PEEL HOLDINGS – END OF EMPIRE?

Outside of the Liverpool/Manchester conurbation few people have heard of Peel Holdings.It owns the Manchester Ship Canal; it built the Trafford Centre and MediaCityUK – now host to multiple television companies – and in Liverpool, is one of the country’s largest port operators.

It also has financial interests in diverse activities such as airports (including Liverpool John Lennon), land, transport, retail, hospitality, energy and media.On Merseyside there are investments in Cammell Laird, Tranmere oil terminal and Frodsham wind farm, plus plans to build 26k new homes on former dockland sites.Further examples further east of Liverpool include regeneration in Salford and Manchester, although not all locals are happy with Peel as it leases out sites to IGasEnergy for the controversial gas extraction known as fracking.Peel owns the land adjoining Salford, but not only is fracking known to be hazardous to people and wildlife, the company refuses to reveal how much money it makes from the leases.

This practice has certainly ruffled feathers in poorer parts of Salford as people view the company as operating behind a veil of secrecy. As well as fracking, opposition was mounted against a biomass incinerator project near Salford – too often Peel seem to neglect consensus with local people.Altogether Peel Holdings – a complex business structure of circa 312 companies worth around £2 bn – owns assets in other concerns with less risk than actually owning those companies – it suits them fine to shirk certain obligations had they not been a holding company; in fact, these hundreds of Peel shell companies are like a huge set of Russian dolls: open one, then find another, yet another one again.I haven’t got a clue how companies such as Peel pay their taxes with such a labyrinthine structure, although it seems that HMRC are satisfied that Peel’s returns.

Regarding personal tax, the owner of Peel is John Whittaker who lives on the Isle of Man and I much doubt he lives there for the hot and sunny weather either.Briefly, Peel’s empire started from an independently wealthy Lancashire family which gained further capital in the 1960’s by removing aggregates from the family quarries.At such an opportune time the M62 motorway was being constructed and as one quarry was exhausted, Whittaker would turn it into an approved landfill site, which once the landfill was completed, would then be levelled and rents would be paid for the newly-reclaimed land – now of course prime real estate.

What would the experts think of this? Yale Business School or the London School of Economics, for example, would say quite plainly that getting paid to dig a hole in the ground, then get paid to fill it again is one great business model!And if the taxpayer assistance is added on – the environmental levy, for example – then both Yale and the LSE would say that holes in the ground are a project you could put your shirt on.

All the same, Whittaker’s opportunity-cost business probably wouldn’t have happened had it not been for taxpayer subsidies.Which just goes to show that there’s no such thing as a free market.But of course, companies don’t like to remind the public of this and all too often the same dogma from books such as Adam Smith’s Wealth of Nations gets banged on about – and then you know it’s just self-interest masquerading as supply and demand.

Anyway, Peel was now flush with money from freehold ground rent and anxious to make more, began buying shares in the Manchester Ship Canal Company.Unlike most British canals, the MSC was never nationalised post-WW2 by Clement Attlee’s government, a move that would change the whole economy of the immediate Manchester area decades later.For although canal revenues were decreasing, there was massive potential from surrounding land in the form of development and housing. The MSC wasn’t an easy acquisition to make for not only were investors resistant to Peel’s takeover plans, but also Manchester City Council saw further problems in the sale which was exemplified in a bitter battle years later over Peel’s plans to build the Trafford Centre shopping complex on fifty acres of derelict land.

By 1996 though work began and two years later, it is the UK’s second biggest shopping mall.When questioned in one of Whittaker’s rare interviews, he described the Trafford Centre as “doing something theatrical, the Dallas effect. To make women, in particular, feel good. If you feel good, you spend more.” 

And so the Trafford Centre’s mantra was to sell, and sell more. The company even successfully lobbied Manchester residents to vote against the council’s referendum to install a city congestion charge. (2) With Peel’s fear that a loss of traffic and subsequent foot-flow into its shops would obviously cause loss of revenue there was board room relief when the congestion plan was dropped.On the other hand, this was much to the detriment of local towns such as Altrincham and Irlam which suffered shop closures.

