The wealth creators (pt.2)

More on the ‘wealth creators’ thanks to the Daily Telegraph (1/10/24). The private equity firm Clayton Dubiler and Rice (CD&R) who loaded Morrisons supermarket chain with £7 billion of debt is one of several ‘investors’ who have now loaded Belron, the company behind Autoglass with billions of debt—in order to reap billions in dividends. According to the Telegraph: ’To fund the payout, Belron is being loaded with nearly €9bn of new debt which has led rating agencies to cut its debt rating to “junk” status. Borrowing money to pay shareholders, known in financial circles as a “dividend recap”, is controversial  because it puts more financial stress on companies while enriching owners.’

Where I wonder does the money created by this debt end up? Jersey? The Cayman Islands? Surely this ‘wealth creation’ masquerade is something Labour might want to curtail? No, probably not. One of the people set to benefit is Gary Lubner whom the Telegraph reports will take away £125million. Lubner has donated over £5 million to the Labour Party since Starmer took over. There are no reports that any of this money was used to pay for Starmer’s shoes or underwear. Yet.

It is deeply ironic that in certain circles this sort of financial behaviour will be seen as perfectly respectable. People like Rachel Reeves will have nothing to say about it. But when it comes to public debt we’re treated to a patronising tale about ‘balancing the books’ and ‘fiscal rules.’