Leader: Don’t bet the bank on Mark Carney

Until the government marries monetary activism with fiscal activism, Britain will not have a recovery worthy of the name.

We live in the age of the cult of the central banker. As governments of both left and right have retreated from economic interventionism, it is Ben Bernanke in the United States, Mario Draghi in Europe and Haruhiko Kuroda in Japan who have led the fightback against recession. Few of the new masters of the universe are more feted than the Canadian Mark Carney, who takes office as governor of the Bank of England on 1 July. Since being named as Mervyn King’s successor six months ago, he has been continually hailed as a saviour for the British economy. When it was pointed out to George Osborne that the Office for Budget Responsibility had forecast that the measures included in his most recent Budget would have “no impact on the level of GDP”, he replied that the estimate did not take into account the changes that Mr Carney would make. The Chancellor is a self-described “fiscal conservative” and “monetary activist”. He is banking on Threadneedle Street to deliver the recovery that he has not.

The appointment of Mr Carney (who is profiled by Alex Brummer on page 20) was a shrewd one. As our economics editor, David Blanchflower, a former member of the Bank’s Monetary Policy Committee (MPC), has written, he was “the best person available” for the job. Untainted by any of the recent banking scandals, he performed admirably as governor of the Bank of Canada, cutting interest rates aggressively in March 2008, a year before the Bank of England and the European Central Bank did. Mr Osborne was right to prefer him to the City’s candidate of choice, the deputy governor Paul Tucker, who ignored early warnings of the manipulation of LIBOR by Barclays and responded sluggishly to the financial crisis.

But if Mr Carney, in the words of one of his defeated rivals, has been “launched on the nation as a messiah”, there are good reasons to believe he will be a false one. The base rate is already at a record low of 0.5 per cent, where it has been for more than four years, and the Bank has already performed £375bn of quantitative easing (QE), the equivalent of nearly a quarter of annual GDP. With growth still anaemic and inflation at just 2.4 per cent, there is a strong case for further loosening but Mr Carney will need to overcome the resistance of the MPC, which has voted against additional QE for 11 consecutive months. Unlike in Canada, where the governor has sole responsibility for policy, he will require the support of a majority of the other eight committee members, six of whom have consistently opposed new stimulus.

Where Mr Carney is more likely to prevail is in following the example of the US Federal Reserve and offering “forward guidance” on interest rates. This would entail a commitment to keep rates low until a certain economic threshold has been met (the Federal Reserve has adopted an unemployment target of 6.5 per cent). Although the markets already expect the base rate to remain at 0.5 per cent until 2016, this would have the beneficial effect of dampening expectations of a rise should growth exceed current forecasts. The principal reason to remain sceptical of Mr Carney’s potential is the inherent limits of monetary policy. When consumers are unwilling to borrow and banks unwilling to lend, it is the state that must act as a spender of last resort and stimulate growth through measures such as temporary tax cuts, housebuilding programmes and infrastructure spending. It is Mr Osborne’s reluctance to accept this truth that does much to explain the parlous performance of the British economy, which has grown just 1.1 per cent since 2010 and remains 2.6 percentage points below its pre-recession peak. The Chancellor is fond of citing the example of Mr Carney’s native Canada, which eliminated its deficit in just three years in the mid-1990s, but it was the concurrent boom in the US, not an “expansionary contraction”, that enabled it to do so.

As even the new governor has said, “Some people may be expecting central banks to do too much” – and none more so than Mr Osborne. Until the government marries monetary activism with fiscal activism, Britain will not have a recovery worthy of the name.

Incoming governor of the Bank of England Mark Carney arrives at the G7 finance ministers and central bank governors meeting in Aylesbury on 10 May, 2013. Photograph: Getty Images.
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Forget sniffer dogs. To stop drug abuse in prison, fight the real enemy – boredom

Since I left prison in 2011, the system has had £900m sucked out of it. No wonder officers are struggling to control drug use.

It’s rare to go a day in prison without someone offering you drugs. When I was sentenced to 16 months in 2011, I was shocked by the sheer variety on offer. It wasn’t just cannabis, heroin, and prescription pills. If you wanted something special, you could get that too: ecstasy for an in-cell rave, cocaine for the boxing, and, in one case, LSD for someone who presumably wanted to turn the waking nightmare of incarceration up to eleven.

