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Catastrophe averted?

The leaders of the rich countries went to Washington to save the world from sliding into deep recess

Vincent Cable

Shadow chancellor, Liberal Democrats

By the low standards of economic summitry, the G20 meeting rated quite high. There was a predictable, no doubt pre-written, communiqué, full of the usual banalities. And the meeting suffered from the absence of the world's most important politician, who hasn't yet taken up office. But, these necessary caveats aside, there were important achievements.

The first is that the meeting took place at all. The ludicrous pretence of the G8 (or G7) that the old western powers should set the global economic agenda has been punctured for good. On a purchasing power parity basis, China has the second-biggest economy in the world and India the fourth. It has been clear for some time that China is lender of last resort to the global system (by, in effect, underwriting US government paper) and the main source of global incremental demand (and commodity price inflation). The Chinese self-parody as the pupil sitting meekly at the feet of a dominant, but erring, master defies belief. It is obviously right that China, India and the other main non-G7 countries should be at the top table.

The second achievement was the clear realisation that unless governments hang together they will hang separately. Enough has been learned from interwar history for us to understand the follies of beggar-my-neighbour economics. Perhaps a warning shock was being sent across the bows of the incoming Obama administration not to reinvent the protectionist tariffs of the 1930s in a new guise, directed at China or Mexico in particular, or aiming to salvage the US auto industry through public subsidy. But this new-found concern for open markets has not yet communicated itself to EU or Indian or Chinese trade negotiators, who show no enthusiasm for lifting the block on trade liberalisation under the Doha round.

While trade policy is on the back burner, macroeconomic policy co-ordination is not. With a few exceptions - Germany notably - there is recognition of the need for aggressive monetary and fiscal policy and for large-scale intervention to recapitalise banks. These interventions can be and are being undertaken nationally. But governments acting in isolation attract critical attention from capital markets and currency speculators, as Gordon Brown is discovering. Structures like the G20 are the best safeguard against chaotic, unilateral action.

Will Hutton

Economic commentator

It was remarkable to gather so much economic and political power in one room to address a common agenda. That was the good news - along with commitments to co-ordinate fiscal expansion, to expand the lending power of the IMF and World Bank (Japan's $100bn loan to the IMF will increase the Fund's lending capacity by 40 per cent), to boost cross-border supervision, to tackle credit rating agencies, to reassess mad accounting rules and require member countries to attack the bonus culture in the financial services industry. A year ago such an agreement would have been inconceivable.

The bad news is that much of this is shutting the stable door after the horse has bolted. Four things have to be recognised: that the world has profound imbalances between high-saving, high-surplus areas in Asia and the Gulf and low-saving, structural deficit countries in the transatlantic economy (Germany excepted); that a system of floating exchange rates and private banks can no longer take the weight of recycling those savings; that unless the system is de-risked and the burden of adjustment is placed on deficit and surplus countries alike, the global system faces breakdown; and finally, that the business model used by the banks to recycle surpluses - securitisation and hedging in the $360trn global derivatives market - is broken.

In plain English, China must accept that its currency must appreciate; Britain and America, that they cannot run their economies on foreign savings; and all players that there has to be a system of semi-fixed exchange rates between the yen, the euro and the dollar.

One tough reality is that, for all their new economic weight, China, Brazil, Russia and India do not have fully convertible currencies - nor do they want to accept the discipline involved in having convertible currencies.

Ann Pettifor

Fellow, New Economics Foundation

Over the past decade, the Group of Eight leaders turned their exclusive annual meetings into jamborees. Rock concerts, protesters and celebrities added populist glitz. However, the real purpose of the meetings - international co-operation and co-ordination - was ducked. At last year's G8 Summit in Heiligendamm, Germany, George W Bush and Gordon Brown vetoed Angela Merkel's agenda item for co-operation over tighter international regulation and financial oversight of capital markets. That task, they argued then, could safely be delegated to "the invisible hand". Now that the fantastic, self-regulating machinery of free markets has proved grossly malfunctional, it is good to hear talk of enhanced co-operation and regulation.

