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Inside Unite: the union, Liverpool and the £100m hotel

Inside Unite: the union, Liverpool and the £100m hotel

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One of Britain’s biggest trade unions has built a hotel in Birmingham at vast cost. Following the threads which explain why it became so wildly expensive leads inevitably to a surprising place: to Liverpool. And to questions which could hurt the Labour party.

Why this story?

Unite is one of Britain’s mightiest unions and one of the very biggest funders of the Labour party. For the past few years there’s been a steady drip of troubling news about it: worries about how it handles its finances; a police raid on one of its offices; a union official under police investigation. Individually, none of these stories seems to have cut through – but collectively? Surely when they’re about an organisation as important as Unite it’s worth looking to see if they amount to something.

Reporter Xavier Greenwood started to do just that, beginning in the obvious places: London, where Unite has its headquarters, and Birmingham where a project to build a hotel is at the heart of concerns about financial mismanagement. But it soon became apparent that neither of those cities connected the various threads in Unite’s story. It was Liverpool that did that. Connections that were made there bind it closely to Unite’s troubles across the country.

Labour’s history with Liverpool is rich and it hasn’t always been happy. When the left-wing group Militant captured Labour politics in the city in the 1980s it caused turmoil in the party nationally and helped set Labour’s reputation for being in thrall to the far left. There’s little doubt that Militant was a factor in keeping Labour out of power until 1997.

Liverpool’s recent troubles have been different. A huge drive to regenerate the city centre has been followed by allegations of corruption and a police investigation. There’ve been multiple arrests.

Keir Starmer will be watching both Unite and Liverpool nervously. Clean politics and clean funding are vital to his remaking of the Labour party. If the mud starts to fly from Unite and Liverpool who knows where it will end up? Ceri Thomas, Editor

Transcript

Xavier Greenwood, narrating: This is the story of one of Britain’s great trade unions. And one of its great cities. Unite the Union and Liverpool. 

Over the past few months, if you were keeping your eyes open, you’d see a story that didn’t make the TV news bulletins, or the front pages. There was the launch of an independent inquiry into financial mismanagement, to do with a hotel Unite has built in Birmingham. 

Then, a police raid on a London office. And a union official subject to a criminal investigation. They kept coming, all to do with Unite. One of the biggest unions in the country, and one of the financial pillars that holds up the Labour party.

In the end, you’d find yourself asking: what’s going on inside Unite? Is there something which joins these dots? We started looking into it. And it took us somewhere unexpected: into the heart of Liverpool and its politics, which have been at the centre of the Labour party for decades. 

There’s history here, between Liverpool and Labour. Back in the 1980s, when a left-wing group called Militant seized control of the politics of Liverpool, it helped set Labour’s national reputation, and arguably played a part in keeping it out of power for more than a decade and a half.

In the last three years, with a lot less attention paid to it, Liverpool has been in the mire – again. 

A police investigation, Operation Aloft, was launched into building and development contracts in the city. The mayor was arrested, along with a host of council officials and property developers.

Joe Andrerson: There was 21 police officers stormed into the house, uh, seven o’clock in the morning, 21 police officers, you know… stamping, charging through your house. You’d think I was a drug dealer or a gun-runner. 

Xavier, narrating: Unite’s problems and Operation Aloft are separate stories. But there’s a thread that links them – and that thread is Liverpool. 

And the question is: is a city which haunted Labour’s reputation for so long after the 1980s about to do the same again? Is Keir Starmer, who’s trying to rebuild Labour’s image as a party of competence and integrity, going to be sideswiped by allegations of terrible financial mismanagement inside Unite, and by a police investigation into city council hundreds of miles from Westminster.

It might seem strange to think about a union and a city becoming almost soulmates for a time – but that’s the way they’ve come to seem to me as I’ve reported this story.

And it wasn’t just an abstract thing. Until quite recently, Unite and Liverpool were important to each other in really practical ways as well. They had close connections. The city and the union liked working with some of the same people. They wanted to do business their way. 

And somewhere in the 2010s their eyes opened to a similar possibility. Maybe, this was their moment to shine. And they did. Liverpool set about building and regenerating its way to prosperity, and Unite got closer to real political power in Jeremy Corbyn’s Labour party than it had ever been before. 

For a while they were both on a roll but, as we’ll see, things took a turn for the worse. In Liverpool, it culminated in a government takeover of the city council. In Unite, it was a major independent inquiry at the centre of which was a project to build a hotel which turned into a financial black hole.

I’m Xavier Greenwood, and this is the Slow Newscast from Tortoise. This is Unite: the union, and a £100 million hotel.

***

Xavier Greenwood, narrating: This podcast is based on dozens of conversations we’ve had with politicians, trade union officials, and businessmen in Liverpool, Birmingham, London, and across the country in the past few weeks. 

Many of them didn’t want to talk on record, either because of the ongoing police investigation into Liverpool building contracts, or Unite’s separate independent inquiry into its hotel. But they all helped us make sense of where our two stories – the stories of Unite and Liverpool – cross over.

It starts with that hotel.

CLIP “The Union’s main decision making body, the Executive Council decided to embark on a major project to provide a major new service.” Len McCluskey speaking on behalf of Unite

Xavier Greenwood, narrating: They thought it was going to be cheap.

Len McCluskey had been in charge of Unite, with its more-than-a-million members, for less than two years when his executive council gathered to discuss a big new development in Birmingham.

CLIP “The decision was taken to build a conference, education and hotel complex in Birmingham, one of our great vibrant cities.” Len McCluskey speaking on behalf of Unite

Xavier Greenwood, narrating: It was December 2012, and the union leadership was told the project would cost around £7m. It would pay for itself in saved conference fees.

Unite had found a site in Birmingham and agreed to a price for it. The city council there already had a developer on board, who would manage the project. 

Even then, their plans were ambitious. A 77,000 square foot education and conference centre. A regional office. An 185-room hotel.

