Keir'll take you to the candy shop
Tackling obvious rule flouters could hit a sweet spot
Over the Christmas break, Sir Keir Starmer sneaked out a policy announcement around tackling central London’s epidemic of American candy stores. Though met with bemused mockery from the very online left, the move is a smart one. It hits an obvious issue where the Tories have failed and one that speaks of the wider state decline that Labour seeks to counter.
For those who frequently find themselves in London’s West End, the candy shops are a grim joke. Some of the best retail real estate in the country is occupied by garish, routinely empty shops stocked with over-sweetened, overpriced stock and guarded by a surly uninterested employee. Nestled alongside them is likely a vape shop, a cheap electronics retailer, and a bureau de change, sometimes in the same premises. They repeat, every dozen shop fronts or so, like the background of a cheap video game.
One or two are legitimate, and all power to them for exploiting the poor taste of those who crave their goods. Most, however, are not. Even the quickest glance makes that clear. They don’t have the footfall to sustain business anywhere, let alone on a flagship street. No one goes in them. No one you know has shopped there, or even seen anyone shopping there, but still they persist. There are literally dozens of them, cheek by jowl.
The secret ingredient here is, of course, crime. These retail units facilitate a variety of international scams, working as a laundry for some of the world’s worst criminals, while also defrauding the British state and endangering anyone foolish enough to shop there. Nearly five years ago, Private Eye first reported on this. Back then, the main scam was souvenir shops – retailers of cheap tat that seemed just about plausible, but ultimately provided cover for black economy shenanigans.
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When the pandemic hit, the souvenir shops were forced to close. Only essential shops could continue operating through the pandemic – a problem for those who needed the artifice of legitimacy to hide their cash. The solution was a pivot towards candy shops. Technically, it was a food, so could keep trading, and the high mark-ups associated whilst everything else closed. An excuse to keep the dodgy cash churning, ready to seize the opportunity as other lots fell vacant. Since then, they have proliferated.
At its heart, the scam is simple. Money launderers need a business to turn their ill-gotten gains into legitimate balance sheet entries. Companies that deal in cash are best, especially if they offer high margins. With cash use waning, targeting tourists is a good wheeze as they are more likely to use old money due to international card charges. A similar logic applies to selling smallish, convenience items – the sort people might pick up with pocket change, like a vape or a charger. Then you just build up a pattern of false transactions and your dodgy money is now clean. Stock with a long shelf life is especially good for this, as you can “sell” it over and over before it ever leaves the store. The sweet shop is a perfect facilitator.
Those behind it, however, have perfected the false enterprise, maximising their gains and dodging detection. Occupying the best real estate makes it more convincing that your profits are legitimate. A sweet shop in Southend raking in vast sums would be even more suspect than one in the West End. Yet it’s the flexibility of English company law that offers the real advantages.
Doing business in Britain is easy. Companies can be registered in a matter of minutes. Unlike in other countries, there are no arduous forms, long waits or bribes to be paid. The diligence at Companies House is pretty cursory, with few checks carried out to verify or cross-check information. These shops can spring up almost overnight. Once established, they can play the system. Landlords may offer them a sweet (ahem) deal to move into a vacant lot – perhaps an initial year rent-free. They might even be in on the scam, channelling rent through some other web of companies. All the business has to do is pay the business rates and the tax on commercial property. Except that they don’t.
Just as businesses can be set up easily, so too can they be dissolved. A company's debts, generally, die with it. So if, after a year, the rates, the VAT and a lease need paying, you can just shut down and let everyone else take the hit. If you are smart, you can then open up immediately with the same stock as a new company, without even needing to file accounts with the British authorities. Add in some patsies to act as company directors and you’ve got a great way of laundering your illicit gains towards shadowy owners in offshore locations.
Of course, like any smart business, the margins can be trimmed further. Counterfeit goods are cheaper than real ones, and you’re not bothered about customer loyalty, so fill the place with knock-offs at a fraction of the price. The black market can serve a variety of unsafe and illicit versions of popular goods. Rather than normal employees, the stores can be staffed by illegal migrants, loyal to gangs and less likely to cause trouble.