But, in places, the joint statement issued by the 20 world leaders borders on the delusional. The phrase "We must . . . ensure . . . that a global crisis, such as this one, does not happen again" implies that they are avoiding the next war when they are still losing this one.

Even more questionable is the call for continued "economic growth". In a world of finite resources on a planet with limited capacity to absorb toxic emissions, and with bushfires encircling Los Angeles, we would have hoped that world leaders had some awareness of the threat of climate change and of the limits to economic growth. But no. The gravest threat to global security - our rapacious attitude to the earth's resources - is once again whipped up with talk of "market principles, open trade and economic growth".

Jesse Norman

Senior fellow at Policy Exchange

One might have thought the G20 summit a good moment for some straight talk from the Prime Minister. Instead, the political wind machine was cranked up to full blast. The summit would be a second Bretton Woods. Gordon Brown would forge a new global consensus on co-ordinated intervention to stimulate growth (while, of course, leading reforms to prevent the banking crisis from ever recurring). Luckily virtually none of this was true, or the summit would have been a hopeless failure. With fiscal measures already widely adopted, the G20 hardly needed Brown's leadership. No surprise that he returned empty-handed.

Labour has moved from despondency to a manic desperation to remain in office. The result is that the ever-fragile concept of truth in politics has wholly been cast aside. Thus the humiliating bank nationalisation has been dressed up as an act of far-seeing economic statesmanship. And a sensible warning from the shadow chancellor that current economic policy puts sterling at risk has been condemned for breaching an irrelevant semi-convention dating from the time of fixed exchange rates.

Alex Brummer

City editor, Daily Mail

There is a golden rule of international financial meetings. The larger the "G" number, in other words the more countries involved, the less likely it is that any worthwhile or binding decisions will be taken. So while it was wholly encouraging that the G20 summit brought a number of emerging market leaders to the top table of finance, including China, Brazil and Russia, there was never any real prospect of the event becoming the new Bretton Woods.

Furthermore, the summit took place in the final days of the lame duck administration of George Bush. Once it became clear Barack Obama was going nowhere near the confab, the event became even more of an irrelevance.

European leaders may like to blame Wall Street and Anglo-Saxon capitalism for the credit crunch and the recession now spreading through the Group of Seven like wildfire, but there is no hope of concerted international action without the new White House and Federal Reserve on board.

Almost all that was agreed could have been decided before the leaders left home. The commitment to reviving the Doha trade round is pure motherhood and apple pie. The prairie populists on Capitol Hill are unlikely to be enthusiastic.

At the core of the proposals was the commitment to use fiscal measures, tax cuts and public spending to kick-start global economies. But despite Gordon Brown's enthusiastic embrace of a new Keynesian big-spending approach - as advocated by Nobel prize-winner Paul Krugman - he neatly forgot to mention that such big-spending ways were only for those countries with a "policy framework conducive to fiscal sustainability". The UK with its ballooning budget deficit, which could hit £100bn or more next year, is clearly in no such position.

It is hard to fathom in what way the G20 was "historic", as the Prime Minister claimed in the Commons. There is little original in a bunch of old ideas designed to remove risk from the financial system and control executive pay. That is what regulators should have done before the banks ploughed into the iceberg.

James Buchan

Author and financial commentator

What is the Financial Stability Forum? What is "mitigating against pro-cyclicality in regulatory policy"? What, if anything, has the G20 summit in Washington on the weekend of the 15 November achieved?

Nothing very much, is the answer to all three questions. In the twilight of a discredited US administration, and with President-elect Barack Obama absent, the meeting was never likely to achieve a great deal or generate excitement in the US. Yet the final declaration, drafted with suspicious ease by the delegations on Saturday night, has something for everybody but not enough of anything to scare the financial horses.

Nicolas Sarkozy, the French president whose idea the whole thing was, gained some support for more institutional government of trade and finance, but no super-gendarme international of the type that has been directing financial traffic in the French imagination since the 17th century. As Jean-Pierre Robin wrote in the Figaro: "Those with fantasies of supranational supervision will need to change therapist." The US, jealous of its commercial sovereignty even when it is going about without its shirt, put paid to those Gallic dreams and also gained some platitudes about free trade.

