Unfair escalating house lease? Seven Questions about Housebuilders’ possible financial connections to Ground Rent Companies and sold-off leases

 

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This blog is under development…

The background to these 7 Questions:

‘There is an increasing awareness by pension funds and annuity funds of the attractive characteristics that come from ground rents and the associated cash flows. Not least there is an asymmetry in the returns available with a high degree of downside protection as well as the potential for upside (for example from increasing house price values over the long-term). This is combined with the apparent paradox of a gain (rather than a loss) in the unlikely event of there being a default.’ (Forfeiture of a house.)  … With the tightening of credit spreads that we have witnessed over the last 18 months to 2 years, ground rents represent an even more attractive risk-adjusted return relative to many other types of comparable, credit-based assets.  

– Mark Herne, Managing Director and Investment Consultant at Redington, writing in Redington Asset Class Spring/Summer 2013.  Redington signed as advisor to Taylor Wimpey Pensions in 2016.

 

Seven Questions for the Housebuilders over Leasehold Escalation

Q1 – Do Britain’s housebuilders retain an interest in a house leasehold in some way after it is transferred by them to a third party?

Q2 –  Did Taylor Wimpey’s Pension Division increase their bond holdings by investing directly or indirectly in ground rent companies under the guidance of their pension consultant Redington in 2016?

Q3 – In the case of Adriatic Land v leasehold residents at Silver Birch Close in Bolton, where the leases had doubler terms, why did Taylor Wimpey offer to pay the residents £750 each to have the leases they sold to Adriatic Land varied to RPI leases, but keep them in place if Taylor Wimpey or their pension division had no further financial interest themselves in the leases after selling them on?

Then going further, in the case of Long Harbour v leaseholders, why did Taylor Wimpey get involved in the agreement to vary lease doubler leases back to RPI if Taylor Wimpey or their pension division didn’t have a connected ongoing financial interest in the ground rent income from Long Harbour?

Q4 – Persimmon ran several ground rent companies including Persimmon Group (No 3) from 14th July 2009 to November 19th 2014.  It was transferred to Adriatic Land 2 Ltd.  Clearly it benefited from selling escalator leases for 5 years.  The question is, does Persimmon continue to have a direct or financial interest in these leases?  The same question can be asked of Bellway, who had three companies — Seaton Group SPV 5 (SPV stands for Special Purpose (investment) Vehicle, a name often used in conjunction with the ground rent industry), Bellway XI, and Bellway XII — registered as associated companies of Bellway, for 4 years from April 2009.  They were subsequently re-named Adriatic Land Group 6 (GR1), Adriatic Land 3 (GR1), and Adriatic Land Group 4 (GR1), and their ownership was subsequently transferred to Adriatic Land.

This question is amplified when Nationwide Building Society’s Pension department confirmed a £54m investment valuation in ground rents as highlighted by The Telegraph on 23rd May 2017 at: http://www.telegraph.co.uk/money/consumer-affairs/leasehold-rip-offs-nationwide-building-society-among-big-investors/

Previously PropertyWeek.com confirmed EcoWorld  Ballymore had sold £60m of London Residential Ground Rents, generating £1.6m (2.67%) from 2,500 units per year to Nationwide pensions department (their funds are also in deficit) in December 2016, see: http://www.propertyweek.com/news/ecoworld-ballymore-sells-ground-rents-on-london-resi-schemes/5086817.article (regn required).

Q5 – Is the reason builders and lenders in the residential property market have been very quick indeed to assist ground rent companies vary their terms because they are very concerned, as Taylor Wimpey and Nationwide seem to be, that they do in fact maintain a direct or indirect financial interest in the ground rents they created, then claimed to have sold off, and have no wish to have this inconvenient finding brought into public view?

Q6 – If it is shown that the builders are continuing to receive monies directly or indirectly from leaseholders after they transferred the leases from under the noses of the leaseholders, in addition to an abuse of trust, is this also a conflict of interest?

Q7 – Did the builders create the house leaseholds to get income to repair their pension fund deficits?

Most of Britain’s large defined benefits pension funds are in deficit, that is, they are battling with having to pay out more to their pensioners than the funds are receiving from their company or their low risk investments.  Taylor Wimpey’s deficit is £232.7m, Persimmon £81.2m deficit, and Barratt, Bellway, and Bovis have smaller deficits but are also smaller businesses.  The ground rents asset class offers much higher returns than Government bonds, and both CBRE and Redington have promoted ground rent schemes to Britain’s top company pension trusts.  The FTSE 100 list includes some of the builders.

