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Children’s Social Care Cannot Be Reformed Without Recognising the Impact of Poverty and Austerity

Published by Anonymous (not verified) on Wed, 25/05/2022 - 6:00pm in

Following 12 years of cuts, is it any wonder that the children's social care sector is in trouble? A new review misses some of the key structural causes

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The publication of the long awaited children’s social care review made more than 70 recommendations to “reset” the sector in the UK this week. 

These included setting up new regional bodies to establish and run care services – and commission them for both the profit and the not-for-profit sector – and doing away with independent reviewing officers, whose role it is as experienced social workers to scrutinise the care of individual children and hold councils to account. 

The report also recommended a one-off windfall tax on the 15 biggest companies in the sector. However it offered no other measures to rein-in profits – an issue extensively covered by this newspaper.

85% of children’s homes are owned by private companies, with the market advertised as a “favourable demographic” to private equity investors.

Ray Jones, professor emeritus of social work at Kingston University and St George’s, University of London, told Byline Times that the Government has led a “privatisation rampage” on children’s social care in England with “awful consequences for children and families and the help they might need”. Jones is leading the parallel review of children’s social care in Northern Ireland.

Many in the sector have welcomed parts of the review and chair Josh MacAlister's calls for “a radical reset of our children’s social care system". The big five children’s charities have dubbed it “a once in a generation opportunity to fix a struggling system”.

Others, including Carolyne Willow, director of the children’s rights charity Article 39, warn that although individual proposals are to be welcomed, a “major structural upheaval” when there are children living in hostels and caravans, could be “an unforgivable distraction”. 

Jane Collins, a foster carer who runs a not-for-profit fostering agency, has decided not to foster any more due to concerns about the direction of travel in the review. The Care Review Watch Alliance, a collective of many working in the care sector, has voiced concerns too.

There is no doubt this is a difficult time for children’s social care, with record numbers of children coming into the system as families struggle with the cost of living crisis. But was conducting a review the right way to reform a creaking system and did it listen to the right people? 

MacAlister, a former teacher with no social work experience, is well connected within Government. As Byline Times revealed in December, he and his fast-track social work training agency, Frontline, (which MacAlister stepped down from in order to chair the review) are at the heart of networks of influence – including the Chief Social Worker, Children’s Commissioners, What Works Centre and others. 

Joe Hanley, a lecturer in social work at the Open University and part of the team which carried out the network mapping research on the review and MacAlister’s own connections, points out that “MacAlister sets [some of these network members] up and others with close connections to him, to have expanded roles in his vision for the future of children’s social care”.

Care, Poverty and the Long Tail of Austerity

Ray Jones told Byline Times that some of the initial fears about the review, such as taking child protection away from family support and promoting further privatisation of social work, had not come to fruition. He also welcomed the review's focus on the needs of children and young people.

But he pointed out that the “cumulative impact” of cuts on the sector had been “awful”. “It is a system which is indeed faltering after being undermined and denuded by politically-chosen cuts and commercialisation,” he added.

The review did not deny that poverty has had a major impact on the numbers of children entering the system. It found that children who live in the most deprived 10% of neighbourhoods are 10 times more likely to be looked-after or on a child protection plan than their peers in the least deprived 10% of areas.

While child neglect and abuse cuts across socio-economic class, poverty is a recognised pressure point – deprivation and related stress has an impact on family cohesion and for households struggling with issues such as domestic abuse, it can reduce a family’s options. 

Data analysed by Byline Times found that there is a correlation between deprivation and the number of looked after children.

Of the six poorest local authorities based on average rank, six had higher than average looked-after children. Blackpool, the most deprived local authority, had the highest rate of looked after children – at 210 per 10,000. Kingston-Upon-Hull had 165 looked after children per 10,000; Liverpool had 157; Manchester had 111; Sandwell had 107 and Nottingham had 99. Other local authorities with high levels of deprivation and looked-after children were Hartlepool and Middlesborough, at 172 per 10,000. 

In 2009/10 the mean of looked-after children for all English boroughs was 77 per 10,000, compared to 94 per 10,000 today. 

Much of the review focused on the need for early years support and ‘family help’.

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Imran Hussain, director of policy and campaigns at the charity Action for Children, told Byline Times that “our own research shows that 64,000 children every year are missing out on early help services and then being re-referred to social care within 12 months. Children’s social care services need to be proactive and intervene before it becomes too late”.

Dr Jo Casebourne, chief executive of the Early Intervention Foundation, said: “The reforms outlined by the independent review herald an exciting moment of change for the entire sector focused on helping families to thrive, from early help to children’s social care”.

But once again, the loss of early intervention has been a political choice over the past 12 years. Up to 1,000 of Labour’s Sure Start centres closed between 2010-19. The Conservative Government has responded with family hubs – but only 150 had opened by autumn 2021. This took place alongside a 62% cut in council early years service spending between 2010-19. 

These cuts did not fall evenly. The most deprived local authorities experience a 22% fall in early years funding compared to 12% among the least deprived. 

Some aspects of children’s social care were also hit harder than others – such as services for disabled children.

The Disabled Children’s Partnership – a coalition of organisations campaigning for better support – welcomed the review’s recognition of how transition into adult services differs for disabled young people, but was disappointed that the funding gap for disabled children’s social care, and respite care for families, has not been addressed.

Cuts to those services since 2010 have not been restored in any meaningful way by the Government. Given that the contract between Josh MacAlister and the Department for Education stated that there must be no assumptions about additional government funding for the recommendations, this is not surprising. 

Ray Jones points to the fact that his Northern Ireland review will be able to ask for more sustained funding – rather than a “temporary injection of funding after the decimation of 12 years of cuts”.

“The seeds the Government is sowing, of cutting help for families, will continue to overwhelm families and the good intentions of this review," he told Byline Times.

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Tough on Crime? The Conservatives Are No Longer the Party of ‘Law and Order’

Published by Anonymous (not verified) on Fri, 20/05/2022 - 8:07pm in

Boris Johnson has proposed authoritarian measures that fail to achieve true progress on improving justice and people's safety, argues Sian Norris

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It wasn’t the headline that Boris Johnson and Priti Patel wanted.

Hours after the Prime Minister told Cabinet that the focus was on “crime crime crime”, the Sun broke the news that an unnamed Conservative MP had been arrested on suspicion of a string of sexual offences, including rape. 

The MP has not had the whip removed nor has he been named in the press, but he has been asked not to attend the House of Commons. 

The arrest was another addition to a shameful roster of Conservative MPs who have been accused and convicted of sexual offences and inappropriate behaviour in recent years. 

Last month, Imran Ahmad Khan was found guilty of sexually assaulting a teenage boy.

In 2020, Charlie Elphicke was sent to prison after being found guilty of sexual assault.

Last year in the family courts, Andrew Griffiths was found to have raped his wife.

Conservative MP David Warburton has been suspended after allegations of sexual harassment (which he denies).

Rob Roberts was given his Tory Party membership back despite being accused of sexually harassing a staff member. 

Inappropriate behaviour aside, law-breaking seems to have become a defining feature of this Conservative Government – not least when it comes to ‘Partygate’. The Metropolitan Police issued 126 fines in Downing Street for COVID-19 breaches, including to the Prime Minister himself, before closing the investigation. 

But this crime crisis is not confined to Westminster. As Byline Times has been reporting all week, the Conservative mantra of being 'tough on crime' is not matched by the experiences of victims and survivors – with long waits for court cases, crashing conviction statistics, and frontline cuts causing havoc in the criminal justice system. 

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Tough on Crime?

“Crime crime crime is what we want to focus on,” Boris Johnson told his Cabinet on 17 May. But, after 12 years of Conservative leadership – which have seen swingeing cuts to police numbers, legal aid, magistrates courts and support services – the criminal justice system is in crisis.

As the Byline Intelligence Team has revealed, convictions for crimes such as sexual offences decreased by 44% between 2016 and 2020. In the year ending March 2020, there were 773,000 adults aged 16 to 74 years who were victims of sexual assault, of which 655,000 were women. More recently, there were 63,136 rapes recorded in the year to September 2021, up 13% from the previous period (56,119).

The Government has repeatedly boasted that crime is down by 14% – a statement challenged many times for not accurately representing the true figures. Indeed, if computer misuse and fraud were included in the Government’s boast, crime has in fact increased by 14%.

