is a proportionate approach for companies of social importance. Transparency about governance arrangements, performance and risk can better equip stakeholders to hold company directors to account. Wider awareness of the state of the BHS pension schemes may have pressured Sir Philip Green into taking more reparative action, sooner.

Large companies should be subject to the Financial Reporting Council Corporate Governance Code

  • Private companies that are large, as defined by Government, or have over 5,000 defined benefit pension scheme members, should be made subject to the the Financial Reporting Council (FRC) Corporate Governance Code on a comply or explain basis. The report includes a table of the top 30 largest private companies in the UK, with many household names like John Lewis, Clarks, Matalan, Virgin Atlantic, River Island, Pret a Manger – and the Arcadia Group – that would fall under the parameters of this recommendation. Many well-governed large private companies already follow best practice on transparency.

Include pension scheme trustees in section 172 of Companies Act

  • Pension scheme trustees should be added to section 172(1) of the Companies Act 2006. The list of stakeholders company directors must have regard to – and report on the exercise of their duties to – does not include defined benefit pension scheme beneficiaries or the trustees who must act in their interests. Incomes of pensioners in retirement are reliant on the sustained success of the sponsoring company but they are at particular risk of being neglected in corporate decision making as no one makes the case for former employees. The inclusion of pension scheme trustees in section 172 might increase the chances both that directors would take into account the interests of current and future pensioners in carrying out their duties, and that those who have failed to do so will be held accountable in the courts.

Publication of Insolvency Service investigation reports

Publication of correspondence with Arcadia

The Committee publishes with the report a series of correspondence with Ian Grabiner, Arcadia Chief Executive, and the Arcadia Group pension trust, charting its efforts to get information about the group’s pension schemes into the public domain. Arcadia’s pension schemes are over £200 million in deficit, but all parties have refused to provide information regarding the 2013 valuation and recovery plan, or the levels of employer contributions.

Chair’s comment

Frank Field MP, Chair of the Committee, said:

“For a company with a big social and economic footprint like BHS it is simply not enough to be accountable to shareholders – particularly when one shareholder owns most of the stock. The sorry tale of its sale and collapse, putting 11,000 people out of work and leaving a pension fund £571million in the red, with 20,000 pensioners facing an uncertain financial future, was a result of gross failures of corporate governance. Would the story have played out the same way if its directors had to be open about the financial decisions they were making for its future? The finances and leadership of a company with so many people depending on it should be open to scrutiny.

We have already expressed our grave concerns about corporate governance in the Green empire, and we know the Arcadia pension fund is also now in substantial deficit. We have been pressing Arcadia’s directors and pension trustees for detailed information on their schemes but very little is published and neither the company nor the trustees – who unlike the BHS schemes do not have an independent Chair – will tell us. Does Sir Philip not want us to know that he was being relatively generous to the Arcadia schemes while the BHS schemes floundered and the company headed inexorably for insolvency? Was he neglecting both? It can’t be right that basic information like the schedule of employer contributions and the length of the recovery plan is not in the public domain. If it goes under then levy-payers and pensioners foot the bill.”

You can read the full consultation response on corporate governance reform from the Work and Pensions Committee here.

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You can watch Philip Green present evidence on the collapse of BHS to the Business, Innovation and Skills Committee and Work and Pensions Committee, Wednesday 15 June 2016 here:  https://goo.gl/eeUggP

Related

In 2010, UK Uncut’s spokesman, Daniel Garvin, said: “Philip Green is a tax avoider, and yet is regarded by David Cameron as an appropriate man to advise the government on austerity. His missing millions need to be reclaimed and invested into public services not into his wife’s bank account.”  See: Philip Green to be target of corporate tax avoidance protest The Guardian.


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Ed Miliband announces that Labour will put democratic leaders’ debates on a statutory footing. And Cameron is a coward.

chickenEd Miliband is quite right to call Cameron a chicken. Tory MP Rees-Mogg appeared on Channel 4 News and laid bare the reason for Cameron’s “predicament” regarding the pre-election debates – it’s all because of a “left-wing conspiracy.” Really.