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold Oppression. It is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Since 2007, around 110,000 owners of new leasehold houses in England and Wales, but not the rest of the UK, have found themselves unexpectedly on the wrong end of a new kind of lease.  It included difficult-to-uncover terms that permitted the ground rent to be increased, or doubled, at regular intervals, often of ten or fifteen years.  The financial impact is severe.  A ten-year doubler lease starting at £350 pa in 2007, would jump to £700 pa this year, to £1,400 pa by 2027, and to £11,200 pa from the 51st year.

I am interested in joining

If, at this point, you decide to sign up on one of two ways:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  Look out for further information on or before 30th September 2017.

Time to fight back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

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Behind the numbers in the House Leasehold Scandal, and why leaseholders should act immediately to complain

The housebuilders routinely refuse to tell Parliament or the media how many houses they have sold since (or even before) 2007 that were supplied with toxic escalator leases.  These leases, which came in 99 year, 125 year, 250 year, and 999 year terms had hidden ground rent increasing clauses clauses that made it hard for buyers’ solicitors and conveyancers to pick up, though that is not an excuse for the legal profession.  Many hundreds of actions for professional negligence are now under way.

HALO have estimated from media reports that there are around 110,000 houses built by the major builders since 2007, and provided with these escalator leases. Here’s a graph of how these built up in 10 years using our estimates:

Presence of new UK Leasehold houses since 1st Jan 2007

For houses sold on ground rent doubler leases in 2007, these are now seeing their ground rent doubled.  This ignores  other fees ground rent companies charge for minor chages to the house.  For a starting annual ground rent of £350 per year, here is the rises per review period, for 60 years:

Lease doubler effect

After 10 years, the rate becomes £700 per year, after 20, it is doubled again to £1,400 per year, and in the 51st year a huge £11,200 per year.  The existence of the ground rent doubler scheme also has the effect of making the house unmortgageable between the 6th and 10th year, giving it a zero net value.

Where ground rent companies are being challenged successfully at the estate level, but less so at individual leaseholder level (the difference in successes is noteworthy) , they back down and and offer a Retail Price Index variation, so instead of a lease being doubled at 10-yearly intervals, it is increased by the RPI rate over the full 10 years.  Currently this is 3.9% (September 2017).  This is how the difference looks:

Ground Rent RPI Rate

Assuming the RPI rate stays at 3.9%, now after 10 years, the rate becomes £513 per year, after 20, it is £752 per year, and in the 51st year it is £2,371 per year.   So, problem solved?  Not at all.  Firstly both the ground rent and the vexatious fees will continue to be pursued with vigour, secondly, with a huge reduction in income from the resulting agreement, the ground rent company will be under substantial shareholder pressure to seek more ways to bill leaseholders further, and finally, the scheme’s very existence would likely have a substantial effect on the  resale market value of the house.

The next significant number is time-barred claims arising from the Limitations Act 1980, which covers England and Wales.  We understand, and are very happy to be corrected, that under the Act, if a contract, such as a house lease, is signed by two parties, buyer and seller, as a ‘simple contract’, and no limitation terms have been included in the contracts, then under the Limitations Act 1980, the defendent can try to argue that any leaseholder complaint is ‘time barred.’  Beale and Company (Beale and Co Website) state:

‘Claims for negligence (excluding personal injury) – the later of 6 years from the date the damage is suffered or three years from the date on which the potential claimant knew, or ought to have known, of the damage and its being caused by the defendant’s negligence, subject to a longstop of 15 years from the negligent act or omission’

As far as we can see, the damage was done when the lease was signed.  However, the anecdotal evidence is that leaseholders only discover the lease doubler or RPI escalator problem either at around 8/9 years through a ground rent company fee notification, or after around 6 years when either they, or a neighbour, tries to sell a home, and the clause is spotted by the buyer’s legal team or mortgage company.  The builder, solicitor or legal conveyancer, and ground rent company can claim the complaint is time barred.  Other reports of leaseholder complainers to ground rent companies are being told to ‘sue your solicitor then’.  Whilst this is not a watertight defence, it is a hard one to legally overcome.  However, on issues of business and public trust, moral pressure runs for decades.