The new commercial powers, not only Brazil, Russia, India and mainland China but also rich oil producers such as Saudi Arabia, received diplomatic recognition of their deep pockets. "The world's geopolitical structure has a new dimension," the Brazilian president, Luiz Inácio Lula da Silva, said. "There is no logic to making any political and economic decisions without the G20 members - developing countries must be part of the solution to the global financial crisis."

I suspect the winner is Gordon Brown. The next meeting will be held under his presidency in London in April. The Washington ragbag of proposals to reform or tinker with the current system, such as reminding us about the Financial Stability Form and mitigating against that regrettable pro-cyclicality in regulatory policy, appeals to his technical vanity and plays to his technical strengths.

Paul Mason

Economics editor, Newsnight

There was a sense in Washington, despite the throbbing engines and bulletproof glass, of powerlessness. The communiqué was stronger on the causes of the crisis than on co-ordinated solutions. Policymakers are right to stay focused on the near-term dangers: these are country-level debt default, the rising cost of borrowing for non-financial companies, rapid job losses and - via feedback - further destabilisation of the banking system. We are moving into the phase of fiscal stimulus but there are powerful technical arguments that say without "quantitative easing" - that is, printing money to stimulate demand - it doesn't work. The same people who told me it would come to recapitalisation, that the TARP (troubled assets relief programme) would not work, are now saying: nationalise the banks and print money.

Despite the urgency of the focus on near-term dangers, what was obvious at G20 was the lack of vision as to the future growth model of capitalism. The problem was seen as a failure of regulation; the solution a pretty weak brew of re-regulation that will get diluted even more as the lobbyists begin to have influence. But the problem is more fundamental: the growth model based on high debt instead of high wages has failed and will be hard to revive.

Peter Mandelson

Secretary of State for Business

We have been caught in a global whirlwind of extraordinary force.

It has brought with it a fear that has gripped the world economy and taken hold here at home. We are seeing it every day, with fear among consumers that is depressing demand; fear among banks that is inhibiting them from lending; fear among small- and medium-sized businesses that banks are just about to cut off their credit lines. The choice facing us and governments around the world is this: do we act decisively to counter and overcome this fear, or do we become paralysed by it and fail to act?

The government has already shown its willingness to take the bolder course as the first mover in setting about stabilising the banks. What is needed now is action to stimulate the demand essential for recovery. The UK economy, like economies in the rest of the world, needs a shot of adrenalin.

The Bank of England has already made a significant cut to interest rates. This monetary stimulus now needs to be matched by a fiscal stimulus. And because this is a global crisis this is best done if the benefit of the measures taken nationally is maximised by the same measures being taken around the world. That was the message from the international conference in Washington, as governments recognised the need to take the action necessary to stimulate their economies.

People will say, "But you are resorting to borrowing in order to deliver the stimulus that's needed." My answer to that is, what is the alternative? We certainly haven't heard one from the Conservatives.

David Cameron and George Osborne, trapped by their desire to oppose everything the government does, refuse to accept the scale of the challenge the world's economies now face and the prescribed international action. Their stance appears to be, if the rest of the world disagrees with us, it is because the rest of the world is wrong. The result is incoherence and an Opposition at sixes and sevens. One minute this is "do all it takes" and the next it is - as we heard this week - leave the recession to "take its course".

Sitting on our hands watching houses repossessed and businesses go to the wall is certainly not the approach being urged on me by people I have been speaking to up and down the country. They want their government to act to stimulate demand in the economy here and now. With all due prudence, that is what we are going to do.

Diane Coyle

Author and economist

The G20 meeting confirmed a robust and rapid response (by past standards) to recession, even in the US operating under a rump free-market administration. Policymakers around the world have been shaken to see the financial system at the brink of collapse - on their watch.