But then… well, the deal fell through.

Sources close to the negotiations told us this was because Unite had insisted on bringing in a company they had worked with before to manage the project. A firm from Liverpool, called Purple Apple Management. 

Purple Apple couldn’t convince the council developer they were up to the job.

Voiced by an actor: After a lot of effort they realised they were not going to persuade us of their abilities, so they went to Birmingham City Council and asked for a different site.

Xavier Greenwood, narrating: There are different accounts of why the deal to build a hotel on this first site in Birmingham fell through. Len McCluskey told us it wasn’t because Unite insisted on bringing in a developer from Liverpool, and pointed us towards what Unite had said in the past.

Unite has argued that the problem was it wanted full ownership of the building and the deal that was on offer wouldn’t give them that. 

The upshot of that deal collapsing was that a project that would have been overseen by an international developer chosen by Birmingham Council was now being overseen by a tiny company from Liverpool.

So Unite found a different site a stone’s throw away: a site where Purple Apple Management could work with them.

And soon another company from Liverpool came into view: the Flanagan Group. We’ll hear more about them because they’re important to this story, but they’re builders described in a testimonial as the “go-to firm” of Unite, and they came on board as the main contractor.

That’s how things stood as building work on the hotel got underway. It was being run by two companies from Liverpool, 100 miles away from central Birmingham. Neither of them had worked before on a project of this size. 

And even by this point, the project was much more expensive than first imagined. The estimated cost was no longer £7 million. It was £57 million. 

That is, £50 million pounds more than the original cost. No executive council minutes from the time explain the disparity.

In May 2016, work on the Birmingham hotel began in earnest. A few months later, Unite’s leadership boasted that the project was moving at a rapid pace. But, in truth, it was slow going.

There’s an online forum for building enthusiasts called Skyscraper City, and they kept a close eye on the hotel, sharing pictures as it progressed.

Voiced by an actor: I swear to god, this has had more delays than Brexit. 

Xavier Greenwood, narrating: …one user joked.

And while the project inched its way upwards, it soon shot past even that £57 million estimate. 

What started being seen by many people inside Unite as Len McCluskey’s pet project was in danger of turning into Unite’s white elephant. 

And the Flanagan Group – as the main builders – were at the heart of it.

***

Xavier Greenwood, narrating: In the early noughties, if you were out on the town in Liverpool, and you had some cash to spare, there was a good chance you’d end up in the Newz Bar.

It was a who’s who of celebrities and pop singers, a-listers and z-listers, Hollyoaks stars, and, of course, because this is Liverpool, footballers.

The sort of nightclub where scantily-clad bar staff deliver magnums of vodka with sparklers in them.

Katie Price, Coleen Rooney, Steven Gerrard, Cheryl Cole, The Killers. They all went there. Even Lady Gaga passed through its doors.

“I love you…” Clip of Lady Gaga at News Bar

Xavier Greenwood, narrating: It closed in 2014 – it’s reopening as a Hooters – but for 14 years, it did a roaring trade. 

You might wonder why I’m telling you about this, because it seems a long way from a Unite construction project.

But Newz Bar was run by the firm that built Unite’s Birmingham hotel: the Flanagan Group.

“It was a platform. We wined and dined people and would be clients and that, and showed them what we could do. And it worked.” Clip from Liverpool Echo

Xavier Greenwood, narrating: And even though most nightclubs are fairly apolitical, this one was not.

Jon Egan: If you ever went to the Newz Bar, there were murals of working class heroes, Spanish Civil War, all that kind of stuff. And they saw themselves as being a kind of authentic working class business.

Xavier Greenwood, narrating: Jon Egan, a former Labour campaign strategist, remembers the place well.

Jon Egan: It was very much a front of house PR initiative of the Flanagan Group. It was the flagship of their company or the public face of their company to a large extent.

Xavier Greenwood, narrating: So what were the Flanagans doing, putting political murals on the ceilings in a glitzy nightclub full of celebs? It feels like a message: “We might have made it, but we don’t forget our roots.”

Intentionally or not, they were declaring themselves as the kind of company that would be perfect for Unite, a trade union that represents working class communities across the country.

And the Flanagans’ life story supported their case. Paul Flanagan, head of the Flanagan Group, has had an extraordinary journey.

From absolute poverty… to bars, hotels and multimillion pound contracts.

“Hello my name is Paul Flanagan and I am chief exec of the Flanagan Group. The Flanagan Group are a group of businesses that cover leisure, construction, property development and semi-sheltered housing schemes.” Clip of Paul Flanagan from Liverpool Echo

Jon Egan: The mother was a formidable woman and she had basically brought them up. I think that the father had been run over in a car accident when they were quite young. So she’d brought them up and she’d instilled this kind of virtue of self-improvement.

Xavier Greenwood, narrating: Paul Flanagan began his career working in local government.

“I started off a long long time ago now – 1979 – as a plumbing and heating engineer with Liverpool city council… I had an accident. It was a genuine accident. I fell through a window as opposed to going through a door. And I wasn’t burgling anywhere.” Clip of Paul Flanagan from Liverpool Echo

Xavier Greenwood, narrating: He set up a plumbing and heating company, then moved into construction and property. Flanagan Group signs started popping up in the city. 

Then in 2000 the Flanagans opened the Newz Bar, that’s Newz with a “z”, by the way, because it was in a building called New Zealand House. 

It kicked off a whole new strand of their business, buying and renovating small hotels and bars. 

Jon Egan: They were a success story for the city and a success story, I think, for authentic indigenous working class entrepreneurialism that, you know, in Liverpool… needs role models and success stories to kind of validate its aspirations.

Xavier Greenwood, narrating: Eventually, the Flanagans got their biggest job – on the Unite hotel in Birmingham. But it was in Liverpool that they slowly made their way… where they forged the connections that would get them in the right rooms with the right people. With Paul Flanagan as the family’s frontman.