When action is taken within the 6 year period, the clock stops.

If the above is the case, the numbers on time-barred leases are discussed next, and they are very concerning.

Out of time

As can be seen, for any complaint raised before 2012, the defendant can claim it is time barred, and they can ignore it.  Most people found the problem in 2016/7.  It can be seen that already around 35,000 leaseholders may face a time barred defence.  These numbers are increasing at between 6,000 to 9,000 per year.  At the time of writing, all leaseholders who bought after October 2011 have barely enough time to complain, and all of those prior to this may be time barred, but we are willing to be advised otherwise.

It is therefore CRUCIAL that leaseholders should take professional advice NOW.

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold Oppression. It is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Find out more and join us.  Visit:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  Look out for further information on or before 25th September 2017.

Time to fight back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

 

Unfair escalating house lease? Unite and challenge house builders to change the lease to freehold.

 

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Is your house new or built since around 2006?  Were the terms leasehold, not freehold, as is more usual?  

Does the lease contain unfair cloaked ground rent clauses?  Or has the lease been transferred to a ground rent company under unknown circumstances? Are you being billed for all manner of things you would not expect to be of any concern to the ground rent company?

The purpose of this blog post is to provide information about a new campaign group, HALO, or Houseowners Against Leasehold Oppression. It is being set up and run by a campaign steering group whose members are themselves victims of leaseholder oppression, with campaign facilitation managed by an experienced campaigning business called Make Public.  We seek to replicate the styles and persuasive voices of the successful national WASPI and Equitable Life EMAG campaigning groups.

Since 2007, around 110,000 owners of new leasehold houses in England and Wales, but not the rest of the UK, have found themselves unexpectedly on the wrong end of a new kind of lease.  It included difficult-to-uncover terms that permitted the ground rent to be increased, or doubled, at regular intervals, often of ten or fifteen years.  The financial impact is severe.  A ten-year doubler lease starting at £350 pa in 2007, would jump to £700 pa this year, to £1,400 pa by 2027, and to £11,200 pa from the 51st year.

This is an example of one of the toxic and cloaked doubler clauses, discovered by The Guardian recently:

‘Each review date the rent is to be increased to double the rent reserved before the relevant review date and the reserved reviewed rent will be payable from and including the relevant review date.’

At least thirteen specific complaints about these new leases have emerged, and we are listing five of the most concerning:

  • Why were these houses sold on lease in the first place?
  • The people caught out are mainly young home buyers
  • On trying to sell a leasehold house that has an escalator lease, buyers’ solicitors warn buyers off
  • Original builder’s quote for lease multiplied fourfold and more by ground rent company
  • Leaseholders are held to ransom over vexatious charges for even small internal house changes, which has inspired the name of this campaign

At present there is pressure to change the law supported by Parliament to ensure new houses are in future built freehold.  There are a number of legal cases underway that may succeed in getting the most harmful leases linked to Retail Price Index-related increases.

However, it is unclear whether the law will retrospectively cover the existing 110,000 leasehold houses.  It is clearer that pursuing legal action may result in alleviation of the problem to an extent, but doesn’t stop the leases increasing. In particular, this does nothing to fix the rip-off fees ground rent companies charge for house improvements such as repainting a door, adding a conservatory or even, in one case, seeking permission to have pets.

What has not been discussed is that there is a significant minority of leasehold contracts that have been in place for more than six years and, under contract limitation rules, if problems are found with these agreements, legally leaseholders can no longer complain.

So who will speak for the 110,000, and the contract-limited left-behinds?

Whilst both initiatives should of course be fully supported and, at HALO: we will play our part here, there is very little that is being done to challenge the creators of the leases, the original mainstream building companies.  In fact, despite public utterances to the contrary, we can show they and their shareholders are generally unworried, and think they are off the hook.  We think this lack of focus on the builders is a mistake and will explain why.

Before continuing, a question that needs to be asked is: Why has the entire problem with house leases come about anyway?  These leases form part of an investing asset class called illiquid assets, and they pay much higher than Government or Company bonds in this current low-interest era.  They have four curious selling points.