Yet it is difficult to predict how severe the recession will be. Bank lending to businesses and individuals is virtually frozen. In many (but not all) areas of the economy, activity has come to a halt. The last financial boom and bust, ending in 2001, had surprisingly little impact on jobs and growth, as the financial bubble had become increasingly untethered from anything real. Today's vicious circle of evaporating liquidity is much more serious, but lower interest rates and bigger government deficits will help. The underlying trends are easier to outline. Some challenges are clearly unaltered, such as climate change and our ageing society.

The technological opportunities are still there, too, in communications, the internet and biotechnology. Globalisation will be less driven by finance in future, but it will not be unwound. It would take a generation to turn back the clock on economic linkages, and the cultural impacts are permanent. In fact, the crisis has underlined our interdependence across national borders.

What has changed is the political economy of globalisation. In the triad of efficiency, fairness and freedom which dominates political choice in democracies, fairness will take priority in the years ahead, and the drive for ever greater productivity gains will retreat. The semi-nationalisation of the banks has started to shift the boundary between public and private domains; we will have to think more carefully about how to govern private choices that have big social spillovers. The G20 did not touch on this profound question of governance.

Iain Macwhirter

Political commentator

The G20 was largely a throat-clearing session and was never going to put in place the foundations of a new international financial system. Progress on the stalled Doha trade talks is encouraging but provides no guarantee that protectionism will not raise its head in the coming economic slump.

It is inevitable that countries faced with financial collapse will try to defend their economies by any means possible. Britain is already far down the road of "beggar my neighbour" economics by the "managed" devaluation of the pound, a crude attempt to boost UK industry by lowering the prices of British exports and creating a de facto tariff wall around imports from abroad. It won't work because Britain does not make much of anything any more except debt, and the world has plenty of that already.

But the collapse of the pound will seriously damage what is left of UK financial services. No one in their right minds would put money into the UK economy now, with the property market collapsing, UK banks insolvent and government borrowing likely to reach £100bn in the next 18 months.

Gordon Brown seems to believe that sterling is like the dollar, and that people will buy our dud pounds whatever the likely losses. However, as we are discovering, sterling is not a reserve currency and unlike the US we cannot force other countries to pay our debts. The future for our battered island is likely to be hyperinflation punctuated by appeals to the International Monetary Fund for emergency aid. Forget about spending our way out of recession - the UK government simply lacks the resources to fund the huge borrowing that would be required. Something will have to give. Brown will have cause to regret being so beastly to the Icelanders.

Richard Reeves

Director of Demos

James Carville, the hardened political aide to Bill Clinton, said that if he was reincarnated he'd want to come back as the bond market: "You can intimidate anybody." Right now it seems odd to think of any financial markets threatening anybody. But it is one of the ironies of the current economic situation that the capital markets still have some serious muscle.

Western governments, faced with recession, need to throw a lot of money at their ailing financial institutions - money that can be raised only by selling Treasury debt, mostly to the capital-rich investors of the Far East. For Gordon Brown, this is likely to become a more difficult sell, as Prudence is given the push and the pound takes a nosedive. Even national exchequers invite sceptical scrutiny in this new, nervous world.

The financial crisis is at heart a loss of faith. The word credit derives from the Latin credo - "I believe". When the Titanic of the financial world - in the shape of Lehman Brothers - was allowed to sink, the bonds of trust stretching around the world were snapped. In an instant, everyone stopped believing in each other.

A number of sensible measures should be on the agenda when the G20 reconvenes next year, including legislation to ensure bonuses in financial services are paid on the basis of five-year performance; new "pro-cyclical" provisioning rules requiring finance houses to increase their store of capital in economic upturns; and tougher, independent regulation of the rating agencies whose doe-eyed assessments of banks built on a mountain of paper helped get us in this mess.

There is, however, no quick technical fix for such a dramatic loss of confidence. Trust can be lost in the blink of a market-trader's eye - but it will take years to rebuild.

