Saving sustainably

We already encourage saving - why not encourage sustainable saving instead?

The post-Budget row over tax relief for charitable giving has obscured the fact that there are many tax reliefs given for profitable activities without any consideration for the public benefit of the activities being effectively subsidised. Around £40bn a year of relief against income or capital gains tax goes to support pension saving, ISAs and protect individual gains from the sale of residential property. In times of austerity shouldn’t we be looking more closely at how this money is used? Could the Government use the policy leverage created by such subsidies to encourage more responsible behaviour in the financial sector that benefits the taxpayer as well as the individual investor?

Britain’s economy before the credit crunch was based on high borrowing to fuel increasing consumption which drove economic growth. As individuals we didn’t save enough for our own financial security, and as a country, we haven’t invested enough in our economic future. To face the long term challenges to our economic prosperity like an ageing population or climate change, we will need a more resilient economy that has far stronger foundations of savings and investment.

So what happens to the money that we combine with the tax subsidy in order to save for the future?

Well, we know that pension funds and institutional investors place much of this in the stock market, but the evidence shows that more and more of this capital is used for high frequency trading rather than long term investing. Andy Haldane of the Bank of England is one high profile regulator who is very concerned with this development. Cash placed in ISAs earns a very low rate of interest and, in as much that these funds bolster bank balance sheets and help fund lending to the economy, we also know that the majority of such lending actually funds property loans and financial speculation. Less than 20 per cent of UK bank lending goes to the productive economy of growing businesses. Finally we know that fees and charges in the investment and banking sectors are notoriously opaque, and competition is far from perfect.

So there is an understandable lack of trust in the finance sector, yet the government has to find a way to convince the public not just to save more, but channel those savings into productive investment. One way to do this is for the government to be more explicit about encouraging savings and investments that apply responsibility criteria and enhance social and environmental well being, as well as financial returns. Moreover, it should be using the existing subsidies to enforce this principle. In an era where all subsidy has to be made to work harder for the public interest, there should be a principle that, in return for tax relief, savers and investors should be able to demonstrate a contribution to the public good. This will not be easy to do, but there is a growing set of voluntary standards and codes of practice which investment organisations can apply to demonstrate they are taking a responsible approach, looking a long term interests, not just short term profits.

In my recent report for Green Alliance, Saving for a sustainable future, I make the case for these principles to be used in public policy and set out a few ways in which it could be applied:

  • Pension tax relief could be made conditional on responsible standards being applied.

  • Banks could only be able to offer tax-free Cash ISA accounts if they could demonstrate responsible and transparent lending practices.

  • Capital gains tax relief for the sale of a residential property could be made conditional on certain energy efficiency improvements being made to the building.

There is political consensus on the need to rebalance our economy and reshape British capitalism in way that better incorporates the values of society. Applying these ideas to existing taxpayer subsidies is a good start.

Green - well, yellow - Britain. Photograph: Getty Images

Chris is an independent environmental policy consultant working on sustainable finance, climate change, energy policy and the green economy. He is a fellow of the Finance Innovation Lab, and an associate of Green Alliance, where he has written on the Green Investment Bank, environmental tax reform and sustainable savings policy.

He was previously head of Climate Change at the Environment Agency and senior research fellow for sustainability at IPPR. Follow @chrisjhewett on twitter.

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The EU-Turkey refugee deal only succeeded in one thing

It swept the humanitarian crisis under the carpet.

The Greek island of Chios is a picturesque holiday resort, and home to some 50,000 Greek residents. The occasional cruise boat moors alongside the fishing boats which populate the main harbour of the island. Tourism and fisheries make up the majority of the island’s economy.  A 7km stretch of sea separates Chios from Turkey. It is so close that you can look across the water and see the lights come on in houses in Çeşme as night falls. This beautiful island is also one of the scene of an unfolding and largely untold humanitarian disaster. It is evidence that the EU-Turkey deal in March, intended to stem the flow of refugees, has failed. 

