A leaked document on a football scandal shows how the elites see the people

Football's latest example of an out-of-touch establishment.

In 1966, Harold Wilson spoke of “a tightly-knit group of politically-motivated men” at the heart of the seafarers' strike. The demands of the strikers appear modest now, higher wages in a notoriously poorly-paid and insecure industry, and a reduction of the working week from 56 to 40 hours. Even the most cursory examination of history will reveal that, as on this occasion, the establishment’s response to demands that go on to be seen as entirely reasonable is to seek to paint them as the demands of a radical "other", not just a threat to the established order, but to order itself. Let’s not forget, for example, how the suffragettes were labeled mentally unstable for demanding votes for women.

A document that has recently come to light on Merseyside shows that little has changed (PDF). And those familiar with the workings of modern football in Britain will not be surprised that it provides the latest example of an out-of-touch establishment attempting to demonise and marginalise opposition. In 2010, at the height of the bitter battle between supporters of Liverpool FC and then owners Tom Hicks and George Gillett, an internal document was drawn up profiling the opposition under the heading "What do these people want?" It said that at the heart of opposition to the Hicks and Gillett regime were “a very small, yet highly-motivated group of agitators” who had “an underlying socio-political aspect to everything they do” and were “the sporting equivalent of the Khmer Rouge”.

The document named a number of senior football journalists, including The Times’ football editor Tony Evans, Hillsborough justice campaigner and former frontman of The Farm Peter Hooton, and a number of established Liverpool writers and fan site editors including Paul Tomkins of the highly-regarded Tomkins Times. The document focused on members of the Spirit of Shankly (SOS) Liverpool supporters union, alleging some were “very active within the Militant movement within Liverpool in the 1980s” and saying “they failed in the past to take on the establishment… when Liverpool almost tried to declare UDI on the rest of the country and form a Trotskyist independent people’s republic”.

It’s classic Red Scare stuff and, SOS’s James McKenna told the Liverpool Echo, it “confirms what we suspected, that there were briefings and dossiers and blacklists”. Liverpool FC say that “no one from the club’s current management was involved with or had any knowledge of this document”. The initials at the bottom of the leaked paper are PT, believed to stand for Paul Tyrrell, who was Liverpool’s head of press in 2010. Tyrrell has issued a firm “no comment” to the local press when questioned about whether he wrote the paper, but a comment in the paper about how SOS “regard people such as me (with my family political background) as traitors” is believed to be a reference to the fact that Tyrrell’s father was once a Labour mayor of Halton.

Tyrrell no longer works for Liverpool. He went on to be head of communications across Stanley Park at Everton FC, although it was announced on 6 June that he would be leaving after having given his notice early in May. The move is not thought to be linked with the controversy – instead it is being reported that Tyrrell is to focus on the PR consultancy he set up before taking the Anfield job. Everton likes to style itself as The People’s Club, but many of the people who make up the support don’t see it as such. Instead they see an organisation that maintains its distance from the people who support it, especially those who are independently-minded. The club’s decision to change its badge recently prompted widespread opposition. Everton has apologised for not consulting fans, but the new version will stay in place for the coming season.

Liverpool’s SOS and Everton’s Blue Union are two of the most organised and independent fan organisations in Britain. Which is probably why they are attracting the attention they do. The football establishment likes to say it works with the fans, but the fans it likes to work with are the ones it grants permission to organise to. More independent alternatives have to be marginalised.

But the aims of fan groups would not seem that radical to most people. SOS’s stated aims are to “represent the best interests of the supporters of Liverpool FC” and to “hold whoever owns the football club to account”. The Blue Union believes in “the integration of fans into a real People’s Club” and sets itself against a situation in which “the fans’ opinion, the fans’ voice, the fans’ ideas are increasingly deferred in favour of those of the club’s owners, the Premier League and the media organisations who inject billions into the game”. Most fan groups’ objectives do not even go that far, but the belief that fans should have more of a voice in the game’s structures is growing.

Even this is seen as a demand too far. In the leaked Liverpool document, one description of the views of a prominent critic is telling. The document’s author says the critic “confessed he would not be happy if the club was sold to a Sheikh Mansour figure! He said the best solution is for LFC to be owned: "by the supporters, for the supporters".” Outrageous stuff indeed.

Dave Boyle, the former chief executive of Supporters Direct and a leading advocate of mutuality, wrote a very illuminating blog post entitled 10 Things I Know About Football from a Decade at Supporters’ Direct. He makes a similar point to the one I opened with, going back as far as the debates on the 1832 Reform Act to find evidence of the establishment being “genuinely terrified that the masses might have a vote”.

Football is not that important in the grand scheme of things in a country where food banks cannot cope with demand and disabled people are killing themselves because their benefits are reduced or removed. But the story of how elites see the people, and how important it is for the people to develop strong and independent voices to challenge the elite view of what is reasonable, runs throughout.

Photograph: Getty Images

Martin Cloake is a writer and editor based in London. You can follow him on Twitter at @MartinCloake.

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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?