When questioned about this inaccuracy by BBC News, Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng said that what mattered was how “crime that people experience in their day-to-day lives... in terms of burglary, in terms of physical injury, has gone down”. But it is not for the Government to cherry-pick statistics and Kwarteng ignored how fraud and computer misuse is experienced by people in their everyday lives – as scammers rob vulnerable individuals of their savings. 

It is true that burglary and some types of physical injury crime decreased during the Coronavirus pandemic, not least because it was harder to break into people's homes when most people were inside them during lockdown or to shoplift when all the shops were closed. But the picture was very different for crimes that can be committed when people are trapped indoors, such as fraud and domestic abuse. 

One of the least-startling aspects of the Conservative MP’s arrest this week is that the complaint was first made in January 2020. Long waits for victims and alleged perpetrators have become systemic in a justice system that is struggling to cope. 

Data published in October 2021 found that the average time from submission by the police to the Crown Prosecution Service (CPS) deciding to charge has risen from 155 days in quarter four of 2020/21 to 170 days in quarter one of 2021/22. For all crimes, the wait for the police and CPS to charge a suspect continues to rise, from 36.5 days in quarter four of 2020/21 to 39.5 days in the first quarter of this year. 

No wonder that polls are now finding that the public does not trust the Conservative Party to tackle crime and to keep them safe. How can they, when conviction rates are dropping, there are long waits for justice, and 20 police forces paid £2.9 million in legal costs in 2021 due to allegations made against the very people who should be upholding the law? 

New Bill, Outmoded Laws

Of course, while the crisis in English justice is felt by victims and survivors, the Government continues to talk tough on crime – not least with the Police, Crime, Courts and Sentencing Bill. 

The controversial laws include increasing police powers and cracking down on the right to protest – as well as longer sentences for some crimes such as damaging statues. 

The Government has also announced that it plans to give taser-powers to special constables, expand stop and search, and increase the number of prison places – including by creating 500 more prison places for women despite the Ministry of Justice recognising that fewer women should be held in prison, not more.

All of these interventions give an impression of toughness but raise profound social justice, and health and safety, questions. 

The focus on statues, protests, prison places and longer sentences in the bill plays to the 'culture war' the Government is intent on waging. But what will ultimately be achieved?

There’s no point increasing sentences when people who commit crime aren’t even being prosecuted – and increasing the number of people in overcrowded prisons is not the best solution. A 10-year sentence may put off another protestor from tearing down a statue (which, in case we have forgotten, has happened once and led to a wholly disproportionate response), but rape has been effectively decriminalised and the bill has little to say about it. 

Then there’s the lack of actual solutions – which tend not to come from adopting authoritarian poses and are instead rooted in community support, education, investment in prevention, investment in supporting people when they leave prison, and strategies to tackle everything from poverty to child exploitation to institutionalised racism. 

Focusing on prevention, investment in communities and tackling poverty and inequality can make a real difference. But it’s long-term, expensive – and it doesn’t fit into a culture war. 

The Government likes to talk tough on crime, as it adopts an increasingly authoritarian legislative agenda. But the stats speak to a crisis – and a crisis for which it offers little in the way of solutions.

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‘We Can’t Live Like This’: Universal Credit Falls Short of Cost of Living Price Hikes

Published by Anonymous (not verified) on Thu, 19/05/2022 - 6:45pm in

Rising energy bills, increased food costs – and yet benefits have not risen with inflation, leaving families struggling to make ends meet, Sian Norris reports

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More than half of families receiving emergency charity aid are also on Universal Credit, with the benefit failing to meet families’ basic financial needs.

Data from the charity Action for Children has found that 54% of people receiving emergency help from its Children’s Crisis Fund were on Universal Credit, suggesting that the benefit simply does not go far enough in helping families make ends meet. The situation has been made worse by the decision to cut the £20 uplift to Universal Credit last autumn.

The uplift was a temporary measure introduced to new Universal Credit claimants at the start of the Coronavirus pandemic. Chancellor Rishi Sunak cut it in October, in what was the biggest single slash to welfare support since the Second World War. Nearly one-fifth (18%) of people accessing emergency help cited the £20 cut as making life harder. 

If winter was bad, summer and autumn risks being even worse for low-income households. Inflation has reached 7%, as food and energy bills continue to rise. But despite the increasing cost of living, the Treasury opted not to raise Universal Credit in line with inflation – meaning that those on benefits have endured a real-terms income cut. 

The Government has claimed that the best way to tackle the cost of living is through employment and economic growth. The Prime Minister has said “we’re creating jobs, jobs, jobs” to tackle the crisis. Safeguarding Minister Rachel Maclean has said that people struggling with the cost of living should “take on more hours and get a better paid job” – although some have pointed out that she was talking about aspirations for a high-wage economy. 

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Despite the Government insisting that more jobs are the answer, it also boasts of a record low unemployment rate, at 3.8%. This means that most people struggling with the cost of living crisis are already in “jobs jobs jobs”.

Indeed, more than 40% of Universal Credit claimants are in work and 75% of children in poverty have at least one working parent. The solution to the cost of living crisis cannot, therefore, solely be found in getting more people into work. Instead, there needs to be a focus on tackling low-paid, insecure and precarious work – as well as efforts to create a benefits system that supports those who cannot work. 

Imran Hussain, director of policy and campaigns at Action for Children, told Byline Times: "The Government committed to using the tax and benefit system to reduce child poverty in its 2019 election manifesto. And yet, with inflation set to reach its highest level for four decades this year, the policy responses introduced by to date will not do nearly enough to support low-income families.

"We desperately need a cross-government plan to reduce and ultimately eradicate child poverty in the UK, but we can start today by guaranteeing benefits keep pace with the cost of living and target help to children in low income families through a rise in the child element of Universal Credit.”

‘We Literally Can’t Live’

For a mum like Leanne, the advice to “take on more hours” to beat the cost of living crisis is meaningless. She already works 37 hours a week on top of raising her two children. “There’s no way I could work my way out of this situation like the Government says I could,” she said. 

Leanne is on Universal Credit and has no disposable income left at the end of the month. Her electricity bill has increased from £188 per month to £279 per month, her council tax has gone up, as has the cost of her groceries. 

The daily struggle to make ends meet is impacting her physical and mental health, she told Byline Times. “I have palpitations worrying about the bills coming out. I’m constantly stressed. Emotionally I feel really drained and really down.”

Already, the cost of living crisis is having an impact on her children. She cannot afford to feed them fresh food as it's so expensive, even though she knows that the cheaper food she relies on is bad for their health. As for treats and days out, there is no money left to give her children those magical extras that make childhood special.

“I feel like I am failing my children,” Leanne told Byline Times. “My daughter is nine and she doesn’t understand why she can’t have things anymore. She doesn’t understand why she can’t have an ice cream when we walk past the ice cream van. I am trying to protect her from the stress while having to say 'no' to her all the time. My son is 18, and he feels like he has to support the family. But I don’t want him to feel like that – it’s not his responsibility, it’s mine.”

Leanne is terrified about what the autumn will bring, when energy prices are set to increase again. Her son is hoping to go to university to study robotics this September – an amazing achievement that is dampened by the family’s fears that she will lose her child benefit and see her income decrease even more. “It’s more pressure”, while she needs to help him through his studies.

“What should be an exciting trip to go and buy his essentials for university is just another added stress,” she said. “He will get a maintenance grant when he’s there, but that won’t cover all his costs. I should be able to help him. He shouldn’t be going to university and worried about his finances, he should be able to enjoy the experience.” 

More than a third (37%) of families like Leanne’s who are on Universal Credit and receiving crisis support from Action for Children said that, without the additional help, they would have struggled to feed their children. 29% were having to choose between eating or heating. 

“The worst pain and misery of the cost of living crisis is being felt by children in low income families, yet the Government is refusing to target help for these children or accept that it needs to rethink its huge cut to Universal Credit,” said Imran Hussain. “The levels of severe and persistent financial hardship our services are seeing are among the worst they can remember and are robbing too many children of the bright futures they deserve.”

A Government spokesperson told Byline Times: “We are committed to ending poverty and the latest figures show there were half a million fewer children in absolute poverty after housing costs than in 2009/10.

"We recognise the pressures on the cost of living and we are doing what we can to help, including spending £22 billion across the next financial year to support people with energy bills and cut fuel duty.

"For the hardest hit, we’re putting an average of £1,000 more per year into the pockets of working families on Universal Credit, have also boosted the minimum wage by more than £1,000 a year for full-time workers and our Household Support Fund is there to help with the cost of everyday essentials."