TEN THINGS THEY ACHIEVED

  • 1 Created a road map aimed at stabilising the world economy and overhauling the banking system with targets for the end of March 2009
  • 2 Advocated Keynesian big-spending
    “fiscal stimulus”
  • 3 Expanded from a small club making world decisions to recognise the importance of the economies of Brazil, Russia, India and China
  • 4 Agreed to reform international finance institutions, including better transparency and supervision of credit ratings agencies
  • 5 Agreed that the Financial Stability Forum should include emerging economies
  • 6 Banks and hedge funds to hold increased levels of capital and cash
  • 7 Recommended “supervisory colleges” for all major cross-border financial institutions
  • 8 Return to the Doha round – trade ministers to meet in Geneva next month
  • 9 Instructed G20 finance ministers to draw up plans and timeline
  • 10 Agreed to meet again, in London next April

. . . AND FIVE THEY DIDN’T

  • 1 Agree a future growth model for capitalism. Instead they reconfirmed their “shared belief in market principles”
  • 2 Agree detailed plans for regulatory reforms of banking
  • 3 Establish a plan of action for achieving the already endangered Millennium Development Goals
  • 4 Set up an international supervisory body with sufficient power to control global markets
  • 5 Halt the run on sterling, which fell sharply against the euro and dollar

Alyssa McDonald

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess

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A 21st century workhouse or a second chance? My life as an Emmaus Companion

Homelessness charity Emmaus takes in the desperate. But does it show them a way out again? 

In the summer of 2013, towards the end of my final year at university, I found myself homeless. Before I had started my studies, I lived and worked in Oldham. As I was a care leaver, I was receiving support from the council’s vulnerable adults team. When I started my degree, however, I moved to Mossley in the neighbouring borough of Tameside. The rent was cheaper and the flat was closer to my family. But with the move, I lost the support from Oldham Council. At the time, this didn't cause me great concern. I thought: "I don’t need to be babysat anymore." I was wrong.

I wasn’t ready to look after myself. During my finals, I fell into heavy arrears with my landlord, I was living alone, and White Storm and Scrumpy Jack had taken over from my support workers. I first became aware of Emmaus during this time, when I befriended residents of the Mossley community at their evening drinking haunt, the “Beach”, a sandy bank on the River Tame situated behind a derelict factory.

They told me how they were all formerly homeless and that Emmaus had provided them with sanctuary in return for 40 hours’ work a week. After our meeting on the Beach I didn’t really think about the charity again – until I found myself living on a campsite a few months later.

“Somewhere I can recover my self respect”

“If you are suffering, whoever you are, come in, eat, sleep, and regain hope. Here you are loved.” Abbé Pierre’s words are at the heart of what Emmaus claims to offer Britain’s homeless. Pierre, a Catholic priest and former member of the French Resistance, founded Emmaus in 1949. He began by taking homeless people off the streets in Paris and had them recycle old rags to earn their keep. The Emmaus model in the UK is not too far removed from the one that Pierre founded, only now Emmaus is a secular organisation, and predominantly trades in second-hand furniture.

Emmaus communities in the UK accept people who have experienced homelessness and social exclusion. Those who are accepted are referred to as Companions. They receive accommodation, food, clothing, and a small weekly allowance in exchange for 40 hours of work in the Emmaus social enterprise. But for Companions to earn “love”, they must adhere to a strict set of rules. They must not bring non-prescription drugs or alcohol onto the premises. They must relinquish all claims to state benefits apart from housing benefit, which is claimed on their behalf. They do not have employment or conventional renting rights. Legislation has specifically excluded them from receiving the minimum wage, and they are not allowed to receive any extra income apart from the weekly subsistence allowance.

Emmaus came to the UK 40 years after it had been established throughout France. The first community in the UK was opened by a Cambridge businessman, Selwyn Image, who reportedly drew inspiration to start Emmaus from a conversation with a homeless man at a soup and sandwich shelter.

The man told Image what he wanted was “somewhere where I can work, where I feel I belong, and where I can recover my self-respect”. Later, he recalled work experience he had done at an Emmaus community in Paris. He reached out to Abbé Pierre and received his blessing to open the first Emmaus community in Cambridge in 1991.

