Who wants to be the Greens' mayoral candidate?
Plus: Scam shops in parliament • Palantir sues the mayor • Pret cornichon shortage latest • Google's foxy HQ finally opens
Now the heatwave’s over (at least for another week or so) we can return to normal service. Subscribers get an exclusive look at who’s in the running to be the Greens’ mayoral candidate as the party attempts to dethrone and/or replace Sadiq Khan.
Scroll to the end for that.
But first, an update on our dodgy gift shop investigation.
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Why’s your London high street full of dodgy shops? It’s the tax evasion, stupid.
Our award-winning investigation into London’s dodgy high street gift shops, which has already helped prompt HMRC raids on some of the capital’s Harry Potter shops, was raised again in parliament at the Treasury select committee on Tuesday.
We’ve spent 18 months travelling across the capital investigating this topic. It’s led us to conclude that, while money laundering and other illegal activities play a part, the biggest reason for the explosion in the number of dodgy shops in the capital is the collapse of high street tax enforcement.
If a shop is raided by trading standards, or sued by a local council over nonpayment of business rates, the punishments can be absorbed as a cost of doing business. In any case you can ‘phoenix’ by shutting down your company with your tax bill unpaid and reopening the following day with another unfortunate patsy director signing the paperwork. It’s only a visit from HMRC that strikes fear into the actual operators.
In parliament Siobhan McDonagh, the Labour MP for Mitcham and Morden, cited London Centric’s reporting on dodgy gift shops and asked the witnesses about “one of London’s most prominent landlords, Criterion Capital, letting shops to people on student visas”.
She told parliament how we’d uncovered that the supposed legal operators of some of London’s most prominent retail units were people living in car parks or overcrowded shared accommodation. McDonagh said: “It’s impossible for anybody to rationally believe that that the individual [legally running the business] has the access to funds and all sorts of support that a company running a business like that would actually have”.
(Criterion’s lawyers previously told us they have no responsibility for the tax affairs of their tenants but would happily assist HMRC with any investigations into the shop operators.)
Witness Paul Monaghan, of the Fair Tax Foundation, told MPs that accountants and shop operators have clocked they usually won’t suffer any substantial punishment if they opt out of paying taxes. He said this realisation that paying taxes is optional is contributing to the state of local high streets:
“It’s so in-your-face, so pervasive, that at some point it’s going to weaken tax morale in this country.”
“Sanctions work backwards. Accountants will tell their clients, ‘If you do this, this will happen,’ and they’re less likely to do it. But if the sanction is, ‘If you get caught, ask your sister to sign it’ — it’s nothing.”
“People have to think, if they’re fraudulently doing this year after year, that their car is on the line, their house is on the line.”
“The sanctions, when you’re caught, are less than if you’d been caught littering.”
Monaghan also told the MPs that London is a national innovation centre when it comes to tax evasion. Many high street tax scams, such as dodgy American Candy Stores, start in the capital before rapidly spreading throughout the rest of the UK. (One exception is snail farms, which started in Lancashire and then slithered south.)
“Once a scam is invented and people see it, it’s like wildfire, it goes through the country.
“I met [an accountant] at a conference last week... he was literally crying, saying every one of my clients asks me to do this, this and this, which is fraudulent, because… they tell me they’ll move if I don’t.”
What if the little guy is the problem?
All of which can pose a moral challenge. Investigative journalism into tax evasion has traditionally focussed on big corporations doing clever offshore planning using expensive lawyers. This provides easy hate figures and someone prominent to blame.
What’s becoming apparent, as we continue to dig into this, is that vast numbers of small businesses unilaterally opting out of paying tax is now a far bigger financial problem for both the national government and local London councils. It’s also one of the main reasons some high streets and large parts of central London are in a mess.
There was one moment in Tuesday’s hearing that made this particularly clear, especially in the context of London’s struggling hospitality businesses.
Labour MP Yuan Yang asked if dodgy shops opting out of paying tax is “actually inflating the commercial rent on high streets.”