The Trafford Centre was seen as the jewel in the company crown, but following events over the past six months it’s fortunes have rapidly declined.Sold to the Intu corporation for £1.6 ban – and still the largest property transaction in British history – income has rapidly dropped to the point where Intu’s shares are down from £4 to just one penny.
It would appear Whittaker sold the Centre just in time, but unfortunately for Peel this isn’t quite the case as they held on to 24% share retention.One could say that from Whittaker’s rise to riches from holes in the ground wasn’t entirely successful insofar as he’s dug a bigger hole for himself in holding onto 24% shares – a quarter of £1.6 bn of course is a major drain on the company’s balance sheet.

However, and moving away from the Trafford Centre, this is the age of ‘partnerships’ and Peel is heavily involved with the government and regional councils to develop Ocean Gateway (occasionally called Atlantic Gateway) a massive area of Liverpool reaching along the MSC and into Manchester itself.

Much more grandiose and costly than the shopping centre, Ocean Gateway plans to deliver £50 bn of private and public funding in regenerating mainly derelict dockland.The company timeline for total completion is around fifty years – a long time to construct a new super-city along the MSC, River Mersey and M62 corridors but upon completion, Whittaker has stated that this regional economy would equal that of London

A certain previous Chancellor of the Exchequer, George Osborne, gave full support in his own vision of a ‘northern powerhouse.’In Liverpool some completion is evident especially the new container terminal, Liverpool2, built near the old Gladstone Dock site. Using state of the art container cranes, and built around the berths of many transatlantic liners as well as a naval base

In WW2, Liverpool2 enables the city to regain status as an international port.But at the other end of the MSC Salford has a huge edifice called MediaCityUK, and between these two big ticket projects are plans to development thousands of acres for housing and infrastructure which include Manchester Waters, plus Liverpool and Wirral Waters – the ‘Waters’ name suggesting a new urban future away from the previous dereliction.MediaCityUK is estimated to bring in over £500mn in rents (over 20 years) from the various TV companies there, but I think that pensioners would like to know how much of their TV licence money is being paid to the BBC’s landlord. The landlord being Peel Holdings, no less.But typifying the partnerships’ relations with the community, housing figures high on the list and to Peel’s credit the use of derelict land Is good environmentalism.

As we have seen in Salford’s fracking row however, Peel doesn’t have a great track record in green matters for they’re out to make money based upon results and performance – not clean up the neighbourhood – but if they do learn environmental principles on the way to the bank, all so and good.All the same, there precious little on company websites about social housing – only that vague term affordable housing.

However, let’s have a reality check on the ‘affordable’ bit because house prices have risen faster than wages for many years now – affordable is subjective to someone on a £100k pa. And in both Liverpool and Salford Waters housing areas, folks are more likely to belong to a higher socio-economic bracket – think conspicuous consumption such as two-car garages and expensive restaurants.So far, the 31 thousand people on both Liverpool and Manchester council housing lists are not mentioned.But if the Trafford Centre is Whittaker’s star project, then in Liverpool it appears that Liverpool2 has the same status. Providing hundreds of jobs – both direct and indirect – the new Liverpool cruise terminal also has seen cruise passengers arriving for the first time in decades. 

There’s a certain vitality around the dock areas with major plans for a new stadium for Everton FC, businesses and offices, plus a new ferry terminal leading some commentators to say the skyline is rapidly looking like Manhattan on the Mersey.Anyway, returning to the Trafford Centre and Whittaker’s reversal of fortune – at time of writing (July 2020) the Centre is being handed over to administrators – there are plenty of other investments for Peel to line up in its gunsights.In fact, they’re one of the UK’s largest landowners with over 1000 parcels of prime real estate.

So although their future may look gloomy it depends on how the shopping mall’s debt restructuring will progress before we can write off the Peel empire.For history has proven that Whittaker’s business tactics are as ruthless as any other and as such, will continue to succeed as before.The only caveat is the ‘as before’ because in the case of the Trafford Centre and the retail economy, Whittaker’s empire will soon be in an entirely different place.