Greybull, Jamie Oliver and Prochlorperazine – the Price of Capitalism

It has been a typical week in the life of contemporary British. For a start, Jamie Oliver’s iconic Italian restaurant chain went belly-up, including its Glasgow and Edinburgh outlets. Other similar, mid-market eateries such as Carluccio’s, Strada, Café Rouge and Prezzo are in no better financial condition. Austerity and slow wage growth means that most folk are eating at home using Deliveroo or going to the local take-away. Only the well-heeled can afford to eat out and they prefer top-end restaurants.

Interestingly, the number of workers in the restaurant trade has shot up from 644,000 in 2007 to nearly one million today. The total number of eating businesses has also increased since the big financial crash in 2008. This may seem paradoxical, but the explanation is simple. Austerity and the wholesale attack on state benefits over the past decade has forced people to seek low-paid work in bars, fast food outlets and gig economy delivery services. At the same time, eating cheap food has become the major form of paid entertainment, given the lack of consumer spending power.

Suggestion: it is about time the trades unions made an active effort to recruit in the restaurant and fast food trades. A million unionised workers in this sector would have political and economic clout. [ED adds – the problem of exploitation in catering and restaurants is exacerbated by the fact that all of the food journalists are compromised by their relationship to chefs, entrepreneurs, managers and food. There is much “Mint Lamb” journalism in food writing as in football].


The other big news was the collapse of British Steel at Scunthorpe. Here we see the insanity and illogicality of contemporary neo-liberalism and finance capital in all its glory. Three years ago, Tata’s ailing steel assets in Scunthorpe were flogged to a slippery private equity bunch called Greybull, which (surprise, surprise) has its HQ in the tax haven that is Jersey. Famously, Greybull acquired the Scunthorpe plant for the princely sum of £1 – thereby saving the Tory government the embarrassment of seeing the UK steel industry disappear.

You might ask why a private equity firm – named after the tiny Wyoming town where its founders first made a buck – was interested in entering the cut-throat global steel business? Answer: Greybull is a vulture fund, like the notorious Cerberus group. Vulture funds have become the fastest growing sector of global finance capital since the 2008 Crash. They specialise in buying (cheaply) so-called “distressed” assets; i.e. companies or individuals facing difficulties paying back regular debts to ordinary banks.

Why take the risk? Actually, vulture funds organise their activities so they don’t carry much risk. Cerberus, for instance, buys distressed mortgages (for example from RBS or the UK Treasury) at a song. But it pays for these assets using a fiendishly complicated set of cross-border, shell companies which ensures its outlays are set against tax losses. In other words, Cerberus gets the distressed loan book for virtually free. It then makes a turn by sweating the debtors for anything they can cough up.

In the case of Greybull, this form of legal larceny is applied to acquiring distressed manufacturing companies like Tata/British Steel for essentially zero cost – because nobody wants them. Next, Greybull borrows heavily against these “assets”. British Steel Scunthorpe has outstanding loans worth £336m against at paper asset value of £82m. Greybull then charges the subsidiary a “management fee” – according to Companies House, in the two years following the acquisition of British Steel for £1, Greybull collected £6m in management fees from the company.

Greybull was also led a consortium of vulture funds that bought Comet, the electrical retail chain, in November 2011. The purchase price in this instance was £2. In Greybull’s hands, the corpse of Comet traded for barely another year. Again, money was syphoned off. When Comet went into administration in November 2012, the UK taxpayer was stuck with £23m in redundancy payments and £26.4m in unpaid corporate taxes. But Greybull and its partners recouped £120m from the insolvency. Fortunately, in June 2014, the courts ruled that Comet did not follow proper redundancy rules, meaning the vulture funds had to cough up £26m – leaving them circa £100m in ill-gotten gains.

Our friends at Greybull were also up to the oxters in the crash of Monarch airlines in 2017, which left 100,000 passengers stranded, costing the taxpayer £60m to bring them home. Greybull acquired Monarch in 2014. True, it invested an estimated £80m of its own cash but it got £125m of planes plus landing slots worth a cool £60m on resale. True to form, Greybull then loaded Monarch with debt, including £100M from Boeing to buy its new 737 MAX (yes, the one that crashed)

Suggestion: vulture funds such as Greybull and Cerberus should be regulated out of existence. As for British Steel Scunthorpe, that should be nationalised.


