Work capability assessments: the fightback

Disabled people win right to judicial review.

Encouraging news out of the High Court on Thursday for opponents of the loathed Atos' work capability assessments (WCAs) : the court granted permission to two disabled people for a judicial review to challenge the operation of WCAs. 

Represented by the Public Law Project, the claimants argue that WCAs discriminate against people with mental health problems. Says the Public Law Project's Ravi Low-Beer, the reasonable adjustment they want is for the onus to be on the Department of Work and Pensions “to make sure they have medical evidence from medical practitioners from the beginning of the process,” for ESA applicants with mental health issues.
 
Most people will know WCAs as the face-to-face interviews and brief physical tests that are conducted by Atos healthcare to assess people's eligibility for the Employment and Support Allowance
 
As things stand, says Low-Beer, WCAs are conducted by Atos healthcare professionals who are not mental health experts. “At present,” the Public Law Project says, “the DWP do not routinely ask for expert medical reports from an applicant’s community-based doctor.” Interviews are often hurried and people must be able to explain their problems in detail. The claimants contend that not everyone with mental health problems is always in a position to do that – it may be, says Public Law, that “conditions fluctuate in seriousness, or [people] cannot easily talk about their disability” - which means people can be found fit for work with less than their whole stories told. That, says Low-Beer, pushes people who may already be struggling into a notoriously stressful appeals process.
 
“For some people, having to negotiate an appeal is an agony. It causes a tremendous amount of distress. It's a confrontation with the state that they're ill-equipped to endure.” For those reasons, says Low-Beer, medical evidence should be available and considered at the beginning of the process, and it should be up to the DWP to make sure it is. Last year, the Public Law Project and the Mental Health Resistance Network began to meet to consider a course of action around the problem
 
Now, they have one. It's certainly a slap in the face for the government – and for a despised assessment process that has long been mired in strife and acrimony. Sites like Broken of Britain, AtosVictimsGroup and Jayne Linney's have grown and grown as people have looked to rein in an assessment process that they say is imprecise, unfair, fails to account for medical evidence and even to reflect discussions which take place in Atos assessment rooms. The Guardian has reported “hundreds of thousands of people” flooding to contest decisions made against ESA eligibility as a result of these assessments:  “a 56% rise during 2010/11 in the number of people appealing rulings that they are fit for work,” and an overloaded tribunals system to boot. “Since the system was trialled at the end of 2009, at least 390,000 people have gone to appeal. Tribunal courts have been forced to open on Saturdays and to increase staff by 30% since January 2010 to deal with the backlog.”
 
God knows I've talked to people who've been stuck in it. People I've interviewed with mental health problems and bad experiences of WCA include Paul*, from Cheshire, a man who'd worked for nearly 40 years, but who suffered from severe depression and had made a suicide attempt when his department was restructured and his job changed. He told me that "there was no sympathy all,” at his WCA:  “They even got my date of birth and my medication wrong. They said I went out shopping and visiting my brother - none of which was true. I can't go out of the door on my own.” Atos found him fit for work – a decision which was, like many, overturned on appeal. He almost didn't get there – he was so stressed by the thought of the appeals process that he did not want to go through it. In the end, he only appealed because his wife insisted and helped him with it.
 
A Newcastle man with schizophrenia, Steve*, also failed in his application for ESA. He told me that few questions were asked in his assessment about the impact his schizophrenia has on his life and his ability to cope. He was found fit for work and needed the help of his community mental health team to go through an appeal.
 
*Surnames withheld
Work and Pensions minister Chris Grayling (Photo: Getty Images)
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?