  • Firstly, the builders themselves created the house lease market from 2007 onwards.
  • Second, the escalator leases cause the returns to investors to rise over time.
  • Third, the much complained about ‘administration’ charges levied for changes increase the returns.
  • Fourth, forfeiture of a house is seen as an investment benefit by the scheme promoters.

Investments in ground rent companies are made by FTSE 100 defined benefit (DB) pension scheme trustees,  many of them struggling with large deficits. They include most of Britain’s major builders.  This means the ground rent schemes have become the crack cocaine of safe investments to managers of large distressed or in deficit DB pension schemes.

Most of Britain’s large housebuilders have DB pension schemes in deficit.  It is not at all clear to us whether their financial interest in leases that are sold to ground rent companies disappears at point of sale.  Here are four cases of apparent conflict.

  • Both Bellway and Persimmon ran ground rent companies for several years before transferring them to Adriatic Land. Both have DB schemes in deficit, and Adriatic Lend attract pension trust investors
  • Nationwide Building Society’s DB pension scheme, also in deficit, invested £54m in leases held on a number of London leasehold apartments
  • A Taylor Wimpey pensions consultancy hired by Taylor Wimpey Pensions in 2016 were promoting ground rents as an asset class from 2010 onwards

We argue that the builders’ responsibility for the design and introduction of the toxic house-lease market has not gone away with their selling leases en masse to ground rent companies, in the same way that tobacco companies could not ultimately evade being sued for their toxic products, or that European diesel car makers were required to compensate their customers after being found out over rogue emissions software.  The main charge the UK’s large builders now face is an abuse of public trust, and this is most certainly not reduced by the legal niceties of trying to sell on their responsibilities, or by a six-year contract limitations law.  They are £multibillion companies, (even the smallest, Countryside, was valued at £1.5bn in 2016) and hold absolute sway over the ground rent companies through size and cash reserves alone.

This is the campaign action plan Make Public are proposing to run.  It will be a commercially managed campaign with accessible membership fees to leaseholders.

GOAL

House leases bought in England and Wales on leasehold escalator contracts from 2007 onwards should be amended to freehold by UK house builders, at nil charge, or at a charge which is the equivalent of the difference between a leasehold house and a freehold house at the point of sale, which is about 1%.

HALO’s OBJECTIVES

There are five objectives.

  • To run a membership-funded national campaign along the lines of the highly effective WASPI and EMAG (Equitable Life) campaigns, to be called HALO – Housebuyers against Leasehold Oppression.
  • To campaign against the builders and continually highlight their abuse of public trust until such time as they agree to settle with the affected leaseholders, regardless of when the leases were actually signed.
  • To work with the All-Party Parliamentary Group (APPG) for Leasehold, to highlight the unfairness inflicted by the builders on this group of leaseholders, and call for retrospective laws to return the leaseholders to the position they would have been in if their houses had been provided within the usual freehold arrangement.
  • To seek the return of all cash paid over to ground rent companies, over and above ground rent compensated by the builders.
  • To support and promote other campaign and legal groups seeking to get current lease terms improved, without compromising ultimate settlement by the house builders.

CAMPAIGN STRATEGY

To bring together an energetic Membership Action Group, including a structured Steering Group comprising –

Chairperson, Campaign Spokesperson, Fundraiser, Treasurer and Admin, Historian and Librarian, and Programme Director

This group would be prepared to take on and win an outcome for the 110,000 affected leaseholders. Pricing per leaseholder will be accessible and probably under £45.00 per leasehold house per year.  Make Public would cover the roles of Research Manager, Programme Director and back office organisation.  Funding will initially be managed by ourselves and, at the earliest opportunity, this responsibility will be passed over to the Steering Group Treasurer.  It is a condition of our role that we are separate from the campaign funding programme.

STEERING GROUP ACTIVITIES

The Steering Group’s action list will include:

  • Create a list of campaigners’ questions
  • Build the membership as quickly as possible to become a substantial force
  • Add several of our own people (?) to investigate possible conflicts of interest with the builders, their pension companies, and the income generated from ground rents
  • Get building company CEOs to attend a Select Committee to answer questions raised by campaigners.  Circulate the results
  • Organise or sponsor effective turnouts at new-build sites originated by housebuilders who issued vexatious leases, whether or not the sites are leasehold or freehold (based on the rationale: if this building site’s freehold, why isn’t ours?)
  • Raise the issue of the left-behinds (those leaseholders where contracts were sold more than six years ago from today), and demand compensation
  • Encourage regular writing to MPs to keep the scandal front of mind. Particularly useful letters will include the difficulties of selling affected houses, ground rent contract examples, outrageous ground rent company demands over trivial matters.  We know this works.
  • Call for the APPG to meet regularly and keep campaigners updated regarding legal moves.
  • Have an effective newspaper communication programme to bring all developments to the mainstream press as they happen.
  • Ensure the HALO Facebook and Twitter accounts are in use frequently to keep all leaseholders up to date with events.