Finally, it was revealed – by the official Competition and Markets watchdog – that four big pharmaceutical firms have been colluding to drive up the price of an anti-nausea tablet (Prochlorperazine) by 700 per cent, when sold to the NHS.

I take this rather personally as this drug was prescribed for my wife, who has cancer. The cartel – composed of Alliance Pharma, Focus, Lexon and Medreich – forced up the NHS bill for Prochlorperazine from £2.7m to £7.5m, between 2013 and 2018.

Finally, RBS was fined again for misconduct. This time it was £14.5m for giving duff mortgage advice to customers. RBS avoided paying the full £20.7m fine by paying settling early, thus qualifying for a 30 per cent discount. Isn’t capitalism wonderful?

Comments (13)

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  1. Mark Bevis says:

    “Isn’t capitalism wonderful?”
    Aye, and soon to be abolished. The only question is whether we are to dismantle it in a structured and orderly fashion, or let the unsustainability of the whole concept of infinite growt on a finite planet bring about it’s own chaotic collapse. Failure to make a decision either way will mean Mother Nature will move in, (well, is already moving in) and finish the job for us in a very brutal fashion.

    Or put more bluntly:-
    Do we want
    a) a low bodycount scenario
    b) a high bodycount scenario
    c) 90%+ extinction of all life forms on the planet.
    At the moment we appear to be on a track somewhere between options b and c…..

    1. Swiss Toni says:

      “Isn’t capitalism wonderful ?”.

      We wouldn’t be able to have such a debate on this site if it wasn’t for the capitalists, investors, financiers etc who have facilitated the digital revolution. This would not have happened if capital had been used to prop up unprofitable businesses like British Steel and Jamie’s Italian.

      Capitalism provides the motivation for people to work hard, gain qualifications, innovate etc. We all benefit from the products and services which flow from this.

      Some benefit more than others, ie those with the most marketable skills. This inequality of outcomes is a price well worth paying.

      The socialist alternative has proved time and time again to lead to economic stagnation and curtailment of individual liberties. Look at Venezuela or Greece or Zimbabwe or North Korea.

      1. Josef Ó Luain says:

        Isn’t ideology wonderful, when you specialize in ideological argumentation?

      2. Geejay says:

        I think you need to read Mariana Mazzucato: The Entrepreneurial State. She explains how the State has been behind many of the tech innovations while the capitalists grab all the profits while avoiding all the risks.

      3. Bill Ramsay says:

        Aye right. Everything in the I Phone thats siting beside the I Pad mini I am writing on was developed in state funded R and D projects.

        1. Your right Bill, the tech we have has been massively supported by the public through research universities, the military and others

      4. SleepingDog says:

        On the digital revolution, open source or free (non-commercial) software and royalty-free standards make up the bulk of web servers, web browsers, the web and Internet stacks, web standards and so forth. The whole web project would never have got off the ground it if were proprietary and commercial (indeed attempts to create proprietary walled gardens regularly failed). Modern communications technology is dependent on a vast digital commons, and many people contributing without payment in their free time. Sure, commercial organizations can piggyback on top of all this lovely communism, and their revenues contribute to the hardware and running costs. And states get in on the act. But the people who made it all happen were more likely to be government-funded computer scientists.

  2. Willie says:

    Good article George.

    Isn’t it wonderful though for ST and his ilk to believe that the digital age would not have happened if it were not for capatalism.

    Ditto that there would be no human motivation but for capitalism.

    A neo liberal caveman.

  3. Wul says:

    Apologies for my lack of sophistication and political nous, but I kind of struggle with the “capitalism is always evil” viewpoint.

    Firstly, companies like Greybull are not really operating in an honestly capitalist market. They exist in a “socialism for the rich” environment whereby private funds receive state handouts. They are benefit junkies, scroungers, parasites whose net effect on our prosperity is downwards. They are a liability we should excise ASAP.