Jon Egan: Paul was much more gregarious. I think that he was the foreign minister on behalf of the Flanagan business. 

Mike Storey: We were having an awards ceremony for one of the departments in the council… 

Xavier Greenwood, narrating: Lord Storey – Mike Storey – is a Liberal Democrat, who led Liverpool City Council between 1998 and 2005. He still remembers the Flanagan charm.

Mike Storey: …and we were having it at the Newz Bar. And as I arrived, a guy came up and welcomed me and said, “we’d like to give you a gold membership card”. He handed it to me. I took it. I had no idea what I was being given, and I just sort of said, “Oh, thank you,” and put it in my pocket. Luckily the awards started and I just enjoyed the evening, but I was uncomfortable in that situation. And various approaches were made via other people – the Flanagans, who had started doing development in the city, wanted to meet up. And I chose, I kept saying: “Well, it’s not a matter for me. It should be done through officers.”

Xavier Greenwood, narrating: The Flanagans seem to have been on the look-out for an opportunity when they saw one. Because after decades of neglect and chaotic local politics, Liverpool was slowly regenerating. And the Lib Dems’ success in the local council elections in the late 90s had supercharged this vision.

Mike Storey was determined to transform the city, and bring in billions of pounds of investment.

Mike Storey: The jewel in the crown of Liverpool was the city centre with, as I said before, some amazing architecture, amazing buildings, and yet it wasn’t a tourist destination. So we went out to the private sector and we built what was called Liverpool One, which at the time was Europe’s biggest retail leisure development. We built a cruise liner terminal. So cruise liners started coming into the city, 50-60 cruise liners. And they all disembark and spend the money. We built an arena and convention centre, which actually won a huge number of prizes and awards.

Xavier Greenwood, narrating: Liverpool was open for business. In 2003, it was told that it would be the European Capital of Culture.

“Hello, you join us in a very proud city tonight. It’s official: in less than five years time Liverpool will be the European Capital of Culture. That means thousands of jobs, an astonishing two billion pounds of investment and more than a million extra tourists.” Clip from Granada News 

Xavier Greenwood, narrating: Throw in a Champions League win in 2005, and Liverpool, at least from the outside, was a city on the up. Its skyline transformed and modernised. A hub for culture and tourism, with a couple of great football teams too.

But not everyone was keen to celebrate. 

According to Jon Egan, who’s been involved in regeneration in Liverpool for decades, some locals – particularly local developers – felt that all this cultural and financial capital… it wasn’t trickling down. 

Jon Egan: I think one of the things that happened was there was a kind of, a kind of backlash against what had been happening in terms of this kind of renaissance process. Particularly people kind of pointing out and saying, this is all well and good, but it’s all happening in the city centre – this is all well and good but it’s all being delivered by companies who aren’t basically from Liverpool or the jobs aren’t being given to people who are from Liverpool. There’s been this enormous great explosion of wealth and prosperity and opportunity, and yet if you are living in Norris Green or Croxteth or wherever that’s not really reaching you. And that became quite a powerful message of resentment, certainly from some local companies and local companies in the development sector…

Xavier Greenwood, narrating: Including the Flanagans.

Jon Egan: I think their concern always was that in a way they were outsiders. They weren’t part of the magic circle. The city was dominated, or the city council was dominated, by a kind of professional elite in terms of officers who were probably regarded them, uh, and viewed them with a sort of sniffy kind of disdain.

Peter Kilfoyle is a former Labour MP in the city. Who thinks the Flanagans had a point. 

Peter Kilfoyle: They came to me because they were complaining that they could never get a hearing for a bid for a council contract. And they had a case. It was a closed shop with the same old favoured few got all the work, going back to what you say about tradition. And I took up the case, believe it or not, and then they did get onto the approved contractors list, which I don’t know whether I’m to blame for what followed. But the next time I saw Paul Flanagan he was inviting me, I’d just bumped into him in the city, to the opening of a nightclub. 

Xavier Greenwood, narrating: The Flanagans, in hindsight, didn’t need the Lib Dems. 

Because the year that Mike Storey became leader of the city council, another politician emerged on the scene. One who, in time, would help the Flanagans make it to the top table. A Labour man. A union man.

Joe Anderson: When I took over in 2010, we had boarded up houses on Edge Lane. You know, we had the capital of culture year, so it was like…. fur coat and no knickers.  Parts of, of, uh, the city were like war zones.

My name’s Joe Anderson… the former elected mayor of Liverpool, um, currently forced into, uh, early retirement.

Xavier Greenwood, narrating: Joe Anderson lives in a small semi-detached house, which he shares with his wife Marg and a tiny dog called Blue. A photo of him, his wife, and their grandchildren holds pride of place in the living room. It’s a modest house, but a world away from where he grew up.

Joe Anderson: If you look at my Twitter feed, you’ll see a picture of the tenement blocks where I was raised and was born and bred in a part Liverpool called the Dingle, um, south Liverpool. Sort of background… six kids, um, mum and dad. Me dad was an alcoholic in the merchant navy. Um, we suffered domestic violence, um, when we were kids. Often me dad would end up throwing us out. It was tough, tough upbringing. I was, um, uh, somebody that, that was, uh, part of a family that loved each other, but had very little, you know, often the electricity, electricity was turned off, the gas was turned off cause me dad had broke into the metres. And, you know, we, my mum would have to cook by little camping stove.

Xavier Greenwood, narrating: Just out of school, Joe Anderson became a seaman and found his political calling.

Joe Anderson: I think the making of me. Within the first few years, um, I’d visited, um, Poland and seen the solidarity, uh, strikes there with Lech Wałęsa and seen all of the, the uprising and all of the brutality of a military junta suppressing people. I’d witnessed that. And then I was on a ship that went to South Africa, the whole coast of South Africa for about three months, and witnessed apartheid firsthand and, and, you know, watching, uh, how Black people were being treated.