Q & A

Q1 – How many members are expected to sign up?

A1 – Over time, we forecast between 6,000 and 15,000 members will be signed over 36 months from the 110,000 house leaseholders currently identified.  This forecast is based on Make Public’s successful Arch cru Campaign, which had 1,600 members first time round, and 1,100 second time round; also on the Harlequin Campaign, with around 600 members signed; and on the larger memberships that the WASPI and EMAG Campaigns have achieved, though these were not run by us.

Q2 – Is Make Public a commercial organisation?

A2 – Yes.  We provide research, outcomes campaign strategy, administration, and IT support to national campaign groups, and charge a monthly fee, milestone success fees, and a percentage of remaining campaign balances at campaign completion.  These fees are designed to enable very affordable membership rates and robust effective campaigns. We agree a fee and a programme with the Campaign Steering Group, and they agree our invoices.  The contract includes severance terms.

Q3 – Why do you believe campaigners should target the major housebuilders and not solicitors, conveyancers, ground rent companies, or estate agents?

A3 – We believe all affected leaseholders should seek any remedy going, and swiftly, and we warmly support all other activity taking place.  ‘Better together’ maximises the pressure.  We think the best deals obtainable from action against solicitors and conveyancers where failure to advise the buyer about the lease escalation issue is proven, will likely result in lump sum payments to offset future demands and reduction in house value, but doesn’t clear the original problem.

Actions against ground rent companies that succeed, which by observation, is usually done on an estate-by-estate basis, results in terms being softened, for example, lease doubler terms being scaled back to RPI only.  This reduces future fees a lot, but they still bite, and this does not rid the leaseholder of the ground rent company’s vexatious charges on top.

But firstly the builders have the financial capacity to repay ALL 110,000 trapped house leaseholders, and secondly, they have the economic power to direct ground rent companies to vary terms, which they are already using to good effect.

Finally, we have clear evidence and four examples to show that at least three builders and one mortgage company may continue to have an interest in the leases in some way after they have been sold, and our first action in this campaign will to call for a Parliamentary Select Committee to request the builders and their pension scheme trustees attend hearings to be specifically asked about their pension schemes and possible ongoing connections with the ground rent companies.  We will be happy to provide around 17 questions on this.

Having said this, we do re-iterate that affected leaseholders should be contacting reputable legal sources for advice and action now, as we have evidence that the 6 year limitation on contracts is causing around 10,000 leaseholders per year to go beyond the time for legal action.

Q4 – How do we know if this Campaign will work for us?

A4 – There is no guarantee in life.  If you take no action to defend your interests, than nothing will happen to improve things.   If you focus firmly on an outcome and campaign persistently to win it, even if it takes five or ten years, there is a good chance you will get what you want, or something similar to it.  This has been our experience to date.

Q5 – What campaigns has Make Public been involved with to date?

A5 – Here are some examples, showing the outcomes of campaigning teams of varying sizes which we helped to bring together and then facilitate:

  • Arck LLC Fund crash – 200 people (campaign won)
  • Arch cru Fund crash – 1,600 people (campaign won)
  • Link for Freedom working alongside National Council for Iranian Resistance and the Iranian opposition to free Iranian opposition prisoners in Baghdad – 3,000 people (campaign progress: all 3,000 people brought out in September 2016, 15 to the UK)
  • Black Cap Pub – 3-5,000 people (campaign progress: pub sale to undesirable buyers prevented, two unwanted leaseholders forced to retire)

Q6 – How do I join?

A6 – If, at this point, you decide to sign up on one of two ways:

and we’ll keep you fully informed.  Our first action when several hundred signups have come in will be to advertise to bring the HALO: Steering Group together, then open up the membership site and provide you with the campaign strategy all parties will work to.