The figure of half a million fewer children in poverty relates to absolute, not relative poverty, as Byline Times has previously reported. The £1,000 per year more in the pockets of working families on Universal Credit would benefit around two million people – however the removal of the £20 uplift impacted 5.5 million families.

You can listen to our interview with Leanne, and learn more about the cost of living crisis from Imran Hussain, on the Byline Times Podcast

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‘A Sense That Rape is Decriminalised’: New Data Reveals Ongoing Crisis for Rape Victims

Published by Anonymous (not verified) on Wed, 18/05/2022 - 9:31pm in

A new investigation by the Byline Intelligence Team reveals that fewer men are being convicted for sexual offences – a crime that impacts one in five women

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The number of sex offenders found guilty in all courts decreased by 30% between 2011 and 2020, a new investigation by the Byline Intelligence Team can reveal.

While the Coronavirus lockdowns will have had an impact on convictions during 2020, the downward trend was apparent even in 2019. Between 2011 and 2019, there was a 12% decrease.

When comparing data from a high in convictions in 2016, the decrease is even more stark. Between 2016 and 2020 the number of offenders found guilty of sexual offences in all courts dropped by 44% (7,511 to 4,165) – and before the pandemic in 2019, the decrease was 33% (7,511 to 5,017).

A spokesperson from the Ministry of Justice told Byline Times: “In the last three months there has been a 15% increase in the number of people convicted for rape offences and a 24% increase in the number of cases the police are referring to the CPS, but we know there is a lot further to go to better help victims and rigorously pursue perpetrators".

There were 467 convictions between October and December 2021, compared to 407, 398 and 376 in the quarters before. On average, 85,000 women and girls are raped in England and Wales every year, and 12,000 men.

The data comes as the Prime Minister holds a Cabinet meeting focused on crime where he said the Government "is making sure that we give everybody the confidence that we are on their side when it comes to the law and their experiences of crimes – particularly crimes of sexual and domestic violence - and we want to see more prosecutions for those who engage in such crimes. We want to see more rapists brought to justice".

But the current record on sexual offences suggests a failure to put rapists behind bars.

Of those convicted in 2020, 2,807 were sentenced to immediate custody – a decrease of 37% from 2011. The average custodial sentence was for 55 months. 

While these sentences cover all sexual offences, some rapists will have received sentences of less than 55 months. Data from the Ministry of Justice revealed that 23 adult rapists were sentenced to less than four years in prison across England and Wales in 2020. There have also been cases where adult men have received community sentences or absolute or conditional discharges. In 2011, then Justice Minister Ken Clarke expressed disbelief that rapists are sentenced to five years.  

This article was produced by the Byline Intelligence Team – a collaborative investigative project formed by Byline Times with The Citizens. If you would like to find out more about the Intelligence Team and how to fund its work, click on the button below.

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In England and Wales, a total of 162,936 adults were victims of sexual offences in the year ending March 2020. Of all women aged 16-74, 22.9% experienced some form of sexual assault in the year ending March 2020 – that’s more than one in five. 7.1% have been raped or endured an attempted rape and 21.7% of women have suffered indecent exposure or unwanted sexual touching. 

The numbers are lower for men – 4.7% of men had been victims of some form of sexual assault; 0.5% of rape or attempted rape; and 4.5% have endured indecent exposure or unwanted sexual touching. 

The charge rate for rape decreased from 8.5% in 2015 to 1.3% today. Shadow Home Secretary Yvette Cooper told the House of Commons that every day in England and Wales, an average of 300 women will be raped – but only three alleged rapists make it to court. 

The failure to prosecute rapists has led to campaigners warning that sexual assault is decriminalised in the UK. 

“What is causing the crisis in justice for victims and survivors of sexual offences?” asked Harriet Wistrich, founder of the Centre for Women’s Justice. “There is no one answer but in essence the failure of the Criminal Justice System to prosecute nearly all rapes that are reported leaves a sense that rape is decriminalised. In addition, women who report rape and sexual violence have to deal with fears of being disbelieved, or being under investigation themselves, insofar as they are often required to disclose their digital data and personal records in order for the investigation to be taken forward. The other big issue at the moment is the huge delays from report to trial (for the few that get there) – three years plus for many while their lives are suspended”.

Culture of Disbelief 

The figures undermine the Government’s tough on crime narrative. Between 2010 and 2020, austerity measures led to 20,000 police staff cuts. A report published by the Women’s Budget Group (WBG) and the Women’s Resource Centre in 2018 stated that funding cuts to the police had “consequences for victims of domestic and sexual violence, including cases dropped due to problems collecting evidence and a reduction in police funding for specialist support services”.

At the same time, austerity measures impacted funding for the women’s sector which provides support for victims and survivors of sexual offences. While a considerable number of organisations generate their own income, many women’s services also rely on grants from local authorities. Grant funding for local councils in England from the Central Government reduced by £16 billion between 2010-19, leading to a 17% fall in council spending on local services. 

41% of organisations surveyed in the WBG report had seen a drop in their income over the previous year – while 80% of respondents said there had been an increase in need. The report's authors found that “austerity measures since 2010 had an impact on the availability and accessibility of statutory services to vulnerable women”.

But the cuts form just part of the picture of low conviction and prosecution rates. 

A super-complaint to the Ministry of Justice submitted by the End Violence Against Women Coalition, Imkaan, Rape Crisis and the Centre for Women’s Justice found numerous examples where women reporting rape were confronted with disbelief based on damaging rape myths.

These include the case of Anna, who reported being raped three times but had her case dropped, in part because she had returned to the perpetrator’s flat after the second assault. She had previously been in a consensual sexual relationship with her alleged attacker. 

Barbara, a young lesbian woman, was raped by an older male relative, but her case was dismissed when the Crown Prosecution Service decided there was not enough evidence to continue. 

The fact Barbara had been drinking with her alleged attacker was used against her, as it was in the case of Daphne, who was sexually assaulted by a co-worker. Her case was dropped because her recollection was “hazy” and she “appeared not to have left the [attacker’s] flat immediately after the incident”. For Imogen, the CPS asked the question “who would the jury be most likely to believe?” – her, or her partner who she had accused of rape, psychological, physical and financial abuse. He claimed she had consented to sex.

Multiple women cited in the super-complaint had their phones confiscated by the police and their messages reviewed. If their phone included messages that could be construed to encourage sex, this was seen as a reason not to go ahead with the case – even if the victim had previously been in a sexual relationship with her alleged abuser.

In a joint report on how rape is effectively decriminalised, End Violence Against Women Coalition, Imkaan, Rape Crisis and the Centre for Women’s Justice argued that: "Central to the way in which criminal justice agencies manage rape and sexual abuse cases are decisions around how credible a victim/survivor is. At every stage of the process, manifestations and pre-emptions of rape myths and stereotypes play a major role in whether a case is taken forward or not".

"For many victims/survivors, the criminal justice system is therefore not experienced as a site of protection, but as a site of harm that compounds the trauma of rape and sexual abuse," the report authors added. "The system is often re-traumatising, and for specialist sexual violence and abuse practitioners who support victims/survivors, profoundly demoralising".

A Government spokesperson told Byline Times: "We are recruiting 1,000 more independent sexual and domestic violence advisers, launching a new 24/7 helpline for victims, trialling a new approach to police investigations, and rolling out pre-recorded cross-examination across the country so rape victims get the justice and support they deserve”.

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Cabinet brainstorms quick fixes for the cost-of-living crisis to avoid the real solution

Published by Anonymous (not verified) on Sun, 01/05/2022 - 3:51am in

“When people live in a fair, caring society, where everyone has equal access to social goods, they don’t have to spend their time worrying about how to cover their basic needs day to day – they can enjoy the art of living. And instead of feeling they are in constant competition with their neighbours, they can build bonds of social solidarity.”

Jason Hickel – Less is More.

Boris Johnson holds a meeting of UK Cabinet minstersPPicture by Simon Dawson – No 10 Downing Street on Flickr. Creative Commons 2.0 license

According to the Telegraph this week, the Treasury has ‘raked in more tax than ever before’, thus putting the UK, it says, on course to have the ‘highest tax burden since the aftermath of the second world war’. The Chancellor, still counting his beans, was not in the slightest bit apologetic, making clear his assertion that he had no other option but to get the public finances back on track after the vast amount of public money that had been spent during the pandemic. Keeping the £12,570 personal allowance for income tax at its current level would, the author of the Telegraph article indicated, generate an extra £20bn for the Treasury over the next five years, thus reinforcing, yet again, the plainly wrong idea that government relies on tax to spend, or balance the public accounts. A government spokesperson called on for comment, said, wiping a tear away, that it had been forced to make ‘tough decisions’, but not to worry, in 2024 we can expect a tax cut bonanza just before the next election.