Xavier Greenwood, narrating: He joined the National Union of Seamen, where Peter Kilfoyle remembers him as a quiet supporter of the Labour militant politicians of the 1980s.

Peter Kilfoyle: He was much younger and he was drafted in as a delegate on the temporary organising committee when I was regional organiser for the Labour Party and they were tough times with militants and he was just a young bloke, who was a rough and ready seaman, and he disappeared. Next time I meet him, he’s in council and to me he was just not my kind of person to be honest with you, you know? 

Joe Anderson: I was one of the youngest ever conveners in the National Union of Seamen as it was then and on the executive council in, in terms of the National Union of Seamen.

Xavier Greenwood, narrating: Peter Kilfoyle recalls someone less impressive…

Xavier Greenwood: When you, when you met Joe, when he was a little younger, I mean, you said you met him before you went off… You didn’t get any indication that he would end up where he was? 

Peter Kilfoyle: No. I can’t even remember him ever speaking. What he did do, he tended to vote with the people who would’ve been supporters of Hatton and Co… 

Xavier Greenwood, narrating: Hatton is Derek Hatton. A former firefighter, he was the leading light of Militant, leftwing Labour radicals who ran Liverpool in the early 80s.

“I would just like to say that I’m sure that everyone in this hall has learned many lessons from this dispute. It’s often said that you learn far more in five minutes of struggle than you do in 20 minutes of reading.” Clip of Militant 1980s

Xavier Greenwood, narrating: In 1985 Militant tried to set an illegal budget in protest at spending cuts made by Margaret Thatcher’s Conservative government. They brought Liverpool close to bankruptcy, earning them criticism from Labour’s national leader, Neil Kinnock.

“You end in the grotesque chaos of a Labour council, a Labour council, hiring taxis to scuttle around the city handing out redundancy notices to its own workers.” Clip of Neil Kinnock from 1980s 

Xavier Greenwood, narrating: Joe Anderson went on to do a bunch of other jobs. He ran a pub for a few years, trained as a social worker. He grafted, and in 1998 he became a city councillor for the area he grew up in. 

Joe Anderson: Politics came knocking in a sense.

Xavier Greenwood, narrating: In 2003, Joe Anderson became head of the Labour group in the city. He built a reputation as someone who took no prisoners, a canny political operator… but who cared about local people, who was principled. 

The Flanagans, by the time Joe Anderson was steadily rising to the top, had their eggs in his basket, and that of the Labour Party. 

Joe Anderson: So if the Labour group was having a function, then they’d buy a table, but they buy one at Marie Eagles, Louise Elman’s, um, or, or any of the MPs within Liverpool…

Xavier Greenwood, narrating: Paul Flanagan knew exactly where to focus his efforts.

Jon Egan: He was always ambitious, always, um, entrepreneurial, but always very clear about his, his, his level of political, um, commitment and his political relationships with the city.

Xavier Greenwood, narrating: In 2006, the Flanagans donated £2,000 to a Labour constituency branch in the city. And in January 2009 they donated £6,100 to the national party. Four months later, Gordon Brown, the Labour prime minister, spoke at a private party at the Newz Bar. Standing next to him was Joe Anderson.

“Can I thank Paul Flanagan for allowing me to come to this great club to be here this evening? I don’t know how long he’s going to allow me to stay, but it’s a great pleasure to be here.” Clip Gordon Brown speaking at Newz Bar

Xavier Greenwood, narrating: Gordon Brown would be out of power before long, but that was national politics, and in Liverpool the Flanagans had bet on the best horse.

Because a year after the prime minister’s speech, Joe Anderson became leader of Liverpool’s city council. And two years after that, he became Liverpool’s first ever directly elected mayor. He was now one of the most powerful politicians outside of London.

“The people of Liverpool have spoken decisively in favour of the Labour Party. We will deliver on our pledges and our promises. The people of this city need new houses, they need jobs and new schools.” Clip of Joe Anderson’s election speech

Xavier Greenwood, narrating: For many people in Liverpool, this was a moment of hope. Even Mike Storey, whose party had just been kicked out of power, could feel it.

Mike Storey: So yes I think initially people thought, oh, here’s a working class man, you know, connections with the sea, a merchant sailor who, who is one of us, and that meant a lot. ​​So I think that initially Anderson was seen as, um, as somebody who had the position to, to help ordinary people.

Xavier Greenwood, narrating: Liverpool developers who’d felt ignored by the Lib Dems were also excited. 

Because Joe Anderson’s vision was for Liverpool to build its way to prosperity. Like the Lib Dems, you might say. But he wanted to do it with locals. 

Joe Anderson: I promised the electorate that we’d build more houses, schools, we would create more jobs, we would grow the economy, and that we would make sure that local labour and local companies were able to take advantage of the regeneration.

Xavier Greenwood, narrating: It was, on the face of it, an admirable aim. The makeup of the council – the accents – the backgrounds – began to change. Refreshingly for some. Although for others it had its downsides.

Jon Egan: From an outsider perspective under the Joe era, the persona of city council became much, much more scouse. It seemed to kind of settle into a view of the city that resonated with that sort of closed self-help against the world, looking after our own… It was a comfort zone in which that kind of transactional politics and that kind of transactional approach towards who we wanna work with, who we trust, who we like, who we think we can do business with it – it became a sort of the genre or the aesthetic for the way the city did its business.

Xavier Greenwood, narrating: Paul Flanagan, who 12 years earlier found it difficult to get a meeting with the Lib Dems, suddenly had a direct line to the mayor’s office. Someone who worked closely with Joe Anderson told us about the 8am calls they had to field from Paul Flanagan.

Xavier Greenwood: And, and would you know, when you were mayor, would Paul kind of call the office quite a lot? 

Joe Anderson: Um… wouldn’t say a lot. Um, I wouldn’t say a lot. Not, not that I recall. I wouldn’t answer the phones anyway or wouldn’t maybe get to know. Sometimes if I’d come in, somebody might, might say, you know, Paul has asked, could you give him a ring or something, or whatever.