This page and the Facebook page are being updated.  Look out for further information on or before 25th September 2017.

Time to fight back!

Chris Clark

HALO – Houseowners Against Leasehold Oppression and Make Public

How Leave.eu won the vote

Several FT readers have asked me to provide the methodology Vote Leave employed to win this referendum.  I did some investigation into this tragedy when an American name popped up in the news.

The Guardian’s Emily Bell described it as follows:  A political system which abandons facts and a media ecosystem which does not filter for truth asks too much of people

I have written up the methods because the method employed is one climate campaigners already know about and it might be time well invested to learn from in the future.

Firstly Vote Leave did not design the campaign.  Washington DC base political referendum consultants Goddard Gunster were employed by Aaron Banks to come up with the method, the messages, and the program management.  Gerry Gunster then worked with data mining company Cambridge Analytica and a 300,000 strong grassroots membership to understand how to direct different messages to different worldviews that existed in a large representative sample of the 17 million people who voted.  Gunster said ““Numbers do not lie, quantifiable data will direct the message and the messengers. I’m going to follow the data”.

These were the question we looked into last week.

1.  Who came up with all the incendiary lines used in the Vote Leave campaign?

2.  Who recommended to Aaron Banks to NOT put Nigel Farrage forward as a principal in the campaigns?

3.  Who came up with the line ‘decent people’ when describing the fight on their hands and the victory to Pro Leave?

4.  Who claims to “…have mastered the art of intersecting client interests with the self-interests of voters?” using the language and expression the voters themselves use?

5.  Who came up with the approach that “different messages chime with different people, whether they are from different parties, or no party at all.  But the result is always the same.  As people engage with the issue, as they begin to understand it, they appreciate the United Kingdom can do so much better outside the European Union.”

6.  Who designed the 5-element campaign for Vote Leave?:

This is described in the 5 elements set out

“Building a successful coalition allows us to position our clients as part of a larger group comprised of prominent citizens, (James Dyson, JCB’s owner Sir Anthony Bamford), business groups (Telegraph 200 small firms list), academicians (Professor Patrick Minford), experts (Ruth Lea*, Roger Bootle), and elected officials (Boris Johnson, Andrea Leadsome, Michael Gove, Gisela Stuart). We then leverage the support or endorsements of these groups or their individual representatives in a variety of campaign communications.”  (This effect depends on the echo chamber of broadcasting policy demanding listeners hear both sides of a viewpoint, and the Leave campaign cherry picking specific and well known people supporting their viewpoint for the broadcasters always to turn to. By concentrating on the well known individuals, the mass of alternative evidence from equally credible but far more numerous alternative viewpoints rarely got aired and never got remembered.)

7.  Who came up with the idea of using Vote Leave’s suddenly materialised 300,000 registrants as a grassroots ‘peoples campaign’ army of the ‘decent people and fleeced donations out of them as well as being funded for millions by Mr Banks?  (The use of the 300,000 were as a polling pool was for Cambridge Analytica to understand the different worldviews that existed in the pool for message development.  This business worldview dislikes EU beaucracy.  We believe they will respond to the message ‘Burn the legislation. Take back Control.’  The Cambridge Analytica data shows there’s a lot of these.  We’ll put James Dyson up for this.  Another worldview Cambridge Analytica would have found is large and hostile to immigration.  They seek security.  We believe they’ll come out for ‘Immigrants raise house prices.  Stop them coming here and create affordable housing.  Take back control.’  Nigel Farrage should lead on this.  He can be as outrageous as possible.  The result was that voices were put up to explain the benefits of immigration, but this was totally drowned out.  The message was a dream for the Sun, Mail, and Express.)

8.  Who suggested that if you wanted to hear about Border Control problems then people wouldn’t want to hear from Westminster, they would prefer to listen to an ex-Border Control Officer?

9.  Who works for the junk food and drinks industries, and right wing politicians, and fights recyclers?

10.  Who was hired by Vote Leave and Ukip, and funded by Aaron Banks to fool a mostly lower income lower educated but substantial part of the UK Population to vote for the UK to leave the EU?