Those were sober times, compared to how things are today. New synthetic drugs – powerful, undetectable, and cheap – have since flooded the market. As the Ministry of Justice itself admitted in its recent White Paper, they’ve lost control: “The motivation and ability of prisoners and organised crime groups to use and traffic illegal drugs has outstripped our ability to prevent this trade.”

The upshot is that, rather than emerging from prison with a useful new trade or skill, inmates are simply picking up new drug habits. According to a report released on 8 December by drug policy experts Volteface, on average 8 per cent of people who did not have a previous drug problem come out of prison with one. In some of the worst institutions, the figure is as high as 16 per cent.

Why are people with no history of drug abuse being driven to it in prison?

There’s the jailbreak factor, of course. All prisoners dream of escape, and drugs are the easiest way out. But, according the report, the most common reason given by inmates is simply boredom.

Life when I was inside was relatively benign. On most days, for instance, there were enough members of staff on duty to let inmates out of their cells to shower, use a telephone, post a letter, or clean their clothes. Sometimes an emergency would mean that there might not be enough hands on deck to escort people off the wing to education, worship, drug therapy, healthcare, family visits, work, or other purposeful activities; but those occasions were mercifully rare.

Since then, the system has had £900m sucked out of it, and the number of operational staff has been reduced by 7,000. All such a skeleton crew can do is rush from one situation to the next. An assault or a suicide in one part of the prison (which have increased by 64 per cent and 75 per cent respectively since 2012) often results in the rest being locked down. The 2,100 new officers the MoJ has promised to recruit don’t come anywhere close to making up the shortfall. Purposeful activity – the cornerstone of effective rehabilitation – has suffered. Inmates are being forced to make their own fun.

Enter ‘synthetic cannabinoid receptor agonists’, or SCRAs, often more simply referred to by brand names such as ‘Spice’ or ‘Black Mamba’. Over 200 of them are available on the international market and they are, today, the most popular drugs in British prisons. A third of inmates admitted to having used ‘Spice’ within the last month, according to a recent survey conducted by User Voice, and the true figure is probably even higher.

As one serving prisoner recently told me: "It's the perfect drug. You can smoke it right under the governor's nose and they won't be able to tell. Not even the dogs can sniff it out."

The combination of extreme boredom and experimental drugs has given birth to scenes both brutal and bizarre. Mobile phone footage recently emerged from Forest Bank prison showing naked, muzzled prisoners – apparently under the influence of such drugs – being made to take part in human dog fights. At the same establishment, another naked prisoner introduces himself to the camera as an ‘Islamic Turkey Vulture’ before squatting over another inmate and excreting ‘golden eggs’, believed to be packets of drugs, into his mouth. It sounds more like a scene from Salò than the prison culture I recall.

The solution to this diabolical situation might seem obvious: but not to Justice Secretary Liz Truss. Her answers are more prison time (up to ten years) for visitors caught smuggling ‘spice’, and new technology to detect the use of these drugs, which will inevitably fail to keep up with the constantly changing experimental drugs market. Earlier this week, she even suggested that drug-delivery drones could be deterred using barking dogs.

Trying to solve prison problems with more prison seems the very definition of madness. Indeed, according to the Howard League for Penal Reform, over the last six years, inmates have received over a million days of extra punishment for breaking prison rules – which includes drug use – with no obvious positive effects.

Extra security measures – the training of ‘spice dogs’, for example – are also doomed to fail. After all, it’s not like prison drug dealers are hard to sniff out. They have the best trainers, the newest tracksuits, their cells are Aladdin’s Caves of contraband - and yet they rarely seem to get caught. Why? The image of a prison officer at HMP Wayland politely informing our wing dealer that his cell was scheduled for a search later that day comes to mind. Unless the huge demand for drugs in prison is dealt with, more security will only result in more corruption.

It might be a bitter pill for a Tory minister to swallow but it’s time to pay attention to prisoners’ needs. If the prodigious quantities of dangerous experimental drugs they are consuming are anything to go by, it’s stimulation they really crave. As diverting as extra drug tests, cell searches, and the sight of prison dogs trying to woof drones out of the sky might momentarily be, it’s not going to be enough.

That’s not to say that prisons should become funfairs, or the dreaded holiday camps of tabloid fantasy, but at the very last they should be safe, stable environments that give inmates the opportunity to improve their lives. Achieving that will require a degree of bravery, imagination, and compassion possibly beyond the reach of this government. But, for now, we live in hope. The prisoners, in dope.