Xavier Greenwood, narrating: Paul Flanagan’s access to the mayor came on the back of a long friendship.

Joe Anderson: I’ve known Paul about 15, 20 years maybe. Not a great friend, but a friend, a Labour party supporter. Used to go to functions, Labour party functions, that most of the MPs had. His company would have a dinner table or whatever. I met him. And I, I, you know, lots of conversations with him about, about Labour, and about things that were going on in the city, especially even when, when we took control. 

Xavier Greenwood, narrating: They first met on a winter’s day, leaves on the ground… in a car park…

Joe Anderson: It was in, um it was in the car park. At the back of the old municipal buildings which was facing the Sir Thomas Hotel. So he was either parking in the Thomas Hotel, getting in his car or whatever when uh, he bumped into me and he said, Joe, you know, so I looked around and said, okay mate, Liverpool thing, you okay mate?

Xavier Greenwood, narrating: And the schmoozing began immediately… 

Joe Anderson: Yeah he said, youse are doing a good job, you know, and whatever, and he was critical of, of, uh, the Lib Dems and stuff, whatever. And that’s how the conversation lasted about, um, 10 minutes or something in, in, in the car park.

Xavier Greenwood, narrating: A friendship blossomed and Joe Anderson would often have a drink with Paul Flanagan inside the Flanagan hotel near where they first met.

Joe Anderson: Paul used to have…. he used to meet with a group of people, uh, I think they called themselves the Poet Society or something like that. I’d go go in there around about four o’clock, you know, I’d half past four. Cos every, you know, tried to get away early. I’d stay and have a few drinks and leave about half past six, seven o’clock often. Paul, if I was with other people, would come and sit, have a, I would chat for that 20 minutes, half an hour.

On other occasions, I’d walk over to where they were sitting in, in the venue and, and, and sit down. I would chat, introduced to different people and, and you know, taste this port. Cause I used to like a glass of port, taste this port or whatever. That’s how it went. But it was never, it was never planned, you know. Because you said, was it regular? Well, it was, it was frequent, you know, it was every week, every other week or whatever. And you know, if, if I went like two, three weeks on, on the run, you know, I might have a chat with Paul every time it was there.

Xavier Greenwood, narrating: Joe Anderson, an Everton fan, even went to the Flanagans’ box at Liverpool Football Club. Although we got into a strange war of words when I called it a box.

Joe Anderson: I went to a match there. It’s not a box, it’s a, Well I suppose you could call it a box. It’s their fac, it’s their facility. Like Yeah, I’ve, I’ve had a meal there.

Xavier Greenwood: When was the last time you talked to Paul? 

Joe Andrerson: Um, about last week. Early last week. 

Xavier Greenwood, narrating: Joe Anderson says this friendship didn’t factor into any work the Flanagan Group would get with Liverpool City Council.

Joe Anderson: Any work that was given to the Flanagan Group by Liverpool City Council had gone through a proper process of tendering and stuff, and bids and things and, and, you know, no decisions were, were made by me. And often I wouldn’t know if they had. 

Xavier Greenwood, narrating: But the Flanagan Group did do well under Joe Anderson. There’s one particular arrangement I’m going to start with, because, to me, it seems to typify the sorts of deals going on in Liverpool under Joe Anderson’s leadership. 

It’s to do with car parks but it sounds much grander because it was part of a scheme called The Beautiful Ideas Company.

Since 2011, the Flanagan Group had been running a community car park as part of a wider council led scheme to improve north Liverpool… tackling issues with street parking and car crime.

It was near the Everton and Liverpool football stadiums, and it was heaving on match days. At £10 a car, cash in hand, it had made a lot of money. The car park raised £186,000 in its first three years. 

In 2014, the council set up the Beautiful Ideas Company to funnel money from the car park into projects with a social purpose – the so-called Beautiful Idea.

Steve Radford: The idea was to create a company that would use the generation of car parking in the north city, in Anfield,  and draw that money in and then reinvest that into that Anfield community.

Xavier Greenwood, narrating: It sounds great doesn’t it? Take the hundreds of thousands of pounds already raised and pump it back into the area. It even got additional funding – some £375,000 – from the government’s Cabinet Office.

But Steve Radford, a Liberal councillor, was one of many people asking where that money was actually being reinvested.

Steve Radford: That was the concept and it was a concept I’m certainly not uncomfortable with. What clearly has raised a lot of angst, it’s large numbers of people in Anfield, who you’ve got members is enabling community mind. I question, where’s the money gone?

Xavier Greenwood, narrating: Steve only started getting answers a few weeks ago, when the council finally released their internal audits of Beautiful Ideas. My producer Gemma has been through them to try and work out what was going on.

Gemma Newby: So I’m gonna share with you some of the things that struck me as I was reading through the audit of the Beautiful Ideas Company. Because some of them are a little bit unusual, and they’re also very convoluted. Here’s the first thing that struck me. Paul Flanagan’s brother Julian was a director of the Beautiful Ideas Company, as was a Labour councillor, and two other Labour councillors were advisors to the board. And they were present when investment decisions were made.

And that might not sound like too much of a problem, except for the fact of who was getting the investment. So you go a little bit further into the report and what it shows you is the plan for distributing this investment from the car parks was that companies seeking a chunk of money would have to make a Dragon’s Den-style pitch to the Beautiful Ideas board. That’s to Julian Flanagan, that’s to the Labour councillor, and to others. But according to these audits, at least 10 of the 17 investments went to organisations that either had business or personal relationships to board members or staff working for Beautiful Ideas.

Just give you a concrete example of where these investments were going – Beautiful Ideas indirectly paid £20,000 to a community interest company, to hire a new member of staff for a cultural space in a local park. That job went to a Labour councillor. That Labour councillor was also the daughter of one of the councillors advising the Beautiful Ideas board.