Today Emmaus UK is the largest movement outside France, with 29 communities spread across the country. Camilla, Duchess of Cornwall, is a patron, and the president is the former assistant to an Archbishop of Canterbury, Terry Waite.

The aims of the organisation have fit in snugly with conservative ideas of community and volunteerism. In 2011, shortly after the Conservative-led coalition government took power, a House of Commons select committee report stated: “We regard the challenge to government presented by charities such as Emmaus as a litmus test of the government’s Big Society project.”

“You are walking on eggshells”

When I entered Emmaus Mossley, I felt relieved that some structure and stability was being reintroduced into my life. After a while I began to feel normal again. I was working in a regular job, and I fell asleep in the same place every night. But as I spent more time with the charity, my feelings changed. Many of the Companions I was with had lived there for a long time, and even though they routinely complained about the community they had nowhere else to go. They were trapped.

I also began to notice that I was doing full-time manual labour for no pay, with no basic rights protecting me. I lived at Emmaus in two different communities for just over a year, but I never felt the “love” Pierre spoke of. Instead by the time I left the community I felt exploited, demoralised and angry. I felt like I was no more to them than a cog in a machine.

I left Emmaus Mossley in late 2013, but after some complicated housing issues I returned, this time to the St Albans community. There I met Leon Webster, 37, an electrical engineer who came to Emmaus after struggles with drugs caused him to lose his job.

Leon’s first impressions of the charity were similar to my own: he welcomed the sanctuary the community provided. But after a few months, his views changed too. He witnessed Companions being frequently expelled from the community: “You don't have a home, you live in this community but you don't have any rights as a tenant. You could wake up in a bad mood one morning, tell someone to fuck off or do something equally stupid, and that’s it you're back homeless again even if you’ve been in there for four or five years. You are walking on eggshells; if you cause trouble, you're out.”

He claimed that the rules were applied inconsistently in the community: "I think a lot of it is if your face fits, and if the staff like you.”

Dominic Smith, 22, another former Companion at Emmaus St Albans who now works as a magician, shared Leon’s fears of being thrown out of the community: “You could get ejected quite easily; people were kicked out left, right, and centre. It is quite daunting to think that if you lose your job you also lose your home. Usually those things are separate.”

Dominic described one incident involving an expulsion: “This guy was kicked out for drinking in his room. Then he started living at the back of the garden near the fence.” Dominic said he took pity on him, and brought him food in the evening: “They asked me why I was giving him food. I was given a verbal warning for doing that. They didn’t explain what rule I had broken.”

In response to Dominic’s claims, Emmaus said: “It is not unusual for companions to provide food for people living outside of the community and it is not something they would be reprimanded for. There is no record of any kind of warning being given to Dominic for passing on food.” 

The perception that the rules were not fairly applied was shared by a group of former Companions I encountered using a homeless relief centre in Deptford. They described a similar atmosphere at Emmaus Lambeth, in central London. Some of them had received short-term bans and were hoping to re-enter the community as they had nowhere else to go. Because of this, only Conor, a young man in his early twenties, agreed to be interviewed on the record. Conor said he didn’t feel valued in Emmaus and that the charity is run more like a business: “It was alright at the start, I kept my head down but trouble always seemed to follow me in there. They’ve got their own little cliques, and their favourites.”

I witnessed the inconsistent application of Emmaus’s rules first hand. During one particularly frightening evening at Emmaus St Albans I got into a confrontation with another Companion. After a brief scuffle, this person produced a knife. Before things got really serious, two other Companions broke it up.

The next morning, I had a very difficult time convincing staff to act appropriately to the situation; I told them that I was not prepared to live in the same community with someone who threatens people with knives. Eventually they banned this Companion from the community, but despite my vociferous protests they allowed him to return a month later while I was still living there. The Emmaus handbook stipulates a much longer ban for violent behaviour.

Emmaus said: “No companion should feel they need to 'walk on eggshells' and we work hard to ensure we are consistent with people. As a charity we do work with people with complex and varied needs, and it is important we ensure we can be adaptable to these needs wherever possible."

