INSTEAD of increasing public funding or promoting public ownership of key industries, or identifying responsible investors that prioritise peace and people over war and violence, Prime Minister Keir Starmer recently put out a gushing post on X about his meeting with Larry Fink, the chief executive of asset management firm BlackRock, and an even more gushing post on career firm Linkedin.
“I’m determined to deliver growth, create wealth and put more money in people’s pockets. This can only be achieved by working in partnership with leading businesses, like BlackRock, to capitalise on the UK’s position as a world-leading hub for investment,” Starmer wrote.
Business Secretary Jonathan Reynolds said that Labour looks forward to working with BlackRock to “change the face of our UK.” It was not the first time that senior figures from the world’s largest asset manager have met ministers in recent months, but it has received much more public attention now.
BlackRock is the world’s biggest asset management company, with around $10 trillion in its portfolio, that’s more than the GDP of every country in the world except for the United States and China.
But BlackRock’s business’s practices are deeply problematic. The company has been condemned for investing heavily in harmful sectors, billions in fossil fuel companies, gun manufacturers and the arms industry, and in places accused of human rights abuses.
Only last month (October 2024), it faced a complaint at the Organisation for Economic Co-operation and Development (OECD) over its alleged contribution to human rights abuses and environmental damage globally via its investments in “agribusiness” – including increased investments in firms accused of widespread damage to ecosystems in the Amazon, the “lungs of the planet.”
Also last month, ClientEarth filed a complaint with the French financial regulator, alleging that BlackRock’s sustainability claims are greenwashing and misleading, claiming that the investment giant’s “so-called ‘sustainable’ funds have poured over a billion dollars into fossil fuel investments.”
BlackRock has also been criticised for its heavy investments in companies providing arms to Israel, with UN experts warning in June that it was among a number of financial institutions facing “repercussions for complicity in potential atrocity crimes.”
BlackRock is one of the largest investors in the global defence industry, with significant shares in arms manufacturers, such as Lockheed Martin, Elbit Systems, General Dynamics, Northrop Grumman, Raytheon Technologies, BAE Systems and Boeing.
The UN made an urgent call in July for BlackRock and similar companies to end transfers of weapons to Israel, warning them of their complicity in genocide and other war crimes, but this call has been ignored.
BlackRock is one of the most powerful corporate actors on the planet, whose influence touches every aspect of our daily lives, but not all of the issues with BlackRock’s influence are quite so obvious.
There has been widespread and extreme negative reaction to Starmer’s posts, some of which driven in part by the reaction of rural communities to the perceived threat of BlackRock’s buying up agricultural land in Britain in a similar way to its mass funding of housing stock in the US.
Asset management companies typically look to buy cheap and then hold onto such investments for a few years before selling at the biggest possible profit, leading to criticisms that they are less likely to spend the money needed to make or keep housing to an expected standard for those living in them, because profits for the business, its shareholders and investors are prioritised.
This has led to concerns among the farming community that farms falling into debt will be snapped up and even that Starmer’s new inheritance tax on farmland is a means of ensuring that more land will be put up for sale as less wealthy farming families find themselves unable to fund the up-front inheritance tax bill.
The move toward BlackRock and similar firms fits worryingly into Labour’s overt enthusiasm for the use of private funds as the main or only way to drive economic growth, a minefield for what remains of public services after 14 years of Tory government – and a revival of Tony Blair’s Private Finance Initiative (PFI) that has saddled hospitals particularly with huge debt repayments lasting decades and costing far more than the bill would have been to simply fund them publicly.
They are also an extension of the “head in the sand” Tory refusal to acknowledge that privatisation inherently leads to fewer pence per pound spent on the actual services, because of profit-taking and, in many cases, profiteering – forcing those who need vital services and commodities to pay through the nose to repair the damage done by under-investment, as we’re seeing now with the water industry and the huge price rises Starmer’s government has approved.
Norwich South MP Clive Lewis sums up this damaging approach when he responded to Starmer’s BlackRock meeting: “Government as only a gung ho inward investment agency without even basic principles for that investment... roll up BlackRock – you’ll solve all our problems…
“Rather than explain how 40 years of atomising, neoliberal plunder; the selling-off of and destruction of our public services; the undermining or our democracy, the hollowing out and selling off of our natural resources at the hands of companies like Blackrock and other price-gouging corporations, billionaires & financial institutions, has led us here…
“Instead we become the defenders of the very elites – the business-as-usual brigade – that the right claim we are.”
Thus, it’s argued that Starmer’s approach is going to create more problems, more hardship, and more cost than it solves. But nobody should be surprised that his government is acting this way.
I would argue that actual policies were few and vague through most of Starmer’s period in opposition – if that word can really be used – but one of the few ways in which he and his front bench were open and clear was in their intention to bring more private money into public services.
Then shadow health secretary Wes Streeting was especially clear about his intentions for further privatisation of the NHS – despite the well-known and damaging legacy of PFI.
That eagerness to get into bed with big finance has only intensified since Labour entered government – and it comes tied to cuts and austerity, as well as the driving-down of wages, pensions, and social security benefits, that are normally associated with with Tory governments.
And it’s clear that BlackRock sees the future for Britain the same way. A couple of days after Reynolds was appointed by Starmer as business secretary, BlackRock executive Anthony Manchester wrote to Reynolds to congratulate him and to make clear that the firm wants in on the action – but that it must come with “pragmatism” about what improvements can be made to the lives of ordinary people and about what surviving conditions can be maintained.
Manchester told Reynolds: “we also share the government’s view that infrastructure investment can play a critical role [but] as our chairman and CEO Larry Fink has recently written, private capital market financing, combined with policy pragmatism, are necessary to meet countries’ infrastructure needs.”
Creating the profits that private investment requires, and the freedom from tax on those profits that companies and investment want, inevitably means less per pound spent at the front end on services and infrastructure – and almost always means lower wages, less job security and less spent on essential social and public services.
Starmer’s gushing about the government’s “partnership” with BlackRock may have been the trigger for wider public awareness and anger, but it was only the tip that gives away the iceberg of mass privatisation and intensified austerity that a Labour government is planning, ensuring the continuity of Tory plans.
We must oppose! It will be up to us as activists and organisers to develop a socialist alternative that puts people and planet before profits, and which strengthens our movement for justice, peace and liberation.
Claudia Webbe is the former member of Parliament for Leicester East (2019-2024). You can follow her at https://www.facebook.com/claudiaforLE/ and https://twitter.com/ClaudiaWebbe