The Guardian took another tack, not taxes, but borrowing. In an article by Larry Elliott entitled, ‘UK government borrowing halves but is still close to record high’, he quotes figures from the ONS which reported that the gap between the state’s revenues and its spending was down on the previous year, but that despite the improvement over the year, the total deficit for 2021/22 was more than £20bn higher than forecast by the OBR. All as if borrowing figures were a sound measure of the government’s management of the economy. The Chancellor, trying yet again to sell his agenda of fiscal discipline, was quoted by Elliott, reiterating yet again, that ‘Public debt is at the highest levels since the 1960s and rising inflation is pushing up our debt interest costs, which means we must manage public finances sustainably to avoid saddling future generations with further debt’.

They are all at it! Whether it’s former or current Chancellors of the Exchequer, journalists or orthodox economists, they all have one thing in common: their addiction to the false narrative of household budgets. The idea that governments are limited in their spending policies by how much tax they collect or what they can borrow. The false corollary of all that, is that without careful management of the public accounts, either we face the prospect of the UK going bankrupt, as former Chancellor George Osborne suggested to the public, or future generations will pay the price in higher taxes. All nonsense, of course, but it keeps the public in their place, meaning acceptance without question, that the government has limited fiscal capacity, and the message that government has no option but to impose belt-tightening policies, completely ignoring the fact that a government deficit represents a private sector surplus, in layman’s terms, the money in our pockets. Taxing away more doesn’t give the government more to spend, or to pay down public debt as is implied, and it certainly doesn’t help an economy to navigate difficult times.

We are now witnessing in the most distressing way, the terrible consequences of those narratives which are having a direct effect on the economy, or more precisely, the people who do the work to keep it functioning. Not just the effects of the last 2 years on people’s lives but the ongoing consequences of decades of successive government spending policies. Policies which have ranked fiscal discipline over economic health and public well-being, seen wealth distribution skewed to favour ever fewer people and overseen the selling off or privatisation of key public assets with vast amounts of public money syphoned off for private profit, along with the underfunding of vital publicly run and paid for public infrastructure which has left it in a state of ongoing decay. We have paid a heavy price as a nation for the economic ideology which prevails and dictates policy and spending.

From every corner, the warning signals have been ringing loudly. Last month, Martin Lewis, the Money Saving Expert, said that he was running out of tools to help people manage the cost-of-living crisis. He said that ‘it’s not something money management can fix, it’s not something that for those on the lowest incomes telling them to cut their belts will work, we need political intervention.’

Phil Andrew, the CEO of the StepChange Debt Charity, echoing Lewis, said that their advisers had been taking increasing numbers of calls from people who fear they won’t be able to keep up their debt repayments. With eleven million households facing Covid-related debt, and four million using credit to pay for essentials, he was clear:

‘For these households, rises in energy bills and the increasing cost of essentials are not things that make the difference between being able to afford luxuries or not. They are the things that genuinely make the difference between heating and eating.’

The Trussell Trust, which runs more than half of UK food banks, says it is witnessing an accelerating crisis across the UK as more and more people are unable to afford the absolute essentials necessary to eat, stay warm and dry, and clean. Figures released this week show that the Trust’s network provided more than 2.1 million parcels to people facing financial hardship from 1st April 2021 to 31st March 2022, which represents a 14% increase over 2019/20 – before the pandemic. And more than 830,000 parcels were provided for children, which represents a 15% increase from 2019/20, when 720,000 were provided. The Trust, again echoing Martin Lewis, said that there is still time for politicians to turn this situation around, saying that, governments at all levels must use their powers and take urgent action now to strengthen our social security system so it keeps up with the true cost of living and helps prevent hundreds of thousands more families being forced through the doors of food banks.’

These figures are a shocking indictment of a government that does have the fiscal tools to put in place solutions to mitigate the economic shock of Covid (although imperfect, already demonstrated), the effects of the war in Ukraine and last but not least to address a climate crisis which threatens humanity, but which seems to have been put on the back burner even as the planet’s life support systems continue to degrade and the social injustices intensify globally.

Our government has the legislative and fiscal tools, should it choose to use them, not only to mitigate this economic crisis in the short term, but also to challenge the market-driven ideology of decades. An ideology which has led to an increasing divide between the rich and the poor, with an ever-increasing share of wealth going into fewer hands, as wages have stagnated. A pernicious ideology that has created increasing reliance on an unfair social security system which punishes people rather than supporting them, whilst it has made the concept of real full employment a dirty word and allowed the corporate sector to get away with murder by paying low wages and setting working people against each other in the dash for a job and a modicum of security.

We may, as the Trussell Trust says, need a fairer social security system for those who cannot work, or who are caught in economic straits not of their making, but we also need a government with the political will to implement a Job Guarantee, not just to provide the vital cyclical economic automatic stabiliser at such times as these, but also to reverse the unfair advantage capital has had for decades over labour, which has been responsible for wages being driven down in a fight for competitive supremacy with all that entails in human deprivation.

However, apparently, the government is right out of tools, out of ideas, out of everything except perhaps its propaganda machine, which is working just fine. This week’s Cabinet ‘blue sky thinking’ exercise left many scratching their heads as Boris Johnson was reported as asking for proposals for tackling the cost-of-living crisis without actually spending public money. Ministers have been ordered to find new ‘non-fiscal’ solutions. Grant Shapps suggested making the MOT test biennial instead of annual. Is that a joke? If so, it’s in the worst possible taste, ignoring as it does the very real effects of higher energy and food costs on families across the country. Their problems won’t be solved by such crass intervention. And Johnson is said to have revived the Liz Truss proposal to cut childcare costs by lowering England’s legal limit on adult supervision for nursery children, even though such a move could well endanger the safety of these children. As we said – right out of ideas, well at least sensible ones like using fiscal policy to address the current crisis and indeed future ones. Meaning, spending newly created money as only a currency-issuing government can do.

Even Torsten Bell from the Resolution Foundation think tank, which has its roots in orthodox economic thinking, commented that he thought the government had ‘lost the plot’, if it believed that such ideas would improve people’s lives substantially.

It is quite shocking and disingenuous of a Chancellor who can afford a £600 pair of trainers, has an extensive property portfolio and will think nothing of spending £13,000 a year on heating a swimming pool, to tell listeners on Mumsnet this week, that it would be ‘silly’ at this moment in time to give poor families any further help with rising bills, when people are already feeling the pinch from record rises in energy price and steep increases in the cost of food and essentials. Sunak’s Spring Statement and previous budgets have been a kick in the teeth for ordinary people who have paid the price in living standards and rising private debt, caused by inadequate spending, not just by Sunak but also by previous Chancellors wedded to economic orthodoxy, and the lie that government spending is just like our own household budgets. People who have already been subjected to government policies which have driven growing poverty and inequality and decimated the public and social infrastructure over the decades which preceded the current emergency. They need help now, not later, when things are likely to be infinitely worse.

The Chancellor has at his disposal the fiscal tools he needs to address the current cost-of-living crisis and create a fairer and more sustainable society. But while he adheres to his fiscal discipline message that puts the household budget narrative of tax and spend, paying down debt, reducing public deficits or the objective of achieving balanced budgets or surpluses at the top of his agenda, regardless of the economic conditions that prevail, the lives of ordinary people can only get worse, and recession will be just over the hill. We are not all in this together under this regime.

There is an alternative. It’s just that we don’t have a government or other political parties willing to challenge the economic orthodoxy which drives spending and legislative decisions. The system has been corrupted to serve global corporations, whilst politicians have been bought, as a result, by benefiting through the revolving door. At the same time, the media plays out the narrative like a broken record, to keep the illusions going that governments are powerless to intervene when economic instability threatens, hamstrung as they are by scarce monetary resources, when the reverse is actually true.

What hinders government is not scarcity of money, but the recognition that it must align its spending to the available resources and the productive capacity of the nation, and make the political decisions about who gets the pie based on that. That is the real balancing act and the real starting point for a true understanding of what governments can do, with the political will, to create the sort of society which benefits everyone, by serving public purpose instead of corporate greed.

 

 

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The post Cabinet brainstorms quick fixes for the cost-of-living crisis to avoid the real solution appeared first on The Gower Initiative for Modern Money Studies.