With regards to the knife incident, the spokeswoman said: "In this particular situation, which was witnessed by a number of people, a companion had been backed into a corner when he pulled a pen knife he had been carrying for work that day, from his pocket. When the altercation was broken up, he admitted he shouldn’t have reached for the knife, and left the community.

"When, at a later date, he applied to return to the community, Danny was consulted to see how he would feel about him living there again. While he did raise some concerns, Danny did agree that this individual should have a second chance and be allowed to return to the community."

In fact, I was never happy about him coming back, but I was worried about my own position in the community.

“You do become institutionalised”

In his book Socialism and the Third Way, Bill Jordan, a professor in social work, compares Emmaus to the Victorian workhouse: “At one level an Emmaus community in the UK could be seen as a privatised form of indoor poor relief – a workhouse, operated according to strict rules, with informal systems of surveillance amounting almost to a blood and guts panopticon.”

The same comparison struck me when I was living in the community. In the Victorian workhouse, paupers were admitted on the proviso that they worked for basic subsistence, and their behaviour was closely monitored; in Emmaus, homeless people must work in exchange for accommodation, food, and a small weekly allowance, and their behaviour is similarly controlled. But there are other parallels, too.

In the Victorian workhouse, some inmates stayed for up to 60 years. An 1861 parliamentary report found that “nation-wide, over 20 percent of inmates had been in the workhouse for more than five years.”

A similar institutionalisation is evident among Emmaus Companions. While most stay for no longer than two years, some have lived in Emmaus for more than 20 years and see the community as an end in itself, either because they are comfortable with the regime or they see no other way out of it.

One Companion I spoke to, who had been with Emmaus for a number of years, told me since the government was not helping her, Emmaus was "a godsend". She emphasised that the community had improved her confidence, gave her a routine, and offered her the support she needed. However, she also expressed her desire to have a place of her own: “This is great but this is not normal life," she said. "You can become almost institutionalised living here, because you don’t have to worry about everyday stuff. It’s like a giant big brother with all the stuff going on. You know little things blow up massively, and you can’t breathe without someone knowing about it.”

Another said that the support workers at Emmaus were “fantastic”, but his views about the future were nuanced: “I would like to move on, but I’ll be 61 in March and I’m coming up to retirement. It’s an odd one, when you get to my age you don’t know what to do. I probably would take my own flat and a job. You do become institutionalised in a way. After a while I think, is it worth going anywhere else or should I just stay here?”

Although Companions can be banned from Emmaus, the organisation does believe in second chances. In today's welfare system, it is quite common for a Companion to leave or be forced out, but to later request a return. 

But Leon, the electrician, thinks it is not just a case of individuals unable to find other options. He argues the allowance is not enough to help Companions make a quick transition to independence: “They pay you £35 and put £10 away for you. That £10 is supposed to be for a deposit. How long would it take you to get a deposit in somewhere like St Albans where you need a grand for the rent, and another grand for the deposit?”

Emmaus does allow Companions to live in the community for up to three months if they find a job, and can help furnish their new accommodation with donated furniture from its charity shops. 

The spokeswoman said Emmaus took "great pride" in not forcing anyone to leave before they were ready: "Those who are looking to move on are given support to do so."

“It's about regaining self-esteem”

I travelled to Birmingham in May this year, to interview Simon Grainge, chief executive of Emmaus UK, in his offices at the city’s refurbished Custard Factory. Grainge didn’t recognise the similarities between the charity and the workhouse: “I think that kind of thing very often comes around where people’s perception of Emmaus is not complete, shall we say, and I think that’s where people dip into it and they don’t fully understand it.”

He went on to describe how Emmaus provides people with a sense of purpose and belonging: “It’s about people regaining their self-esteem by being able to work and support themselves, rather than being in receipt of charity.”

Historian Simon Fowler agrees that there is a fundamental distinction between Emmaus and a workhouse: “I’d say the big differences are psychological, how the workhouse staff and managers treated the inmates. They humiliated and did their best to dehumanise them. Often it was deliberate ie putting family members into different wards and making them wear special cheap and nasty uniform. Sometimes it was subtler, that is the boredom that most inmates endured – there was little stimulus, particularly on Sundays.”

