How a major English city sold out to Abu Dhabi’s elite – and not even cheaply | Aditya Chakrabortty

London is a giant pantomime this summer. Just watch the politicians and journalists, gasping with excitement, haggling and haggling over who will be the Tories’ next head boy. But if you want the truth about how power and money work in the UK today, ditch Rishi Sunak and Liz Truss and head to Manchester. Yes, Manchester: the comeback city that traded cotton mills for skyscrapers, and is now acclaimed by the Financial Times and George Osborne. The metropolis that taught the world so much about industrial capitalism 200 years ago is now offering another harsh lesson about its 21st century financialized version.

Go a few minutes east of the town center and walk from New Islington to Ancoats. The block follows the block of newly built and freshly converted apartments and houses, many of which border a beautiful marina which glistens in the July sunshine. You can rent or buy these places right now, as long as you don’t mind how similar some look. pile-em-high student boxes and they all cost a bundle. This is what post-industrial regeneration looks like, isn’t it? Red brick in teeth and claws. But take note: nearly 1,500 of these homes come from a single developer, and that’s quite a sobering story.

Launched in 2014, Manchester life was hailed as a “billion pound deal” between the City Council and the owner of Abu Dhabi-based Manchester City football club. The local authority owned swathes of brownfields and Sheikh Mansour, the club’s owner, was ranked among the richest men on the planet. Working together, the result would be homes for people in desperate need and pots of money. Then council leader Richard Leese promised “a world-class example of regeneration”.

Meanwhile, human rights groups have warned Manchester Council against its powerful new trading partner. The Abu Dhabi United Group investment fund is formally separate from the kingdom, but its owner, Sheikh Mansour, is the deputy prime minister of the United Arab Emirates and the brother of Abu Dhabi’s ruling crown prince. In April, reporters from Der Spiegel magazine published documents suggesting the state of Abu Dhabi had facilitated payments to Manchester City. At the very least, the investment fund is closely tied to this Amnesty International described as “one of the most brutal police states in the Middle East”. To be dissident in the United Arab Emirates is to rot in prison, in a regime that has proportionally more political prisoners than anywhere else in the world. According to Human Rights Watch, migrant nannies or poorly paid builders are:forced labor”. Yet such facts did not deter the Labor leadership of the council from moving forward.

It was a huge step forward for Sheikh Mansour who had, only half a decade earlier in 2008, bought a struggling football club. Now his investment fund was entering into a joint venture with the British state (albeit locally), getting its hands on prime real estate and shaping the very geography of the city. Those of Vladimir Putin’s oligarchs who put on pieces of London could never dream of such a glittering prize.

As one of the rulers of an autocratic kingdom with an abysmal reputation for repression and dependence on oil revenue, Sheikh Mansour had much to gain from this partnership. It is the municipality that holds almost all the cards: the hectares of the public domain, the town planning regime, the public subsidies. Yet somehow, according to new research shared exclusively with the Guardian today and written by academics at the University of Sheffield, it was Sheikh Mansour who pocketed almost all winnings. The report says nine sites were sold to the sheikh at a fraction of their value, and well below what other nearby land has recouped (the council says it used independent appraisers using standard valuations, though he does not give more details). They were on leases lasting 999 years, well beyond the norm. And the fund transferred what had been state assets to companies registered in Jersey.

This walk along the water from New Islington to Ancoats now passes through blocks of privatized land belonging to an offshore tax haven, which brings millions and millions to a key member of the wealthy elite who runs a monitoring status at the other end of the globe. One of the greatest cities in the world has sold itself to a top official of a brutal autocracy – and not even for a good price.

That’s the devastating implication of the Manchester Life scheme’s first in-depth study, which is the product of months spent on the company’s accounts and planning apps. The city council is sometimes more inclined to criticize its critics than to hear what they have to say: Leese, its leader for 25 years until 2021, once answered to those calling for more affordable housing as “middle class tosspots and I hate them”. So let’s hit any personal attack on the head: the experts have all lived in the city for decades, I’m one of the independent, unpaid advisers on the advisory committee, and this is a report published squarely in the public interest.

Among a political establishment that is still scratching its head over how to level up, Manchester is celebrated as a trailblazer. His Labor leadership was hailed by Tory administrations, while Osborne called his chief executive, Sir Howard Bernstein, “British local government star”.

Bernstein led the council for nearly two decades until 2017 and served on the board of Manchester Life. Yet his success has cost the little people who live in the city dearly. Not only were the assets they owned sold cheaply, but they received little return. The nine developed sites have no social or affordable housing, which council planning officers have justified with statements such as: “There is already a high level of affordable housing in the immediate area”. The same council admitted earlier this year that almost 4,000 children in the city sleep each night in temporary accommodation.

In Manchester Life developments, a two-bed flat is considered a bargain if it costs £369,000 – a price that puts it beyond the reach of couples working full time on an average salary. On the tax side, the sums paid to the tax authorities seem derisory. One of its main subsidiaries earned more than £26million in the five years to 2021, but, according to the researchers, paid less than £10,000 in tax – an effective rate of four cents on every income book.. Manchester Life told me that its subsidiaries “pay all UK corporation or income tax due on rental income and profits”. However, he would not disclose how much tax he pays or how much he earns.

It’s fair to say that New Islington and Ancoats are much nicer areas than they were even five years ago – but the big question is who has gained from redevelopment and who has lost. Putting precise numbers on this is tricky when much of the information about Manchester Life – a company using state assets and state grants with public authority – is strictly confidential.

I asked the authors of the report to calculate how much the council could have made from this agreement. Looking at examples from other land deals and other local councils, their conservative estimate is £33m, plus up to £1.7m a year in rent. The board and the joint venture called the sum “speculative.” The board also said it expected more money to come from a surplus or profit-sharing agreement, although it did not provide any details of that agreement and would not not be made public. But for comparison, that £33m would be more than cover what the city pays in a year to house families in temporary housing.

Sheikh Mansour will likely know exactly how much Manchester Life is making for him – and can expect 10 centuries of rental income from land in this great city. He seems satisfied with the arrangement. A few months after Bernstein retired from the board, he was appointed senior strategic adviser to City Football Group, owned by Sheikh Mansour. I asked the board what procedures it followed when appointing Bernstein later with such a major business partner. He couldn’t tell me.

Perhaps the finest of Manchester Life developments is Murrays’ Mill, a conversion of one of the world’s first steam-powered cotton mills into apartments. It stands in the heart of Ancoats along Bengal Street. My family hails from Bengal, a region that once wove the finest textiles in the world, muslins so fine the French sighed for their perfection. It was the East India Company’s entry point into the riches of South Asia.

To look at such names carved in brick is to remember how Manchester came to its industrial wealth and Britain to its world pre-eminence, from cotton harvested by slaves and by destroying foreign industrial competition, even criminalizing the sale of Indian textiles. But today it symbolizes something else: a country celebrating its receipt of capital from other states in the seediest of terms as a triumph. The difference is that the Indians had no illusions about what had happened to them.