Chios is home to more than 3,000 asylum seekers. Refugees, mostly from Syria and Afghanistan, make the perilous crossing from Turkey every day. Smugglers launch tiny rubber boats in the middle of the night, over capacity to a dangerous level, to attempt the crossing. One Syrian boy told us that the smuggler on the boat counted down from 10 to calculate when the best time was to purposefully puncture the side of the boat in order to escape the Turkish coastguard, but be rescued from drowning by the Greeks.

As a result of these cavalier strategies, this scenic stretch of water has become the grave of thousands. Those who are rescued by the Turkish authorities rather than Greece are often detained. Such high stakes has not deterred the refugees - one family we knew of had tried 17 times to get to Chios from Turkey. 

The main camp on Chios, "Vial", is at the end of a dusty track and is housed in a disused aluminium factory surrounded by barbed wire. G4S, the private security firm, guards the entrance to the European Asylum Support Office compound. It looks more like a prison than a place of refuge. The majority of the refugees live in metal containers. The camp was constructed to hold 1,100 and now holds approximately twice as many.

Most of the migrants and refugees who arrived in Greece before the EU-Turkey deal have been moved to the mainland, nominally in the hope of relocation elsewhere in Europe. More recent arrivals on Chios (and those simply left behind) have been subject to the hastily-adopted Greek Law 4375/2015, which allows for the lengthy detention of asylum seekers on arrival.

While camps on other Greek islands operate as de facto prisons, on Chios, the police allow refugees to travel around (but not leave) the island. A bus service is provided between Vial and the island’s main city, to allow those housed in unofficial camps to come to Vial for appointments. This is a tacit acknowledgement that makeshift camps are needed for those who cannot be accommodated in Vial’s limited facilities. Thus, the entire island is turned into an open prison camp, with asylum seekers unable to leave until their claims are determined, a process taking upwards of six months. During that time refugees, many of whom have fled from unimaginable horror, are left in an endless waiting game.

In May 2016, a Human Rights Watch report called the refugee “hotspots” on the Greek islands, such as Vial, “unsanitary and unsafe” . By September, when we arrived, the situation had not improved. The conditions in the camps around Chios were shocking. Violence was a daily event - both between asylum seekers and from the frustrated local population. Children, at risk of sexual exploitation and abuse, would simply disappear. We would spend hours searching the camps, armed with lists of unaccompanied minors, asking everyone we saw if they had seen this or that child. Some had already become desperate enough to risk their lives in the hands of human traffickers, in order to escape from the very place where they initially sought sanctuary. Shortly after we left Chios we heard that seven people had suffocated to death in a fridge trying to reach the mainland. Isis were known to be recruiting in the camps. 

Unaccompanied children were left to live together in overcrowded containers, often without enough beds. They would take it in turns to stay awake on guard. Food was often inedible. Access to medical treatment was limited. In Vial, the medical facilities were located inside the disused aluminium factory. To be able to speak to a doctor, you first had to get the permission of the police officers manning the entrance gate. People were sometimes left waiting there for days in the baking heat of summer.

It is no surprise that most of the refugees we met were self-harming, severely depressed and suicidal. It is also no exaggeration to say that everyone we interviewed said they would rather be dead than live in this limbo on Chios. Many of the refugees who arrive in Greece are already seriously traumatised. Large numbers of them are victims of torture, or bereaved or wounded by the Syrian war. Almost all have been forced to flee their homelands because of incomprehensible suffering. The reception they receive in Europe only reinforces their trauma. “I didn’t expect Europe to be like this," a Kurdish Syrian refugee aged 18 told us. His entire family (26 members) had been killed in one bomb blast and he had been subjected to horrific torture under the Assad regime.