Renters Hit Hardest by Cost of Living Crisis

Published by Anonymous (not verified) on Thu, 28/04/2022 - 6:00pm in

Data from the Office for National Statistics shows that renters are more likely to be struggling to make ends meet than those with mortgages

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Renters are being hit hardest by the cost of living crisis, new data has revealed, with homeowners more likely to be protected from rising costs.

Data published by the Office for National Statistics (ONS) shows that a greater percentage of renters (37%) found it “very difficult” or “difficult” to pay their usual household bills compared to a year ago – while the percentage of mortgagors was lower, at 23%. 

Renters are also more likely to have seen their housing costs increase since the cost of living crisis began to bite. 

Between 16 and 27 March 2022, a third (34%) of renters reported that their rent had increased in the previous six months. This was compared with just under a fifth (19%) of those with mortgages who saw their mortgage bills go up. 

Homeowners tend to be more protected from rising housing costs as many will be on fixed-term mortgages or own their homes outright. Renters, meanwhile, are vulnerable to rent hikes from landlords. 

A spokesperson from the union ACORN told Byline Times that, while “the cost of living crisis is affecting everyone, it’s no surprise to see that renters are disproportionately footing the bill".

They said the organisation has seen many more people approaching it due to rent rises in recent months. "Only last week, a member in Manchester reported a rent hike of 33%, but this is far from a unique example," the spokesperson added. "At the same time, wages and housing benefit remain largely stagnant.” 

March 2022 also saw the largest annual increase in private rental prices paid by tenants in the UK since July 201, at 2.4%.

“Unless the Government takes this growing crisis seriously and urgently puts in place measures to safeguard tenants, we will soon see the number of people struggling to pay rent quickly turn into more people being evicted from their homes,” they added.

“Not only is this devastating for an individual renter or a family caught in this situation, but it will also be devastating for wider society due the cost and damage inflicted by the subsequent homelessness crisis.”

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Housing Woes

As rents increase, the quality of housing and rental standards have failed to keep up.

According to data published in 2020 by the housing charity Shelter, private renting is making millions of people ill. Almost half of England’s renters experienced stress or anxiety, and a quarter were made physically sick as a result of their housing. 

In England, the majority of renters have a private rather than social landlord, with more than 4.4 million households renting their home from a private landlord in 2019/20. This equates to just under a fifth of all homes in England. These households represent around 11 million people and the number of people living in rented accommodation has more than doubled since 1997.

Research published by the House of Commons Library found that the private rented sector has the “worst housing conditions” compared to council houses and homes occupied by their owners.

English Housing estimated that, in 2019, 23% of private rentals did not meet the 'decent home standard' – approximately 1.1 million homes. In comparison, 18% of owner-occupied homes and 12% of social-rented homes did.

Privately-rented homes were also more likely to have at least one 'category one hazard' under the Housing Health and Safety Rating System – such as damp and mould growth, unsafe stairs or surfaces, and pests. This can have an impact on health and wellbeing. 

Poor housing costs money. Living in damp, cold or unhealthy conditions can have profound physical and psychological effects on individuals, especially children. One estimate puts the cost of poor housing to the NHS at £1.4 billion per year in England.

A Wider Crisis

Across the board, 87% of adults reported an increase in their cost of living last month – an increase of 25% compared with around 6 in 10 (62%) adults in November 2021. This reflects the rising cost of energy, housing, and food, as inflation hit 6.2% in February. 

Households in the most deprived areas of the UK were more likely to be struggling with costs – with 34% saying it was “difficult” or “very difficult” to pay their usual household bills. This was double the number of people struggling to make ends meet in the least deprived areas, at 17%. 

While the majority are keeping their heads above water, 3% claimed to now be behind on rent or mortgage payments, with nearly half a million people behind on their rent. 

While the proportion of people turning to credit has remained relatively stable – in part because wealthier households have dipped into savings to cover unexpected costs and bills – the picture is very different for those in the most deprived English regions. 

Nearly a quarter (23%) of households in the poorest areas of the country reported that they had borrowed more money than a year ago. They were also more likely to report that they would be unable to save money over the next 12 months – 55% would not be able to save, compared to 34% living in the least deprived areas.  

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How bad will it get?

Published by Anonymous (not verified) on Mon, 25/04/2022 - 8:15pm in

Woolworths went into administration on 6 January 2009 after 99 years trading. Flickr/Dominic Alves.

There’s an unpleasant calm before the storm feel to British politics at the minute. Anyone who remembers the period from the end of 2006 through to the debacle of autumn 2008, with the failure of Northern Rock as a half-way point, will be familiar with the sensation: of watching an increasing number of the proverbial warning lights start to flash.

This isn’t, however, a repeat of 2008. (In critical respects, it’s worse – a more fundamental malaise.) Back then, from around 2006 onwards, multiplying defaults in the US housing market were amplified by the complex financial products the same mortgage debts had been packaged into, and then traded between major global financial institutions. Over 2007 and right up to the 15 September 2008 bankruptcy of Lehman Bros, these highly leveraged packages of debt were exploding and bringing down larger and larger financial institutions. By autumn that year, the crisis had spread into the dead-centre of the financial system: the giant, world-spanning investment banks, headquartered in the larger developed economies on both sides of the Atlantic, which now faced bankruptcy. Lehman Bros was allowed by the US government to fail; the shockwaves from the overnight disappearance of one of the world’s largest investment banks were so great as to then mobilise panicked support from the world’s major-economy governments. Various packages were rapidly assembled and, by spring 2009, the Bank of England and the US Federal Reserve had embarked on unprecedented money-printing exercise of Quantitative Easing. (Although sometimes presented as a crisis of “Anglo-Saxon” capitalism, or some similar story about the more risk-taking and unstable US/UK version of capitalism, major European banks like Credit Suisse and Deutsche Bank, had seriously overreached themselves.)

Crucially, the mechanism of crisis here was “endogenous”- meaning it was generated primarily inside the financial system itself. It was a classic debt bubble, as described by Hyman Minsky and others, that was bursting. The years of stability over the 2000s had encouraged the taking of more and more risks by financial institutions in the belief that the bubble would never best. But, as in Minsky’s description of the mechanism for crisis, stability generated later instability: the “Minsky moment” occurred when just a few of those debts could not be repaid – in this case, it was the US “subprime” mortgages that defaulted first – and this wobble was amplified by the huge amounts of debt that the earlier period of stability had built up. That financial crisis was then pushed into the wider economy – a sharp retrenchment of lending leading to less spending which, in turn, pushed economies rapidly into recession.

IMF warnings

This time round, the mechanism is (mostly) running the other way: that succession of disruptions to the real economy might provoke a financial crisis which would act as amplifier for the disruption, but not itself operate as a trigger. In addition, the regulations and additional support for financial systems that have been put in place since 2008 have reduced the presence of “systemic risks”, or at least reduced the systemic risks of the kind that played a crucial role in 2008. The system has been subjected to one, immense shock, when covid first erupted in spring 2020, and, whilst there was a brief wobble in financial markets across the globe, nothing like 2008 recurred.

This doesn’t mean there are no financial risks, with the IMF’s latest Global Financial Stability Report highlighting rising leverage (indebtedness) in corporate and household sectors across the world, the weakly-regulated space of cryptoassets, and the unevenness of the recovery from 2020-21 between the advanced and “emerging market” economies. The latter is already producing strains. Sri Lanka, hard hit by covid, is facing shortages of “food, fuel and medicines” and is heading towards a default on its government debt. The government has approached China and the IMF for additional support, with China already offering a $1bn “swap line” of cheap credit – this arriving on top of the $3.5bn its government already owes to Chinese concerns.

One specific risk highlighted by the IMF across “emerging markets” is a version something that was already seen inside the eurozone in the aftermath of the 2008 crash: the “sovereign-bank nexus” turning rotten. With governments borrowing more, it has been banks in the global south who have loaned the money, leaving them with huge amounts of high-risk government debt on their balance sheet. Should a sovereign default, those banks themselves are at risk of failure. This could lead them to (at the very least) reign in their lending to households and businesses, provoking a recession – and then of course bringing the risk of sovereign default that much closer. Coupled with a slowdown in global trade, and the tightening of monetary policy in the advanced economies, particularly the US, which squeezes export markets for the less-developed world, and makes lending into the less developed less attractive, and the stage is set for an economic slowdown followed, in some cases, by default.