    Secondly, if by “Capitalism” we mean a structure whereby, once a certain amount of money and influence have been accumulated, the “Capitalist” and his offspring are guaranteed wealth & power in perpetuity, then I’m dead against that.

    I’d like a market economy where good ideas and hard work are rewarded up to a reasonable limit, set by taxation and negotiable by democracy. Laws which mitigate against greed and corruption would be in place, as would laws which de-couple corporate interests from democratic interference.

    “Socialism”, in the forms it has appeared in other countries, is not attractive to me and I am certain it is a huge turn-off for most of the population. Best find another word.
    Even as a confirmed lefty, the word “Socialist” conjures up an image of a megaphone welding, layabout scruff railing at the world from the pavement. Sorry, my prejudice and baggage and unfair, I know. But again, shared by a majority I suspect.

    Maybe socialism never gets a chance because it get corrupted by capitalist interests; World Bank, IMF, Troika etc.

    Let’s decide together what a fairer country would look like and build it.

    1. Swiss Toni says:


      If left wing political parties want to start winning elections they need to get over their obsession with equality of outcomes.

      Outwith left wing echo chambers, the majority of people, including those on below average incomes, do not resent people with more money with them. They are much more likely to resent the government meddling in their lives.

      The state already performs a large scale redistribution of wealth and to ramp this up further through increasing taxes on the better off and making more generous payments to those who are unable or unwilling to work would reduce the prosperity of the nation.

      The political and economic theory of socialism is based on the assumption that certain groups of people, e.g the rich, exploit other groups,e.g the poor,and that the state is morally obliged to intervene to address this unfairness.

      Capitalism is not a theory. It is a practice which has developed over thousands of years and has resulted in the development of products and services which have enhanced all our lives.

      The political theory of conservatism embraces free market capitalism and recognise that there is a role for the state in redistribution of wealth, regulation of the economy and providing public goods. Conservatives do not see society as being split into groups who are in conflict with each other. Instead they see society as being comprised of individuals and their families, and that it functions best when individuals are encouraged to take responsibility for their own economic, social and moral wellbeing.

      1. Wul says:

        I think your view of capitalism is overly uncritical. Markets and entrepreneurialism are fine ( and couldn’t exist without the rule of law and infrastructure provided by the state).
        However, human nature, being what it is, some folk will always aspire to accumulate more that they can possibly need.
        Take Amazon as an example. Making millions in the UK, from customers educated and kept healthy by the state. Using an infrastructure provided by the state. Yet contributing almost nothing in return. Paying almost no tax. Paying staff very little (who themselves can pay little income tax, probably in receipt of tax credits). Amazon owned by the world’s richest man. Truly obscene and a net loss to our country.

        That’s why we need laws to curb the concentration of too much wealth in one person’s hands. It’s not a healthy arrangement for the rest of society or the billionaire.

        How can a man truly be said to “earn” several million pounds per year? Surely you can only accumulate that amount of cash by exploiting the labour of other human beings or an unfair share of earth’s resources?

        The “Market” ideally wants unlimited, free resources being processed by unpaid slaves. That’s its end-game if unregulated. That would be the most “efficient” business model.

      2. The Clincher says:

        Swiss Toni – capitalism has not been in existence for ‘thousands of years’. In its modern form you could say that it started in Elizabethan times when mass production of sorts began. Therefore, it is historically speaking, like feudalism, only had a short life span. Economic systems are continually evolving and are not set in stone.

  4. Derek Henry says:

    This is excellent !!!

    It’s such a crying shame George and Nicola and the SNP are going to get Scotland trapped in their 3% deficit rules, 6 pack, 2 pack, excessive debt proceedure, corrective arm neoliberal globalist nonsense.

    It’s Indy at all costs no matter what fiscal prison they get us all trapped in.

    George knows this of course but won’t say a word. He’ll hide the truth from the Scottish people and it will all be too late. I don’t know how you sleep at night George I really don’t.

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