All of this is well known to the authorities. Westminster Council is chasing the stores for over £5 million in unpaid rates. Trading standards routinely raid them for unsafe and illegal goods. Numerous reports have highlighted the problems with the stores, yet they continue to exist and trade. As they do so, they are providing a legitimate income stream for some of the worst villains on the planet, from corrupt officials to drug, arms and people traffickers. All this sits in plain sight on Britain’s most famous high street.
The locality pays a price for this too. First, there is the direct fraud, the missing tax rates and other revenues that disappear when the companies go bust, only to rise like phoenixes under a new company registration number. This is money that should, by rights, be going to the British state, either through HMRC or the local authority. Beyond that, the presence of these stores degrades the area. Criminal activity exists as a de facto subsidy, allowing otherwise unprofitable businesses to keep trading even though there is no economic need for them.
This comes at the expense of legitimate shops. Landlords are fairly unfussed who pays the rent, so don’t mind if the illegitimate force out regular businesses. Genuine shops simply cannot compete, as the crooked candy shops have both an outsized revenue, and dump most of their overheads by avoiding taxes and other charges. At the same time, the character of Oxford Street suffers. The ugly, open-all-hours tat vendors cheapen the area, giving the street a tacky and unsafe vibe. It’s no longer the place you want to do your high-end shopping, so other shops suffer further. The presence of these criminals undermines real traders.
There is a bigger problem in all this, too. We know that open and obvious crime has a psychological toll. This is clear when it is neighbourhoods that are vandalised or feel threatened, or where drug dealing is open and obvious. It shows that society is breaking down and that the authorities have lost control. The proliferation of candy shops is the white-collar version of this. If global gangsters can launder their cash on our most famous shopping street, it’s a sign that the government has lost its grip.
The ease at which anti-money laundering controls can be evaded is a mark of the increasing tilt towards anarcho-tyranny of Britain, where rules only matter if you are foolish enough to follow them. We have grown a bureaucratic state which is overbearing and officious to those who engage with it, and toothless against those who show it contempt. That this is obvious and in view creates a sense of unfairness that rankles.
At one end of Oxford Street, Marks & Spencer is trying to demolish a building for redevelopment. It’s a pretty building, but only of mild architectural note and ill-suited to the needs of modern retail. The decision has been escalated all through the system, and now sits with Michael Gove as a minister. The shop will have spent millions in legal fees and consultations to reach this point and then may be faced with a decision that makes it impossible for them to operate this flagship. Those using illegal goods to launder arms dealing profits a few doors down face no such scrutiny. It is topsy-turvy.
This malaise runs through many aspects of modern Britain. In professional services, conscientious companies spend vast amounts of time and money trying to navigate compliance, carrying out checks and recording every free lunch lest it count as a bribe. But the complicit can just ignore it, knowing that overstretched regulators and authorities will probably never get to them. When it comes to wider frauds, just one in a thousand reports results in someone being charged.
When the government comes to crack down on immigration, it repeats these mistakes. High-value candidates for visas have to deal with an irrational and bureaucratic system. I was once involved in a sponsorship application for a company which was turned down because the role didn’t sound senior enough. With nothing but the name changed, it was accepted. People with foreign spouses have to jump through countless, often expensive, hoops – yet the government struggles to clamp down on fraudulent visa sponsors. It seems like it is easier to deport someone because they didn’t have paperwork they never knew they’d need than when they are a rapist.
Starmer’s pitch to the voters is beginning to solidify – Britain is broken and he’s the man to fix it. There is no shortage of things for him to point to, but this breakdown in fairness is a good theme to pick up on. The electorate hates unfairness, and they especially hate people getting away with stuff they shouldn’t. Building a narrative around this could be a useful tool for Labour, bringing together scandals like PPE procurement and Windrush into a wider narrative. It shows a way to talk about the Tories losing control without simply being pulled onto public spending. It's broader than that, focused on order and competence of government beyond what is in the coffers. And, with egregious crimes in full view, there are few better places to start with this than the candy shops.