This is a relatively familiar story – one that fits easily into our existing ways of understanding economic crises. Either (as in 2008) a financial crisis causes a shock to demand, provoking recession, or a shock to demand provokes a financial crisis, worsening recession. In both cases the mechanism operates on the demand side. (This, incidentally, is what made austerity such a perverse response to the crash: a crisis driven by a collapse in spending was to be countered by… further cuts in spending.)

Supply-side crisis

Instead, the coming recession is emerging primarily as a result of supply-side factors. The rise in inflation, at least for the large, advanced economies in the OECD, is appearing because of rising import prices of essentials like oil, gas and food. It is not the product of “excess” domestic demand – retail sales are falling in the UK, but the prices paid by consumers are continuing to rise. And then there is the impact of concentration in different industries, enabling mark-ups on goods to stay high, and the hoarding of wealth, particularly of housing wealth: whilst consumers have seen their real incomes squeezed hard by rising prices, many large corporations have enjoyed a bumper few years. House prices, meanwhile, continue their upward march, assisted by the production of vast quantities of new, Quantitative Easing money since early 2020.

In all these cases, the causality runs from supply-side disruptions, led by covid-19, now joined by Russia’s invasion of Ukraine and, increasingly, by extreme weather across the world, that then feed into a grossly unequal distribution of ownership and finally turn into a squeeze on most people’s purchasing power as prices rise faster than their incomes. Throw in, on top of that, rising debt – in part as a result of attempting to maintain purchasing power, but itself turning quickly, via rising repayments, into a squeeze on spending – and the stage is set for a significant downturn in the UK and other advanced economies over the next 12 months.

This may not, as in the textbook demand-side recession, produce huge increases in unemployment, at least in the UK, where the “flexible” labour market has enabled the explosion of bogus self-employment, zero hours contracts, and other more insecure forms of work since 2008. We might well anticipate that if real wages are falling (since prices are rising faster than wages), the incentive for employers will be to maintain existing employment, or at least moderate their attempts to reduce costs by making redundancies. But seeing millions of people maintained in increasingly precarious employment, forced to cut back on their own spending as prices continue to rise, would hardly be a good thing.

The short-run solutions depend on two things, neither of which this government seem willing to achieve: rapid increases in wages and salaries, over and above the rate of inflation, and restrictions on price rises in key goods. Rapid increases in public sector pay, and the National Living Wage, both of which the government can control, would induce pay rises across the rest of the economy. Capping energy price rises in October – which, again, the government can determine – would significantly ease pressure on households. Down the line, a restructuring or simple write-off of unpayable household debt may well prove necessary, freeing up additional consumer spending. A short-run programme of rapid redistribution, from capital to labour and from creditors to debtors, would help get over the immediate hump. In the longer term, a more fundamental shift is needed – away from increasingly expensive non-renewable sources of energy and into cheap, domestically-generated renewables, matched to a programme of efficiency improvements such as providing proper loft insulation.  

The post How bad will it get? appeared first on The Progressive Economy Forum.

Rishi Sunak’s Plan to Soften Blow of Universal Credit Cut has been a £1 Billion Bust

Published by Anonymous (not verified) on Thu, 21/04/2022 - 7:30pm in

Nic Murray explores the Chancellor’s under-funded and misjudged scheme to help deprived families make ends meet

“Is that it?” came a heckle from the Labour frontbench. The response could have been used to describe any number of his policies, but the exasperation on this occasion was directed at what the Chancellor had just announced in his Spring Statement.

The Household Support Fund, an emergency pot of funding for local authorities to help residents with essential costs, due to wind down on 1 April, was to be given an extra £500 million to run until September.    

First launched a week before the removal of the £20 Universal Credit uplift late last year, it was clear the fund – initially resourced with £500 million – was barely a sticking plaster, aimed more at placating Conservatives ahead of its annual conference than helping the 500,000 swept into poverty as a result of the Universal Credit cut.

According to the Government, the fund was supposed to “be distributed by councils in England to directly help those who need it most" and it would be "distributed through small payments to support vulnerable households meet daily needs such as food, clothing, and utilities”.

At the time, the Household Support Fund was estimated to, on average, to replace less than 18p for every £1 cut from Universal Credit. New figures provided to Byline Times show how far short the scheme is falling, with tens of thousands of people across England lucky to get even that. 

Data obtained by a Freedom of Information (FOI) request indicates that, by January, halfway through the fund’s original duration – before the cost of living crisis truly began to bite – one in five applications to the fund were not being approved.

Of the 95 English county councils and unitary authorities open for applications to the fund that responded to Byline Times' request, a total of 174,000 applications were received, 22% of which had not been approved.

Brent Council, a third of whose residents are living in poverty, only approved 35% of the 1,182 applications made to its funding pot. For Blackpool, one of the most deprived areas in the country, this figure was a staggering 12%.      

Not all local authorities require direct applications from individuals. Some have automatically targeted funding towards households that already received support such as free school meals or council tax reductions. However, millions already miss out on this support, and are likely to be left out again.

For those required to apply, the fund is often a last resort, but one that requires applications to meet unspecified levels of ‘deservingness’ when competing against hundreds of others for already insufficient funding.

“I have £4.01 in my bank to last until 21 April,” Ashleigh in Liverpool told Byline Times. “Never asked them for anything before, applied and was rejected and told I could appeal, asked what I was rejected for so I could appeal against it and was told that they don’t give a reason.” 

Less than one in five local authorities operate their own local welfare assistance scheme, research in 2021 by End Furniture Poverty found, leaving many rushing to establish eligibility criteria. While some have used their discretion generously, such as Newham, by ensuring those with no recourse to public funds were eligible, others have replicated the most discriminatory aspects of the benefits system. 

Applicants in Preston, for instance, are required to submit two months of bank statements with no signs of ‘irresponsible’ spending. Meanwhile, in the City of London, any financial support comes with a stipulation that individuals must also show proof of receiving debt advice. Both frame the problem as one of individual choice – rather than an inability to make ends meet in a climate in which energy bills are rising 17 times faster than benefits.

Austerity Reborn

For those who have been lucky enough to have their applications approved, there is no guarantee that even accessing this support will be easy.

Janina told Byline Times that Ashfield District Council approved her application but that her internet was down for a couple of days, which meant that the vouchers sent to her expired two days later.

"I was hardly given the best chance to access it," she said. "I simply don’t know how I’m going to manage. As things are, I stay in my bedroom most of the time so that I can use an electric blanket when I’m cold.”

Plenty of people in local government feel that those on both sides of the Household Support Fund are being let down.

“The Government hasn’t properly involved local government in the shaping of the guidance so that we can then go ahead and deliver it effectively from day one,” Ian, head of a district council in the Midlands, told this newspaper.

“There is a danger they are setting local government up for failure in two ways – one by failing to deliver what we’ve been asked to do, and second at the end of the process as the Government isn’t going to carry on giving us some extra money to dole out.”

Rather than distributing necessary financial support through a social security system already set up to target those most in need, the fund places the administrative burden on local authorities – many of which have chosen to direct much of this to local ‘delivery partners’, adding another layer of administrative cost.

By the time it reaches individuals in need, not only has the total amount been depleted, it may not even come in the form of financial aid. FOI responses showed that at least £2.7 million has already been given directly to food banks across England. Kensington and Chelsea was the largest donator, directing £200,000 of its £1.8 million funding total to local food banks.  

Ultimately, slashing welfare funding accompanied by piecemeal increases to pots of local authority funding is a path well-worn by the Conservative Party over its 12 years in power.

The Welfare Reform Act 2012 – which introduced Universal Credit and the ‘Bedroom Tax’ – abolished the £732 million a year Social Fund, providing just £170 million for local welfare assistance in its place.

Meanwhile, former Chancellor George Osborne’s three-year freeze on Local Housing Allowance in 2015 – part of a raft of £4 billion worth of cuts to the welfare budget which put more than a million families at risk of homelessness – was accompanied by just an extra £170 million per year to the Discretionary Housing Payment. 

In the current political climate, this austerity is taking place while households face the largest fall in real-term incomes since the 1970s – delivered by a Chancellor whose approval rating is currently in free-fall, in part due to his piecemeal approach to tackling the cost of living crisis. 

Current guidance issued to local authorities stipulates that they must “reference that the grant is funded by the Department for Work and Pensions or the UK Government in any publicity material”.

The Household Support Fund may be funded by the Government, but only with the same amount of cash that it allocated in the Spring Statement to "increasing DWP’s capacity to detect fraud and error" – highlighting just how inadequate the scheme truly is. 