Witness Alistair Townsend, a fellow at the Institute of Revenues, Rating and Valuation, told MPs: “I’m afraid that is the case.”
In short, if your local legitimate independent shop, restaurant or cafe plays by the rules and pays its taxes then it only has a limited amount of money left in its budget at the end of the month to pay rent.
Your local dodgy shop, which has fewer customers than the legitimate business but has chosen not to pay its taxes, has more money left to pay a higher rent.
This way, MPs were told, over time the dodgy shops will almost always have a competitive advantage when it comes to bidding for new retail units and swamping the high street.
If HMRC continue to feel pressure from politicians, the public and the media to take this seriously then this tide could be stopped. With your support, we’re going to keep reporting on it.
Quick updates
💷 Former Herne Hill resident Andy Burnham dubbed London “the world’s greatest capital city” this week. The likely future prime minister is committed to moving part of the Downing Street operation to Manchester and downgrading London’s importance to national government. But his broader devolution plans could result in London’s underpowered mayoralty gaining substantially more control over the city. As a start, Burnham said this would include giving Sadiq Khan (or his successors) more control “over education and housing”.
🌉 Plans to reopen Hammersmith Bridge to cars and buses have been formally abandoned by Hammersmith & Fulham council on cost grounds. The Victorian suspension bridge has been closed to motor traffic since 2019 due to structural weaknesses and any money available will now be used to maintain it as a walking and cycling route. A community group is now arguing the council should introduce lightweight self-driving vehicles from Ohmio (artist’s impression below) to enable access for those less able to walk across the river.
⚖️ Data firm Palantir had threatened to sue after Sadiq Khan blocked a planned £50m contract with the Met police, to the open fury of police commissioner Mark Rowley. London Centric can now confirm that Palantir has made good on this threat and formally filed a legal case against the Mayor's Office for Policing and Crime. To help, Palantir has hired a public affairs specialist with experience of battling City Hall, in the form of Hal Stevenson, who spent the last five years running lobbying operations on behalf of Lime bikes.
🦊 Google hasn’t formally announced it yet but staff began to move into the company’s giant new Platform 37 headquarters in King’s Cross this week, sources at the company told London Centric. We had our fun with the fox invasion on its roof garden but the much delayed completion marks the end of an era for the giant building site. The epic project was first announced in 2013 when the city was still basking in the legacy of the Olympic Games.
🥪 Ever since we brought you the explosive era-defining scoop that Pret’s Jambon Beurre sandwich was off the shelves due to a “temporary shortage of cornichons,” we've had Pret Truthers sliding into our DMs. They’ve claimed that there is no shortage, given the wide availability of mini gherkins elsewhere in the world. With our tin foil hat on, we put this to Pret, who told us that they are “still working hard” to bring the sandwich back, and that their “priority is finding a supplier who can match our quality and very strict allergen requirements.”
Who wants to be the Green mayor of London?
By Polly Smythe and Jim Waterson
With May’s local elections out of the way, political parties are turning their attention to the next big electoral battle in the capital: the 2028 mayoral election.
We’ve previously documented the behind-the-scenes manoeuvring within the Labour Party to replace Sadiq Khan, who may or may not contest a fourth election, with different Labour politicians gearing up for a selection battle that has yet to begin. (As an aside, speculation has been circulating in City Hall that Sadiq Khan and Dawn Butler had a frank exchange of views in May over whether the mayor would run again, following a news story that Butler was preparing to formally launch her succession bid. Neither Khan’s spokesperson nor Butler commented on the claim when we approached them.)
Most of London’s mayoral elections have ended up as straight Labour vs Conservative fights. Yet this time Labour could face a challenge from the left. Buoyed by its performance in May’s local council elections, Zack Polanski’s Green Party is now eyeing up the capital’s top job. But whose name will be on the ballot paper next time around?
London Centric has learned that the Greens’ selection process will formally begin in September, with internal discussions about potential candidates and eligibility rules already well underway.
Here are the internal discussions from within the Greens…
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