Gosh, does that mean the BBC’s political editor, Nick Robinson, once chairman of the Young Conservatives, has undergone a radical Trotskyist transformation whilst we slept?

Since when was debate, open discussion of pressing issues that affect the electorate, democratic discussion of policies, political transparency and  accountability deemed a “left-wing conspiracy”? Given the priceless claim of “BBC bias”, despite Iain Duncan Smith’s ongoing intensive monitoring campaign to keep the beeb “right”, I had to chuckle very heartily at that. It gave me quite a sarcastic turn.

I’m sure that emminent communist Lord Patten of Barnes must be delighted that standards haven’t slipped since he resigned last May as the Chairman of the BBC Trust, which is the appointed governing body.

Mind you, the government appointment of Pattern’s successor, following backroom negotiations, certainly raised a few eyebrows. Renowned socialist, Rona Fairhead (appointed a Commander of the Order of the British Empire in 2012) is one of the government’s business ambassadors and a director at the Cabinet Office, advising Francis Maude. There may be a glimpse of a political hinterland, however, from the fact that her husband, Tom, a director of the private equity firm Campbell Lutyens, was a Tory councillor.

Andrew Neil, the presenter of the BBC’s flagship political programmes Daily Politics and This Week, is chairman of the Spectator magazine. His editor is Robbie Gibb, former chief of staff to Francis Maude. And after the BBC’s economics editor Stephanie Flanders left for a £400,000-a-year job at that communist hotbed, JP Morgan, she was replaced by its business editor Robert Peston.

Peston himself has said: “Any suggestion the BBC has a left-wing bias is bollocks and the broadcaster actually veers towards a right-wing, pro-establishment view for fear of criticism.”

Research does indeed indicate that the BBC’s output is heavily biased towards the establishment and right-wing sources. Cardiff University undertook an extensive study, revealing that whilst there is always a slight bias towards political incumbents, the ratio in favour of Conservative politicians appearing on BBC news is significantly far greater than it was in favour of Labour figures when Gordon Brown was prime minister. Business representatives appear much more than they do on commercial news, and appear 19 times more frequently than trade union spokespersons on the BBC Six O’Clock News.

The evidence from the research is very clear. The BBC tends to reproduce a pro-Establishment, Conservative, Eurosceptic, pro-business version of the world. Furthermore, the Queen appoints the regulatory body – the BBC trust –  advised by government ministers, and the BBC trust then appoints the Director General. This has led to a public service run by people with strongly right-wing political and business affiliation.

Tory insiders say that Cameron is “determined” to avoid participating in the televised debates on equal terms with Miliband before the election, as he believes the Labour leader is the only one who would benefit. Chief election strategist Lynton Crosby and the former party deputy chairman Lord Ashcroft both insist Cameron should not risk taking part in a head to head, even if he endures “short-term criticism” for not doing so.

Ed Milband has announced that a Labour government would take legal steps to make sure leaders’ debates become a permanent feature in general election campaigns following David Cameron’s flat, arrogant refusal to take part in the three showdowns proposed by broadcasters.

A Labour government will move to put “fair and impartial leaders’ debates” on a statutory footing in an effort to avoid them becoming subject to the kind of “political wrangling” that has characterised the programmes scheduled for next month in the run-up to polling day.

The new system would work on similar lines to the current rules for planning the number, length and timing of party political broadcasts, under which parties are consulted but not given the power to veto them.

This may be done by establishing the body which negotiates the terms of debates as a trust in statute with responsibility for determining the dates, format, volume and attendees.

A Labour government would set a deadline of 2017 for changes to be put in place, giving more than enough time to plan the debates for a 2020 election.

Meanwhile, the four broadcasters – the BBC, ITV, Sky and Channel 4 – have said they will stick to their previously-announced plans for three debates during the election campaign, and urged the Prime Minister to “reconsider” his refusal to take part in these shows, including a head-to-head showdown with Mr Miliband.