Almost a month on from Rishi Sunak's announcement, the latest guidance for local authorities is still in draft format – leaving many in the dark. For Ian, one question is particularly pressing: “This fund only runs until September. So what’s the answer for next winter’s fuel bill?”

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The Neoliberal Origins of Russia’s War

Published by Anonymous (not verified) on Thu, 21/04/2022 - 5:30pm in

US President Biden has called for ‘regime change’ in Russia, a statement that should recall previous US-led regime change crusades – in Chile (1973), Iraq and Afghanistan, among many. To put it mildly, they have not been unmitigated successes. But the regime change initiative that deserves our scrutiny today was the United States’ most ambitious and most relevant to the latest demand for change, which one would dearly like to see. This is because it embraced Russia and Ukraine thirty years ago.

Let me preface this article by saying that, fortuitously, I witnessed what the USA, the UK and others did on the ground. In 1990, on behalf of the International Labour Organisation (ILO), I organised an international conference on labour policy in Moscow, which emerged as a report just as the Soviet Union was dissolving. I was then appointed director of a programme set up by the ILO to advise governments in the region on social and labour policies in what was euphemistically called the ‘transition’ from ‘communist’ to a ‘market’ economy. 

Based in Budapest, for about four years I interacted with senior government ministers and officials of Russia, Ukraine and neighbouring countries while also having numerous meetings with economists and officials from the USA, other countries and international bodies such as the World Bank, the latter all committed to their version of regime change. It was a bizarre experience. I even met the Queen, the Duke of Edinburgh and the Queen of The Netherlands as they played walk-on parts in helping to legitimise the expensive regime change plans.

From the outset, I strongly opposed what was happening, and gave numerous speeches and published articles and several books to that effect. Today, I believe that the Russian invasion of Ukraine in 2022 is partly attributable to the neo-liberal strategy led by the USA in that period. The precise details of what has been happening were not predicted or predictable, but it was clear at the time that the fault lines leading to today’s quagmire lay in that strategy. One way of putting it is that it failed to lay the ghost of Stalinism, and created fertile ground for its resurgence. 

Shock doctrine

So, what was the foreign-directed strategy? Although different proponents had variants, it enshrined a doctrine fostered by economists at Harvard, LSE and elsewhere known as ‘shock therapy’, designed with one objective, turning Russia and Ukraine into capitalist economies. This was based on three premises. First, it was reasoned that pro-market reforms had to be introduced quickly, so that there was no time for ‘socialist’ forces to regroup and block reform. 

Second, a more technical premise was that priority had to be given to macro-economic policy, backed by aid conditionality to force the Russian (and Ukrainian) government to adhere to it, over and before micro-economic (structural) policy. This was based on the orthodox economic view that macro-stabilisation was a necessary prior for structural reform. This was the dominant reasoning of the International Monetary Fund. The third premise was that there had to be a particular sequencing of the macro-economic reforms. The combination of these three premises was literally the fatal, hubristic mistake.

Before describing what the shock therapy advisers prescribed in their frenzy of activities in Moscow, Kiev, St.Petersburg and elsewhere, I should mention that as soon as I was appointed to my ILO post we mobilised funds to conduct a series of detailed surveys of hundreds of industrial enterprises in Russia (1991-94) and in Ukraine (1992-96), and extensive household surveys covering many thousands of households in both countries. In effect, the data mapped the context and outcomes of the shock therapy doctrine. This seemed an essential task, but the shock therapy advisers charged ahead without worrying about evidence.   

Folly and hubris

It was an exercise of hubristic folly. The first set of reforms in the sequencing were price liberalisation, coupled with removal of price subsidies (except on energy). Bear in mind that production had collapsed, that strict price controls had existed for generations and that the production structure consisted of huge industrial enterprises with monopolistic characteristics, dominating whole sectors and regions. 

The effect of price liberalisation was thus an extraordinary burst of hyper-inflation. While we were working in Ukraine, in one year inflation was estimated at over 10,000%, and in Russia it was estimated at over 2,300%.[1] The impoverishment was lethal. Millions died prematurely; male life expectancy in Russia fell from 65 to 58 years, female from 74 to 68; the national suicide rate jumped to over three times the high level of the USA. 

In a collective state of denial, the western economic ‘advisers’ were almost Stalinist in their zeal. Their second policy was to slash public spending, with the double objective of squeezing inflationary pressure by curbing monetary demand and weakening the state. This had the immediate consequence of intensifying the rising mortality and morbidity. But it did something else that is affecting the whole world today. Wages and salaries in the public sector fell so low that the state ceased to function. This created a vacuum in which the kleptocrats thrived. I recall government ministers asking for $50 bribes just so they could feed their family. They were easy prey to ruthless gangsters, who in turn were bedfellows with ex-KGB officers, led by the new First Deputy Mayor of St.Petersburg, a certain Vladimir Putin.

One cannot overemphasise the folly of the anti-state ideology, when what was needed desperately was the nucleus of a professional civil service, backed by a proper legal system. But all the RCAs wanted was full-blown capitalism, which they saw as leading to a ‘Russian Boom’, in which ‘democracy and free markets have taken root for good’.

Mass privatisation

The third plank of the shock therapy sequencing was mass privatisation. It began as a bit of a joke, with privatisation ‘shares’ being handed out like confetti. I still have one somewhere, given to me by the Mayor of St.Petersburg. But it soon became a wild-west plunder. The World Bank, USAID, the new European Bank for Reconstruction and Development (EBRD) in London and other foreign bodies allocated vast amounts to assist in speeding up the transfer to the new ‘entrepreneurs’. Over 15,000 state firms were sold off; kleptocrats became oligarchs overnight; their American and other foreign ‘advisers’ became multi-millionaires. This is when the criminality stretched across the Atlantic.

One still has to be circumspect in how one puts this. However, it was widely known that prominent economists in the ‘regime change’ community were linked to the rising oligarchy and making millions of dollars. Eventually, one case was brought to the Massachusetts High Court, where several professors pleaded guilty to insider trading. They paid modest fines, with Harvard paying much more, but the main one was allowed to continue his stellar career. Rest assured, he and others did very well.

Meanwhile, there was the awkward onset of the fourth phase of the sequencing, characterised as the ‘therapy’ after the ‘shock’. This was touted as building a new social policy system, based on standard neo-liberal lines, that is, a residual welfare state with as much privatisation as possible, beginning with pension systems and education. As some of us had argued from the outset, the erection of a universalistic social protection system should have been done before any ‘shock’ policies. Callously, implementing social policies was left to afterwards, and then only done patchily, with interminable delays.  

Carnage

The carnage was palpable. In this period, two personal events occurred that epitomised the madness of what was happening. In 1992, I was invited as a ‘labour market expert’ to give a lecture to Ministers of Finance and Ministers of Education from eastern European countries, organised by the World Bank in a Dutch castle, symbolically with its own moat. There I listened while the Ministers were told what policies they should be introducing if they wanted foreign loans or grants. 

The other event was even more bizarre. In 1993, I was chairing a small conference in France on minimum wages and basic income policies for eastern Europe when I received a phone call from a US Ambassador inviting me to Washington to give a briefing in the State Department. After doing background checks, I accepted and so found myself taken to the basement of the State Department. Sitting at a long table with a ‘minder’, I was surprised to find 12 men come in to sit on the other side. Chaired by an Under-Secretary of State, they identified themselves individually, and most said CIA.  

I told them that their policies were disastrous, that huge numbers of Russians and Ukrainians were dying as a result of shock therapy and that contrary to what they were reporting, real unemployment was about 25%, concealed by the fact that enterprises were retaining the work history books of workers to claim subsidies. I argued that the people with whom they were working at the political level were deeply corrupted, and that they should focus on providing direct aid to ordinary people if a lurch to neo-fascism was to be avoided.

I argued that restructuring of enterprises and the substitution of rules of regulation and law should take precedence over macro-economic reforms and privatisation. I poured as much scorn as I could on claims being made by the World Bank and prominent RCA economists that there was no unemployment, and argued that it was crazy for the Bank to withhold a large loan to aid the unemployed on the presumption that as one Bank report claimed, the unemployment rate was only 1%, backed by the statement, ‘Contrary to initial expectations, unemployment remains not only low but declining.’[2]  

This was ridiculous. It was clear that the neo-liberal strategy was simply creating a kleptocratic capitalism, a virulent form of rentier capitalism that was taking shape globally. A new class structure emerged, with a plutocracy of oligarchs, a tiny salariat (including educated people trying to build a decent society), a lumpenised proletariat (ageing, atavistic) and a rapidly growing precariat. The oligarchs in Ukraine were split, with Russian-speaking heavies allied to their Russian counterparts in mafia-style conflict with Ukrainian-speaking oligarchs. There were also a few Bulgarians, Romanians and others in their orbit, and they all soon found they could mingle comfortably with the financial and other plutocrats in London, Wall Street and elsewhere. 