And there’s one more thing that the audits reveal that I think is really illuminating about all this. There’s from 2015 that shows that the Flanagan Group had by that stage received over £250,000 through the car park scheme. But the auditors, the council auditors, couldn’t access the bank account where the money was held. Apparently the person with the password was off work and strangely nobody thought to pursue it. 

Steve Radford: Really suggesting that we couldn’t look at the accounts, or we can’t look at them, because somebody had gone sick and nobody knew the password for an account that was supposed to hold a revenue base of a quarter of a million pounds? I just think it’s stretching credulity.

Xavier Greenwood, narrating: Jon Egan, who sat on the Beautiful Ideas board for a couple of meetings, defended the Flanagans’ role in the company.

Jon Egan: I think that they were doing this honourably and honestly. The accountancy and the transparency was shoddy and slapdash. But that was the responsibility of the Beautiful Ideas company.

Xavier Greenwood, narrating: And, ultimately, the council. 

It didn’t look good for Joe Anderson. Little accountability and traceability. Councillors involved. All under his watch. Although he wouldn’t say that.

Joe Anderson: Look, I’ll be absolutely clear here that the mayor cannot see everything. The mayor can’t watch the minutiae of everything. You got social services departments, you’ve got education departments, regeneration departments, you know, whole host of different things going on, meetings, coming out your ears with government, with other people. You can’t see… that’s why you need a good team, good cabinets.

Xavier Greenwood, narrating: Since the release of the audits, Liverpool’s current mayor has launched an investigation, which will assess the behaviour of five Liverpool councillors in relation to the Beautiful Ideas Company.

There are other times where the Flanagans seem to have benefited from Joe Anderson’s mayorship.

In 2016 they were given nine acres of council land, the size of five football pitches, for free. The Liverpool Echo found they sold a piece of land they had bought off the council for a pound for £1.6 million. They were able to sell a different piece of land they’d also got for a pound, for £900,000.

Joe Anderson: Well I don’t know how the legals work on, on, on why they got land for, for a pound, but yeah. You know, that, that’s what happens sometimes. You know, you, you, you might grant a, a company three years business rate free in order then to, uh, afford to be able to, uh, refurbish something that that means it’s gonna take them a huge amount of money… we’ve done it, I’ve done it, where we’ve then brought in, uh, business rates and created jobs…  So sometimes you have to come up with innovative ways and solutions to, to, to get things moving.

Xavier Greenwood, narrating: The £1 sites were given to the Flanagans against legal advice, and despite the fact that the council had higher bids for some of the sites totalling over £1 million pounds. Joe Anderson insists he did nothing wrong.

Joe Anderson: I can guarantee you that the reports that gave this acres of land, nine acres of land that you’ve just mentioned or whatever, would’ve gone through proper regeneration, would’ve gone through cabinets, would’ve gone through the full council meetings. And also would’ve been, and could have been, halted by the chief executive, the city solicitor, or the financial director – you know, those statutory officers.

Xavier Greenwood, narrating: We’ve been told that many of the deals were in fact put not to the city council solicitor but to private solicitors. And that the deals would change without being put back in front of council members.

Remember at the start of this story, where I said that for a time Liverpool and Unite, the trade union, were soul mates? One of the reasons I found it interesting is that Unite isn’t based in Liverpool. Its headquarters are in London. It seems the main reason Liverpool and Unite are close – are the people involved.

Well, at the same time that Liverpool was building and building. So too was Unite. And like in Liverpool, the Flanagan Group were beneficiaries.

Just after Len McCluskey became the Unite boss in 2011, the Flanagans did work on Unite redevelopments in Stoke, Swansea and Liverpool. 

The building the Flanagans refurbished in Liverpool – Unite’s north west office – was described by some local politicians as the little Kremlin, playing up to its image as a hotbed of leftwing activity.

Len McCluskey clearly had an affection for the Flanagans. In 2014 he came to their Liverpool hotel – where Joe Anderson would have a drink – to unveil the political paintings that used to hang in the Newz Bar. 

At the event, Len McCluskey reportedly described the Flanagans as a “working class family who have made good and never forgotten their roots.” Len McCluskey, like the Flanagans, had a humble upbringing, in a Liverpool terraced house with no toilet or bathroom.

“This is my story. The story of a working class fighter, from the quayside of Liverpool to No. 10 Downing street. I’m proud to have fought for my class every step of the way.” Clip of Len McCluskey

Xavier Greenwood, narrating: He was a union shop steward on the Liverpool docks at just 19, but by the time he came to the Flanagans’ hotel in November 2014, he was probably the most powerful trade union official in the country. Labour’s then leader Ed Miliband had only been elected with the support of the unions.

Back then there was possibly no better way to show your working class credentials than to be pictured with Len McCluskey. And Paul Flanagan, when Len McCluskey came to his bar, got just that. Or so says Jon Egan.

Jon Egan: It suddenly became very obvious that he was being paraded out as being one of their influential friends.

Xavier Greenwood, narrating: After Len McCluskey came to their bar, the Flanagans’ relationship with Unite, mediated through Liverpool, continued to flourish.

In 2015, the Flanagans moved into a building on the Liverpool waterfront that used to belong to the Transport & General Workers Union – The T&G, which had merged with another union a few years earlier to become Unite. 

Purple Apple Management – the Liverpool company on the Birmingham hotel – were the agent when the building was on sale. The Flanagans made it their new head office.

Then, of course, the Flanagans got the job on the Birmingham project. Joe Anderson was close to the person running Purple Apple Management at the time the hotel was being built.

Joe Anderson: I knew Mike. I knew Mike very well. Mike’s a good friend of mine. And, um, I go to Mats with Mike – yeah, Mike’s a good friend, still is.

Xavier Greenwood, narrating: A health and safety contract went to a company run by Joe Anderson’s son. 

It’s a morass of connections, and it’s hard to parse coincidence from convenience from cronyism. Especially when Liverpool is a small city.

