Hi ,
Here's a portrait of a vicious inequality cycle: have you ever heard of the Arch Company? You may have seen the small plaques on railway lines letting you know they own and manage the railway arches that house thousands of small businesses across the UK. But you might not know that the cute name is actually a venture by US private equity and landlord giant Blackstone Group, or how they exploited privatisation to create a monopoly.
Historically, railway arches were owned and rented out by the railways themselves, and later the public body Network Rail. These cramped, noisy, windowless spaces weren't prime property and for the most part, their owners were focused on running trains, so rents were low – creating thriving communities of independent businesses. But in 2019, Network Rail sold off 5,261 rental spaces in one go, including almost all of the railway arches, to Blackstone Group's newly-formed Arch Company for £1.48bn. Network Rail needed the money thanks to government funding cuts.
The sale instantly made Blackstone Group the largest small business landlord in the UK. Why buy these spaces? Network Rail themselves estimated the rents paid by these spaces would increase from £83m to £160m a year, so it would only take Blackstone 9-and-a-bit years to start generating pure profit without having to do any work. But Blackstone now held a near monopoly on these spaces, so why content themselves with that?
Immediately, Blackstone began hiking rents to eyewatering levels – 100% increases in some cases – forcing out hundreds of businesses. Blackstone, which holds over $1 trillion in assets, could afford to leave hundreds of units vacant as their businesses folded, waiting for new and often corporate tenants who could pay their hiked rents.
Blackstone Group understand the power of a monopoly in the age of inequality. They also own VFS Global, the company that runs the UK's entire visa system and is also alleged to use their monopoly to hike prices. In the US, they've bought nearly 275,000 homes for rent and again they've built monopolies by outbidding other buyers; this time by targeting low-income and racialised communities. Their rents are set by algorithms, tenants are evicted at high rates, and properties are badly maintained. They also own thousands of homes in the UK. It's a strategy to strip wealth from us and hand it to shareholders and CEOs.
Not only are monopolies increasingly the foundation of our economy, CEOs are enjoying an age of monopoly money payouts. New research from the High Pay Centre yesterday finds that for the third year in a row, UK CEO salaries have hit record highs at 122 times the average full-time worker's salary. Global dividends also hit record highs last year, as inequality of wealth helps build enormous inequalities of income.
And to protect that inequality, wealth lobbyists are investing in media strategies like the thousands of pieces of news encouraging our government not to tax millionaires generated by one deeply dodgy report from millionaire investment and migration firm Henley and Partners. Inequalities of wealth and income used to create inequalities of power in a perfect cycle! |