Miliband told the Observer: “In recent days the British public has been treated to the unedifying and tawdry spectacle of a prime minister seeking to duck out of the TV debates he once claimed to support with great enthusiasm. Yesterday the broadcasters made it clear they would not be cowed by his tactics but it is wrong for them and the British public to have governing parties use this kind of pressure in campaign periods. It is time to ensure, once and for all, that these debates belong to the people not the prime minister of the day.”

But Cameron hasn’t exactly led a democratically inclined, transparent and accountable government for the past five years. He knows that in agreeing to just one debate with seven parties, questions will get such a short time for responses that he can evade any meaningful, in-depth scrutiny regarding his appalling policy record, entailing the myriad U-turns, inflicted cruelties and crass, prolific dishonesties of his leadership. And the one debate that Cameron has agreed will take place before his party manifesto is published, which again dodges accountability to the electorate: a profoundly (and consistently) undemocratic approach.

As Vernon Bogdanor, professor of government at King’s College, London says: “Debates should not be subject to the tactical calculations of party leaders. There is certainly the case for a statute requiring debates between leaders of all parties with over 5% of the vote; and a separate debate between the PM and leader of the opposition. That statute is best administered by the Electoral Commission rather than the broadcasters who can too easily be accused of bias.”

Cameron clearly dare not debate head-to-head with Ed Miliband – which is remarkable, given that the Tories’ entire campaign is predicated on portraying the Labour leader as “weak and incompetent.” So why is Cameron too afraid to confront him in public?

Last year I wrote that people often mistake Miliband’s decency and refusal to engage in negative smear campaigning as “weak”: it isn’t. This year, Ed Miliband has acknowledged that perception – fueled by a desperate Tory party and right-wing media barons that have endeavoured to portray Miliband as “unelectable” – asked us not to make that mistake, in an interview with Simon Hattenstone  – Ed Miliband: don’t mistake my decency for weaknessIt’s worth reading the entire interview, what shines through is Miliband’s genuine warmth, honesty, decency, strength and conviction in his principles.

Miliband is no “career politician” and Cameron knows that formal debate with him would serve to juxtapose unfavourably – exposing the vast differences between his own unprincipled archetypal anti-heroic Flashman character – a manipulative scoundrel and liar, a cunning cheat, a corrupt and coarse coward  – and a steadfast, decent, true partisan, conviction politician with principles and integrity. Miliband is precisely the prime minister that this country so desperately needs. Cameron knows it. He doesn’t want the public to know it.

Cam weaknessThe right-wing media campaign, aimed at attempting to undermine Miliband’s credibility as a leader, arose precisely because Miliband is the biggest threat to the UK power base and status quo that we’ve seen for many decades. He’s challenging the neo-liberal consensus of the past 30 years – now that is a plain indication of strong leader, and someone with personal strength and courage. Qualities that Cameron so conspicuously lacks.

I wonder if the Tories consider their imminent loss on 7 May due to their own callous policies, prolific lying and unmitigated economic disaster these past five years a left-wing conspiracy, too?

Laugh out loud.

 

Further reading:

Cameron’s chief spinner on leaders’ debates: No no no! The PM should hide and throw things at Miliband

The establishment are ‘frit’ because Ed Miliband is the biggest threat to the status quo we’ve seen for decades

The moment Ed Miliband said he’ll bring socialism back to Downing Street

Miliband is an excellent leader, and here’s why

The Tories attack Miliband because they’ve got no decent policies

The BBC expose a chasm between what the Coalition plan to do and what they want to disclose

Once you hear the jackboots, it’s too late

tory liesThanks to Robert Livingstone for the excellent memes.

Labour MEPs secure support to reject the ISDS clause in the TTIP

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In January, Labour MEPs called on the European Commission to provide alternatives to the inclusion of the Investor State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP), following its response to a Europe-wide public consultation.

Glenis Willmott, Labour MEP for the East Midlands, reports that Labour have secured the support of their colleagues in calling for the ISDS clause to be removed from the EU-US trade deal.

The controversial ISDS clause of the TTIP would allow private companies to sue governments if they felt that a decision or law impacted on their ability to make profit. It will now be opposed by the Progressive Alliance of Socialists and Democrats (S&D) group, which Labour MEPs are a part of.