But what we can say is that the Flanagan Group became a much richer company because of the Birmingham hotel. 

In 2013, the Flanagan Group was turning over just £8 million. 

By 2017, when the hotel build was well underway, it was turning over £17 million. By 2018, £27 million. And by 2019, £38 million pounds.

Tortoise asked Unite and the Flanagan Group to provide any evidence of a competitive tendering process for the contract won by the Flanagan Group; to point us to any published advert for the tender; to list any other contractors that submitted bids. Unite said they didn’t want to comment until they had completed their own inquiry into the cost of the hotel. The Flanagan Group did not respond to our requests for comment.

***

Xavier Greenwood, narrating: It’s in 2019 that things in Liverpool took a turn for the worse.

In March, Paul Flanagan and Joe Anderson went to a local Labour fundraiser in a Liverpool park. They watched Len McCluskey speak, defending the Labour Party against charges of antisemitism. 

It seems like a different era now.

Because later that year, Merseyside Police began to arrest people in Liverpool. And not just anyone. Property developers, council officials. By the end of 2020, they’d arrested eleven people as part of Operation Aloft, a major police investigation they’d launched into building and development contracts in the city.

The people arrested included two developers, five council officials, former council officials and aides, and the family member of a council official. Currently no one has been charged, and there is no connection between Operation Aloft and Unite’s hotel in Birmingham.

We know who the people arrested are – there was another woman arrested a couple of weeks ago – but for legal reasons we can’t report their names. What we can say is that on the 4th of December 2020, Joe Anderson became one of them.

Two weeks after Labour selected him to go for a third term as mayor, he was woken up at dawn.

Joe Anderson: Margaret got up about 20 past six, whatever. And she’d gone out with the dog, and as she was coming back in with the dog behind her, um, there was 21 police officers stormed into the house. Seven o’clock in the morning, 21 police officers, you know. Stamping, charging through your house.

You’d think I was a drug dealer or a gun runner.  You know, if they’d asked me to speak to them I would have gone. You know, she was panicking, the wife, panicking, you know, what’s, what’s going on?

Xavier Greenwood, narrating: Joe Anderson was arrested, at home, on suspicion of conspiracy to commit bribery and witness intimidation. He has never been charged and denies wrongdoing. He still remains under investigation.

After he was arrested, things moved quickly. Joe Anderson sent a message to the public.

“He’s released a statement saying: ‘I’ve always done what I believe is best for the city. And I’m taking the following action with those best intentions in mind.’ He says he’s stepping away from decision-making within the council through a period of unpaid leave until the police make clear their intentions.” Sky News clip 

Xavier Greenwood, narrating: On the 17th of December, the Conservative government appointed Max Caller, someone who’s led large London boroughs, to carry out an independent inspection of the council. 

Three months later, he gave his findings. It is a damning report. Then secretary of state for local government, Robert Jenrick, read out some of the key lines in the House of Commons.

“It paints a deeply concerning picture of mismanagement, the breakdown of scrutiny and accountability, a dysfunctional culture putting the spending of public funds at risk and undermining the city’s economic development. An overall environment of intimidation, described as one in which ‘the only way to survive was to do what was requested without asking too many questions or applying normal professional standards’.” Liverpool Echo clip

Joe Anderson: I rebut everything Caller says. Caller’s a liar. You listening, Mr. Caller? You’re a liar. He says in his report that only companies in Liverpool with a Liverpool postcode got jobs. That’s a lie.

Xavier Greenwood, narrating: We put Joe Anderson’s assertions to Max Caller who says he stands by everything he wrote in the report. He says that he’s heard all these claims before from Joe Anderson and that they didn’t cut much ice with the Labour Party or with Robert Jenrick. 

Liverpool’s ultimate humiliation came when the Conservative government intervened to help run the Labour council.

“This package is centred on putting in place commissioners who I will appoint to exercise certain and limited functions of the council as required for a minimum of three years.” Channel 4 News clip

Xavier Greenwood, narrating: It was in this period – 2019-2021 – that things took a turn in Unite’s story too.

Unite had long since left its £7 million estimate for the hotel in the dust. But not only that… it blasted past its revised £57 million estimate. 

Leaked accounts show that by the end of 2019, they’d spent £74 million on the project. The media start to take interest, as do Unite candidates vying to replace Len McCluskey. 

By the start of 2021 – when costs had reached £98 million – Len McCluskey had had enough.

He called a special meeting of Unite’s executive council, where he denounced the “hostile media” who had sought to “undermine and smear” the trade union.

He explained that the cost increase was primarily down to implementing a union protocol, requiring that only directly-employed workers on national pay rates and with union membership work on the site. 

He said that “the world-class Birmingham hotel, conference and education centre is a reflection of this union’s sound management of its finances.”

At the same meeting, according to an audio recording obtained by the Times, he told Unite’s executive council he had “no connection whatsoever” with Joe Anderson, who had been arrested a month earlier.

Joe Anderson [montage of clips]: So Len McCluskey came up to see the school site with me and also, um, looked at the flyover sit situation there as well around the, the site…

Joe Anderson: I’d spoke at a couple, a couple of conferences that he was at. I spoke at a couple of rallies that he was at, I’d met him at the Labour Party conference at the Pullman Hotel, uh, had a pint with him. Only one pint. In fact might have been a glass, um, but a drink with him…

Joe Anderson: Len supported me of my going for the third team to be mayor again…

Xavier Greenwood: And would you consider Len McCluskey a friend? 

Joe Anderson: I’d say he was, yeah. I’d say he was a friend. Yeah. I wouldn’t say that that, you know, I have, I mean, I haven’t spoke to the man for a few years, um, over two years…

Xavier Greenwood, narrating: In April 2021, the hotel in Birmingham finally opened.

“Unite is a union that invests in its members.” Len McCluskey speaking on behalf of Unite

Xavier Greenwood, narrating: Len McCluskey hailed it as a triumph.