11.  Who claims to win 9 out of 10 Referendum fights whenever they get involved?

Answer:

The entire campaign to get 17 million people to vote agains the EU was masterminded by Gerry Gunster of Goddard Gunster, Political Consultants, based in Washington and London.  The website shows the methods at:  http://goddardgunster.com/capabilities/

Benjamin Franklyn said:  “when truth and error have fair play, the former is always an overmatch for the latter.”

Gerry Gunster told The Washingtonian the following “My role with Leave.EU was to provide strategic advice on the mechanics of running a referendum campaign. I brought them the methodology and the science behind how best to win, based on my experience of running many ballot measure campaigns here in the U.S.”

The method outlined by Gerry Gunster and Vote Leave to win the EU vote is on the YouTube video here:

https://www.youtube.com/watch?v=kuPbAX6Lzhc

and clearly outlined in earlier campaigns, ‘Stop Forced Deposits’, when the bottling industry fought campaigners trying to increase bottle recycling:
http://goddardgunster.com/project/no-on-question-2-stop-forced-deposits-2/

and New Yorkers for Beverage Choices’, where the junk food industry fought off attempts by mayor Bill de Blasio to downsize huge takeaway drinks and meals:
http://goddardgunster.com/project/new-yorkers-for-beverage-choices/

Note very carefully the use of the absence of facts in both these clips, and the identical ways used to make people ‘feel they were in control’.

To perfect the messaging Gunster used a data analytics company called Cambridge Analytica who looked to see what lines people would respond to most, then changed the messaging to suit.  So if you had a racist voter you would say “Stop immigration.  Vote Leave and take back control”.  It looks like they fell on this quite late in the campaign.  The YouTube video explains Cambridge Analytica’s method.

None of this was secret, though similar methods have been developing in the UK over the last few years, but nothing as strong as this.  The Remain campaigners just did not join up the dots and never saw this coming.  All remainers saw was half the population rising to support a fact free proposition that never existed.  The message lines that Goddard Gunster agreed with Vote EU (NHS, Immigration) were removed from their website on the day of the result, and the removal noted by The Guardian, but few else.

The Guardian reported:  “This week Banks revealed that a central plank of the leave campaign’s successful strategy emerged from advice taken from the US election strategists Goddard Gunster that “facts don’t work”.”

What then emerged on 1st July was that Aaron Banks had sought hypnotist Paul McKenna’s help with the Goddard Gunster devised videos.  McKenna appears to have helped out but is declining to say what he actually did.

How to fight this next time

The University of Queensland has developed a series of techniques designed to fight this kind of disinformation war against climate deniers, and these methods are transferrable to political disinformation.  It’s a 1 year course called Denial 101X.  I have created a campaign handbook using their techniques, and using it in a campaign to protect a pub against developers in Camden Town.  The campaign is working very well though we haven’t won it yet.

The steps (very broadly) are:

i)  Inoculate – tell people how these fact-free campaigns operate, the tactics used to roll over opinion, and give examples.  The campaigns only work when people don’t know what is happening.

ii)  Fact – state your BIG INCONTROVERTIBLE POINT.  For example, The EU has brought us peace and prosperity since 1945.

iii) Myth – state Some campaigners will argue the EU is no longer functioning and we should leave.  They will bring on fake experts with unrepresentative opinions and cherry picked evidence to support their case.  They’ll use broadcasting impartiality rules to ensure only these few experts are available for interview.

iv)  Fallacy – It is true that the EU is not perfect, but it has given the longest European peacetime dividend ever.  However Vote Leave’s Mrs X, or Mr Y said the opposite of what they said this time (evidence) and their professional peers think this of them.  Then disclose their links to parties who seek to benefit out of the EU leaving (though in this case it is somewhat hard to see if anyone benefits at the moment.)

If you would like a copy of the handbook, which I do need to update to include the Goddard Gunster methods, just email chris@makepublic.uk and ask.