We volunteered in the camps on Chios providing legal aid. Any hopes we had on arrival of facilitating the speedy settlement of refugees in Europe were quickly dispelled. The structures in place on Chios for the processing of asylum applications were at breaking point. A tiny team of under-resourced and overworked staff from the Greek Asylum Service and European Asylum Support Organisation try to work through the mammoth backlog of cases, but with officers only conducting two asylum interviews per day each, the process moved at a glacial pace. Every day of infuriating bureaucracy is another day vulnerable people are left in appalling conditions. During this indeterminate period of delay in an individual’s protection claim being processed, the authorities failed to take any steps to disseminate information or timescales which would have minimised the psychological harm caused by the never-ending uncertainty.

So what can be done? A French legal NGO collected the accounts of 51 residents in the camps and applied to the European Court of Human Rights (ECtHR) to oblige Greece to take interim measures to safeguard the refugees from the risk of serious and irreversible harm. This application was quickly dismissed, with the residents being asked to wait (yet again) and abide by the usual procedures (yet again). The case of Raoufi and others v Greece, brought on behalf of several asylum seekers challenging their detention in camps in Greece, is pending before the ECtHR and doesn’t look likely to change the position for refugees in Europe any time soon. 

Some have placed their hopes in the controversial agreement between the European Union and Turkey, signed in March of this year. The heart of the EU-Turkey deal is the return of so-called "irregular migrants" to Turkey. Syrian refugees who reach Turkey are expected to make their asylum claims there and await relocation to Europe. Turkey will then, on a one-for-one basis, take migrants from Europe who have not patiently waited their turn. The supposed lawfulness of such a deal comes from the suggestion that Turkey is a "safe third country" to which to remove refugees. 

The attractiveness of this agreement to the EU, which comes at a cost of several billion euros, is that it may deter refugees from undertaking the dangerous (and politically inconvenient) crossing into Europe. While the European Commission has insisted that the numbers of refugee arrivals has fallen, their assertions are contradicted by aid agencies who point out that the temporary drop in arrivals following the EU-Turkey deal was short-lived. Refugees continue to arrive in large numbers on Chios, to face appalling conditions on reception. Few are returned to Turkey and the promised funding has not yet been provided to Turkey’s satisfaction.

Our experience on Chios was that the EU-Turkey deal is not only not working, it is fundamentally unworkable. Most of the refugees with whom we worked had passed through Turkey on their way to Greece. Almost all had stories of mistreatment in Turkey. In particular, we were told of guards on the Syrian border shooting and wounding at desperate people – including women and small children – attempting to cross into Turkey. Once in Turkey, arbitrary arrest and detention was the norm. Those migrants most likely to be returned to Turkey (because they cannot be returned to their country of origin) are Syrians, for whom Turkey is clearly not a "safe third country". Turkey’s systematic refusal to allow refugees fleeing Syria to cross its border is a clear breach of international law mandating the reception of refugees. Those refugees who manage to slip through into Turkey are left without meaningful protection or support. Kurds are systematically mistreated by the Turkish state while migrants in general face abuse by police, army officials and criminals. Turkey simply is not a safe third country for refugees, as is underlined by the tiny numbers of people found appropriate for return. 

The EU is seeking to resolve its refugee crisis by returning vulnerable people to inhuman conditions in breach of EU member states’ obligations under international law. The assessments as to whether the refugees are returnable to Turkey, are meaningless. Thousands of refugees are waiting for months for these assessments and yet a tiny minority have been found to be appropriate for return. 

In the meantime, a humanitarian disaster unfolds. The physical and mental health of those trapped in the camps deteriorate. Children are left without schooling or proper protection. Violence breaks out. Self-harm rises. Lives are irreparably damaged. Further delay, for political, economic or legal wrangling, is not an option. As long as the European Union fails to act, it remains complicit in these human rights violations. 

Miranda Butler, Maria Moodie, Bryony Poynor and Saoirse Townshend are barristers who recently volunteered in Chios, providing legal aid to refugees.