“This project is now completed and it stands as a tribute to the values of this union.” Len McCluskey speaking on behalf of Unite

Xavier Greenwood, narrating: He essentially tells the membership, that this hotel, this conference centre, is worth it.

A few months after the Unite hotel was opened, Len McCluskey stepped down as general secretary of the trade union.

He was replaced by Sharon Graham and Unite, under new leadership, began to wonder if the hotel was worth it.

And with that, the Liverpool ties began to fray. 

We’ve been able to track how things have changed by finding lines deep in the weeds of Unite’s published records. They’re so hidden that even Unite’s most eagle-eyed critics hadn’t spotted them.

We can see that soon after becoming general secretary Sharon Graham suspended Purple Apple Management as Unite’s property managers.

In October 2021 she took a building in Bradford away from the Flanagan Group. Unite said there would be a new tender to refurbish the office.

In December 2021 Sharon Graham also took an old pub back from the Flanagans. The pub was next to the Birmingham hotel. It was supposed to be refurbished as part of the development.

Unite said that their in-house team, not the Flanagans, were dealing with any remaining defects in the hotel itself.

And most importantly, Sharon Graham commissioned two independent valuations into the Birmingham project. In February, she gave Unite officials the news. The first valuation came in at £27 million, the second at £29 million, leaving a shortfall of tens of millions of pounds.

Sharon Graham then appointed Martin Bowdery, a top barrister specialising in construction disputes, to lead an inquiry into the discrepancy in costs. 

He’s due to report back any day now.

And I’ve discovered that the costs of the hotel haven’t stood still. At the start of 2021, remember, the bill stood at £98 million. But in a meeting of Unite’s leadership in June this year, officials were given an updated figure for the Birmingham project. It was shared verbally, I’ve been told.

And it was: £112.3m. That’s over £80 million more than the valuation said it was worth. Unite wouldn’t confirm the figure when we put it to them.

£112m is nearly £100 for every Unite member, some of the lowest paid workers in the country. For a hotel at which – according to the hotel itself – members don’t even get a discount.

***

Xavier Greenwood, narrating: So that’s where we are. The UK’s second largest trade union has been forced to open an inquiry into its own spending on a hotel, after it appears to have wasted tens of millions of pounds of its members’ money.

A major hotel contract went to a company run by someone close to Len McCluskey, a company which has been caught up in a separate corruption scandal in Liverpool.

Another contract went to the son of a former mayor who has also been caught up in that scandal, a mayor who considers Len McCluskey a friend.

It’s tempting to look at all this and pass it off as unsavoury but maybe not a ‘Grade A’ story: a tale about a regional city cutting corners and looking after its own, and a union which, as I said at the beginning, doesn’t matter as much as unions used to.

I think that would be a mistake. Just look at the power Unite still has. It’s not just the money it shovels across to the Labour Party – £3 million ahead of the last general election, and more than £1m each year in the affiliation fees that link the union to the party. 

But it’s also the energy it puts into election campaigns. Like the phone banks it runs to get out the vote. Talk to anybody in the Labour Party and they’ll tell you how important those things are.

For all the agonising about the relationship between Labour and the trade unions, Unite is still part of the warp and weft of left-of-centre politics in this country. A huge part of it.

Unlike on the right of British politics, there hasn’t been much scrutiny of whether Unite is well-enough run, and financially-accountable enough, to pass the equivalent of a fit-and-proper-persons test.

Conservative donors have come under the microscope over the past couple of years, of course. And they haven’t come out of the examination well. 

But here’s a union which, by its own admission, has serious questions to answer about its finances. Which has spent a fortune on a hotel and never successfully explained how. 

Unite’s potential to damage Labour is there for all to see. What’s happened in Liverpool could do the same. Clean politics and clean money will count for something at the next election. And both Unite and Liverpool could muddy Labour’s reputation.  

***

Xavier Greenwood, narrating: There is no indication of any criminal wrongdoing in the Birmingham hotel project. There is no indication that the Flanagan Group was at fault for the enormous rise in costs around the hotel development. And there is no connection between the development and any of the property or land deals being investigated under Operation Aloft. Joe Anderson has not been charged and denies any wrongdoing. He remains under investigation.

Unite told us that Sharon Graham established an independent inquiry in order to review the costs incurred in the union’s Birmingham development – and to address the questions of how and why those costs were incurred. Unite added that in Sharon Graham’s election campaign she had pledged to do this if issues arose that justified such an inquiry. Unite said they would make public comments when the independent inquiry reports. They said they cannot comment on matters within the scope of the inquiry while it remains on-going.

We sent Len McCluskey a series of questions about his relationship with Paul Flanagan. He described the questions we posed as “false, misleading, and inaccurate”.  We also asked him some questions about Unite, including the process by which the Flanagan Group were awarded the contract for the Birmingham hotel. He said we should direct these questions to Unite. He added that the questions had been publicly answered before and that any good journalism would be able to locate Unite’s answers through even the most cursory of investigation.

The Flanagan Group did not respond to our requests for comment.

This story was written and reported by me, Xavier Greenwood, and Gemma Newby. The producer is Gemma Newby. The executive producers are Ceri Thomas and David Taylor. Sound design is by Sam Mbatha.

How we got here

This was a story that dripped and dripped: a few lines here and there in a newspaper or two about a police raid on Unite’s offices; a bit more coverage of the runaway cost of a hotel the union was building in Birmingham. But no big splash, no great interrogation. Nothing of the scale which an organisation as important as one of Britain’s great trade unions might seem to deserve. So Xavier Greenwood began to look into it. 

Getting a handle on Unite’s finances is hard enough. It hasn’t ever offered an explanation for how the cost of the hotel went from an initial estimate of under £10m to north of £100m, although it has commissioned a lawyer to look into it. But the bigger challenge was to try to understand the personal friendships, business relationships and political ties which link Unite and the Birmingham hotel project to a city far away – to Liverpool. Ceri Thomas, Editor