References:

EU referendum: Controversial Leave.EU co-founder Arron Banks on why he’s happy to put noses out of joint
http://www.independent.co.uk/news/uk/politics/eu-referendum-controversial-leaveeu-co-founder-arron-banks-on-why-hes-happy-to-put-noses-out-of-a6762806.html

Gerry Gunster, the Border Control Officer idea
https://www.youtube.com/watch?v=kuPbAX6Lzhc

EU referendum: 200 small firm bosses and entrepreneurs tell Britons to vote for Brexit
http://www.telegraph.co.uk/news/newstopics/eureferendum/12181306/EU-referendum-200-small-firm-bosses-and-entrepreneurs-tell-Britons-to-vote-for-Brexit.html

Look into my eyes: Leave.EU campaign consulted TV hypnotist
http://www.theguardian.com/politics/2016/jul/01/eu-referendum-leave-hypnotist-paul-mckenna-nigel-farage

Five Questions for Gerry Gunster, the DC Strategist Who Ran the “Leave” Campaign

Five Questions for Gerry Gunster, the DC Strategist Who Ran the “Leave” Campaign

The truth about Brexit didn’t stand a chance in the online bubble – Emily Bell
https://www.theguardian.com/media/2016/jul/03/facebook-bubble-brexit-filter?CMP=share_btn_tw

With kind regards

Chris Clark

*Ruth Lea has just said on Radio 4 Broadcasting House today that the markets are calming, the UK currency is 5% lower against other currencies and there is great demand for gilts.  The only reason that gilts are higher is because of uncertainty, not because of confidence.  And of course devaluing a nation’s currency is hardly the best way to provide true competitive advantage in exporting – 3rd July 2016

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Campaigns

Why do people and organisations campaign?

The universal reason is to change something that is proving painful for the parties affected. Campaigns are often in for the long haul, and whilst the initial problem is not one to celebrate, as the campaign gains traction, a considerable bringing together of campaigners and community spirit happens, especially when progress is made.

Campaigns can be global, as in climate change or the TTIP controversy, at a country level, as the famous 38 Degrees campaign against the last government to prevent the forests selloff, or specific, to undo a financial injustice, rescue a treasured building, or to get a government to change a point of view. One could be forgiven for thinking that it takes huge numbers of people to effect a change. Whilst this is clearly the case in the global campaigns, where it is a specific issue it is surprising how effective a small number of well informed campaigners can be to bring about change.

Evidence is everything.

In any campaign against organisations considered to be acting unethically, the first thing that disappears is the evidence. That is the best clue that they have questions they don’t want to face up to.  Make Public specialise in ‘as found’ evidence retrieval to academic and forensic standards, dating and time stamping the sources, discovering where possible the stakeholders, and what their objectives might be.

Depending on the campaign, this evidence is then published in plain sight, along with lists of contacts, interested journalists, notable commentators on the social web, and a templated action plan ready for campaigners to come together and use.  You can see an example of this on The Evidence File page.

We prefer to work with special issue campaigns, for group financial redress, seeking to change a specific political position, or remedying an issue affecting a certain group or set of organisations. We are nonpolitical although it is fair to say we are unable to help such organisations as payday loan companies, speculative developers, and the financial sector ‘sin’ stocks.

More on financial redress campaigns

Those campaigns where a successful outcome is more likely normally has at least one large organisation with a regulated public trust or set of compliances to observe.  A legal and campaigning partnership is usually likely, and actually much easier to organise than you might think.  Unfortunately, we can’t help those where a significant group have invested in an unregulated investment, and may have used unregulated advisors.  These groups need to involve the fraud authorities at the earliest possible moment, and the outcomes are frequently not good.

Building and running your campaign

We use surveys, statistical evaluations, and first person stories to build analysis and help the campaign. We borrowed ideas heavily from the US tobacco and climate denier organisations, firstly because they clearly work, and second these tactics are often repeated by present day organisations who campaigners complain about.  By knowing how the other side will operate, we can design and facilitate campaigns which are much more likely to succeed.

Our role is to bring campaigners together, to facilitate their organisation or steering group, and create and guide powerful activities.  We design and put in their operational systems, and provide campaign messaging guidance, create paying membership campaigns, manage the programme and measure the results. Where legal action is required, we help create an agreement with a preferred group action solicitor group with successful expertise and whom we have worked with since 2011.

Can you afford us?

Probably. We operate a scalable membership-based approach with our campaigns.  Your campaign steering group becomes a recognised society organisation, and members paying a moderate amount of money per month or per year to pay for our services plus further resources to help your campaign.

For longer-haul campaigns there are set up costs for dedicated websites, and often the approach is for the most strongly motivated campaigners to step in with repayable loans to get started.  This method is common to many other campaigning organisations.  We can provide you more information about this on request.

If you have a specific problem, and you feel a campaign approach is the way forward, get in touch for a discussion soon.