Venal kleptocracy

After the State Department meeting, I returned to Hungary. Several months later, I was invited back to Washington to brief the Department of Labor. Afterwards, they gave me a cocktail, and at the back I saw two of the CIA officers who had been in the State Department briefing. I asked them what had happened after the first briefing. One said to me, conspiratorially, ‘Quite frankly, it went right to the top….and he doesn’t believe you.’ He meant President Clinton. 

Several months after that, the Russian elections took place, and the new party of the neo-Stalinist ultra-nationalist Vladimir Zhirinovsky, who advocated invasion of Ukraine, gained 23% of the vote, with the US-backed neo-liberal party reduced to a rump. I sent a one-liner telegram to one of the CIA officers, ‘Does the State Department believe me now?’ I was told later that this caused some wry amusement.[3]

In sum, the regime change strategy had generated a venal kleptocracy, and in line with that today we have globally a morally indefensible form of rentier capitalism where plutocrats are funding major political parties and politicians in their interest. It is the most unfree market economy ever conceived and it is not sufficient to see the UK as Butler to the World, however apt that description might be. The state is deeply corrupted, and we will not escape the quagmire until a new progressive, transformative politics emerges, one that could mobilise the precariat in all parts of the world. 

The evil being perpetrated by Russia will not be defeated by military means alone. Of course, we should all admire and support the incredibly courageous Ukrainians. But it is a transformation of our own societies that must be achieved. In response to the rush towards an ecological dystopia and a grotesquely unequal and insecure existence for so many, progressives in politics must have a coherent, well-articulated strategy for dismantling rentier capitalism.

Today, neo-liberalism is not the primary enemy. Today is the time for a new radicalism based on principled opposition to the global plutocracy and to the system of rentier capitalism that is based on rapacious plunder. We need a new Renaissance, to revive conviviality, commoning, republican freedom and equality. So far, in Britain and elsewhere, that transformative vision is being held back by excessive pragmatism by old-left parties. However, just as Nature abhors a vacuum, so does the human condition. We need a progressive revolt, one that crosses national boundaries and that is ecologically redistributive. One can see the green shoots, but must just hope there is time for them to grow. 

Guy Standing is Professorial Research Associate, SOAS University of London, a Fellow of the Royal Society of the Arts, and a councillor of the Progressive Economy Forum. His new book is entitled The Blue Commons: Rescuing the Economy of the Sea.

[1] These and following statistics were collated for two books at the time. See G.Standing (ed.), The Ukrainian Challenge: Reforming Labour Market and Social Policy (Budapest, ILO-UNDP, 1994); G.Standing, Russian Unemployment and Enterprise Restructuring: Reviving Dead Souls (London, Macmillan, 1996).

[2] This view was backed by leading shock therapy advocates, such as Jeffrey Sachs and Anders Aslund. For references, see my book

[3] [Zhirinovsky remained in the Duma until his death from Covid, ironically on April 6, 2022, with his dream of invasion of Ukraine realised. His original party had been funded by the right-wing French politician, Jean-Marie Le Pen, with whom he remained close.]

The post The Neoliberal Origins of Russia’s War appeared first on The Progressive Economy Forum.

Young People As Prime Targets: Student Loan Hike is the Latest Frontier of the Conservative ‘Culture War’

Published by Anonymous (not verified) on Tue, 19/04/2022 - 8:23pm in

By allowing student loan debt to soar, the Government is seeking yet more division between young and old, says Maheen Behrana

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Interest rates on student loans are set to soar as a result of rising inflation. The rate of interest accrued by a recent graduate earning under £50,000 a year will jump from 1.5% to 9%. Graduates earning more than £50,000 can expect interest rates as high as 12%.

Over a lifetime, this that means higher-earning graduates with student debt of roughly £50,000 can expect to pay £3,000 more.

But these changes aren’t the full extent of how the Government has fiddled with the student loans system.

Recently, the Conservatives announced significant alterations to the way in which repayments will be made for graduates starting their degree courses in 2023. These graduates will be required to make repayments for a full 40 years – as opposed to 30 – before their debt is written off, and will see the threshold for beginning repayments on their student loans set at £25,000 rather than the current level of £27,275.

All graduates will also find that the threshold for repaying student loans will be frozen until 2026/27 and will then rise in line with inflation rather than average earnings – a move that has been condemned as disproportionately affecting lower-earning graduates.

In response to the Government's latest move, Labour MP Zarah Sultana, herself just 28 years old, declared that “the Tories despise young people”.

Changes to student loan repayments impact those who attended university after 2012 – and the vast majority of people who did so are likely to be under 30. These changes are undoubtedly harmful, and leave recent graduates worse off at a time when few can afford to see their disposable income drop.

Overall, it’s not a great time to be young. The cost of an average house is more than eight times the average UK salary – compared to a house-price-to-income ratio of roughly 4:1 in the 1980s. The gig economy has been expanding rapidly and, though employment rates in the UK economy may currently look high, much of that employment is precarious in nature. The vast majority of workers filling these precarious jobs are young people

Times are undoubtedly hard for everyone, but the Government seems to have adopted a targeted approach to young people – implementing policies that are actively making things worse for us.

Indeed, the Government is still in austerity mode. While the term isn’t openly being used, policies of high taxation coupled with parsimonious public spending are gutting the welfare state and leaving public services – and individuals – with far less to spare.

The notion that student loan reforms are part of a widespread attempt by the Government to claw back money wherever it can is mistaken. Because it does not hold true when it comes to high-wealth people and entities.

Uber-wealthy individuals are able to take advantage of an abundance of tax dodges to avoid paying their fair share – something that has recently been evidenced expertly by our Chancellor and his family. Look at the profits of oil and gas companies, which seem to be using rising prices to their advantage, despite the fact that spiralling bills are leading to dire poverty.

So, while it is clear that the Government is clawing back money – much of it spent wastefully by the Conservatives during the Coronavirus pandemic – it is not necessarily doing so in the most effective way, often putting the burden on the poorest.

Distortion and Division

The Government's fiscal policy then is a new front in its manufactured ‘culture war’.

The culture war is not real in any tangible way. It largely consists of Conservative Party Co-Chairman Oliver Dowden popping up on various platforms complaining about ‘wokery’ (which, incidentally, is not even a real word).

But it is a weapon of populism – and the Government references it to distract from the actual problems (of which there are plenty) that the country is facing. It serves as a tool of division, designed to convince socially conservatives voters that their priorities are diametrically opposed to those of socialists and liberals. It is a campaign of distortion.

The changes to student loans may serve an economic purpose, but they also exist as a new frontier in this battle.

It doesn’t really bother the Government that recent graduates are feeling the pinch. Under-30s skewed significantly towards Labour at the 2019 General Election, and they are concentrated heavily in Labour-voting metropolitan areas such as London, which have a young average age and a high percentage of university-educated residents.

Young people are only important to the Conservative Party’s electoral ambitions in the sense that their liberal values can be distorted and demonised to fuel a sense of antipathy among older, more conservative voters.

This is electoral pragmatism at its most ruthless and abhorrent. Instead of trying to curry favour with young people, the Government has instead decided that its political ambitions are best served by maximising fiscal gains and resentment from this group.

This resentment is fuel to its fire; one more way of creating an ‘us versus them’ scenario, dividing the young and the old, graduates from non-graduates. As the cost of living crisis worsens, the hardest hit by Government policy will react most strongly against it – sometimes angrily, and sometimes against those who are only a little bit better-off than themselves.

And this is what the Conservative Party appears to want – ‘woke’ and ‘ungrateful’ young against struggling pensioners; divisions between ‘graduates’ and ‘taxpayers’ (despite the fact that they are often one and the same thing). It wants those who do not support it to feel the consequences of their lack of support. It is tactical, brutal and calculated. It causes pain and targets the pressure points that suits the Government’s agenda.

The Conservative Party’s actual feelings towards young people are likely neither here nor there – but, strategically, it knows that to keep up with its nouveau-austerity and to fuel the culture war, the young must be a prime target.

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