On the 4 March, the S&D group in the European Parliament decided to oppose ISDS in an almost unanimous vote. The proposal was supported by 78 votes to five against. The adopted position was drafted by Labour MEP David Martin, who is the group co-ordinator on trade issues.

The S&D working group was headed by UK Labour Party MEPs including David Martin (chair), Jude Kirton-Darling (spokesperson on TTIP and CETA – The Comprehensive Trade and Economic Agreement: the negotiated EU-Canada treaty) and Richard Corbett (Labour’s Deputy Leader in the European Parliament).

David Martin said: “We have always been opposed to ISDS as a group, although we didn’t have a chance to adopt a formal decision on this matter since the last European elections in 2014. In doing so today, we are responding to the thousands of constituents and the many civil society organisations that have asked us to clarify our position.”

Jude Kirton-Darling added: “This decision … will prove to be a real game-changer, not only in the negotiations between the EU and the US but also with respect to the ratification of the Canada agreement.

The European Commission and Europe’s Conservatives will need our support in the end if they want to see TTIP through. Today, we are sending them a loud and clear message that we can only contemplate support if our conditions are met. One such condition is we do not accept the need to have private tribunals in TTIP.”

 Richard Corbett said: “Today the Labour Party has demonstrated that engaging with our neighbours across the EU yields tangible results in the interest of the general public. Labour were instrumental in securing this outcome, and this is a tribute to the hard work, commitment and resolve of Labour MEPs.”

Glenis Willmott summarised : “This decision by the S&D group will be a real game changer not only in the negotiations between the EU and the US but also for the approval of a trade agreement with Canada. The European Commission and centre-right group in the Parliament will need our support if they want to see TTIP through.

“Today, we are sending them a loud and clear message we can only support it if private tribunals are left out of TTIP. Labour has proven that engaging with our neighbours gets real results in the public interest. We were instrumental in getting this agreement and we will continue to stand up for the NHS and our public services.”

This is an excellent achievement. The ISDS contradicts principles of democratic accountability and would potentially allow one government to bind another for decades to come. Unlike the great majority of other treaties, investment treaties have very long minimum lifespans ranging up to 30 years.

Much debate has arisen concerning the impact of controversial ISDS on the capacity of governments to implement reforms and legislative and policy programs related to public health, environmental protection, labour and human rights.

It’s been of particular worry that the current Tory-led mass privatisation process has been a total failure. In the UK, we already have a highly corporatised Government. We have witnessed scandalous price-rigging, and massive job losses, decreased standards in service delivery and a disempowerment of our Unions. This is because the Tories will always swing policy towards benefiting private companies and not public needs, as we know.

In Britain, privatisation was primarily driven by Tory ideological motives, to “roll back the frontiers of the State.”

Where the ISDS has been forced into other trade agreements, it has allowed big global corporations, already with too much power, to sue Governments in front of secretive arbitration panels composed of corporate lawyers, which bypass our domestic courts and override the decisions of parliaments and interests of citizens.

Not that this would be a particular issue of concern in the case of the UK, with the current Government always favouring policies that promote the interests of such powerful businesses, anyway.

But this mechanism would also remove any chance whatsoever of public interests being a consideration in the decision-making process.  In short, it would bypass what remains of our democratic process completely. And it would bind subsequent governments.

Worryingly, moves by a future democratically elected government to put the deregulation process into reverse and bring our public services – including our NHS, railways, water, energy and other utilities – back into public ownership would be confronted by an international court system (ISDS) where lawyers will judge what is or is not a barrier to “free trade.” And to reiterate, it would be carried out behind closed doors. Corporates can go on to sue nation states that stand in the way of “free trade” and threats to future as well as actual losses to profits.

The Labour Party understand that no matter how economically beneficial the Conservatives have claimed the TTIP to be, potentially, such serious threats posed by the ISDS clause to civil rights, citizen well-being and democracy are untenable.

252299_486936058042594_609527550_nThanks to Robert Livingstone.