Thanks to electricity, central heating, modern medicine, and the Human Rights Act, the living conditions in Emmaus very different from the hostile environment that Oliver Twist found himself in. Companions still have to adhere to a strict regime, but their working uniforms are much more attractive, and there is no oakum-picking or stone-breaking. Companions have access to televisions and games consoles, they enjoy four weeks' holiday a year, and there’s more than meagre slops of porridge on the menu.

But even though Companions do not experience the kind of draconian treatment that Fowler describes, some do suffer distress. The lack of guarantees that Companions have mean that even those who have lived and worked in Emmaus communities for up to 20 years do not have assured tenancies or employment rights. They can be dismissed from the community at the drop of a hat, or more often, as Professor Jordan observed, “a can of lager”.

“It was the hardest job I've had”

The work that Companions do is obligatory, so there is a strong argument that they should they be considered employees, and have the rights that come with that status.

The test on whether someone is an employee is broad-ranging, but key elements are “control” and “mutuality of obligation,” says Paul Johnson, a solicitor from the Oldham Law Centre who has practiced employment law for more than 30 years. “It appears to me that Emmaus have total control over when, where and how the Companions work."

There is also a mutuality of obligation – Companions are obliged to work 40 hours, and Emmaus must provide subsistence in return. Johnson says that this does not mean that a Companion would necessarily win if they took a claim to an employment tribunal, but says the “prospects of winning seem good”.

It is also possible that Companions should in fact be considered tenants, and therefore have the rights that come with that status, too. 

Companions sign a Right to Occupy agreement when they enter Emmaus, and they are told this is under a licence. A licence can be terminated on giving reasonable notice and does not confer the protections against eviction provided under the Housing Acts (formerly the Rent Acts).

Johnson says that even if an agreement says it is a licence, it doesn't necessarily mean it is one. In the leading case on this subject (Street v Mountford) the Right to Occupy agreement said that it was a licence, but the House of Lords decided that it was a tenancy and that the Rent Acts did apply.

Johnson adds: “On the basis of the decision in Street, it could be argued that Companions have exclusive possession of their rooms, even though Emmaus has reserved a right to enter, and therefore the Companions are tenants.” This argument, too, has yet to be tested in court.

Grainge rejects the idea that Companions are more vulnerable to unfair treatment due to their lack of legal protections. He argues that it is appropriate for Companions to not have these rights, as he does not think the charity could function if they were given employment contracts. He also does not believe that Companions should have tenancy rights because Emmaus is no different than any other hostel where people don’t have assured tenancies. “When people come into our communities they are very vulnerable,” he explains. “They have drug, alcohol, addiction issues; mental health issues."

Grainge also argues that the comparison with a typical worker is incorrect, as many Companions would not actually be able to work as an employee: "I’ve seen that with many Companions who have actually moved on from communities and gone to work for an employer, and it hasn’t worked for them.”

He says “huge allowances” are made for Companions that ordinary employees wouldn’t enjoy, such as time off for routine appointments at the doctors and probation services: “What kind of employer do you think would accept 20 to 30 fag breaks during the day, and the ability to say, ‘I’m not functioning today I need to go to my room’. All that sort of stuff goes on, on a regular basis in communities.”

The work at Emmaus can be very labour-intensive. One of the key roles is portering furniture, which involves a lot of heavy lifting, often up and down several flights of stairs. When I put this to Grainge he said: “It is exactly the kind of labour that many other people are expected to do on the minimum wage,” and then reiterated that the “huge allowances” made for Companions means that they are not ordinary employees.

Of the Companions I spoke to, all of them without exception agreed that the work is hard. Dominic, one of those who left Emmaus, said: “Everyone took their work very seriously, if you didn’t work you were asked to leave. Every job I’ve had after Emmaus was easier; it was the hardest job I’ve had.”

Even if Companions were to win status as employees, they would still not be entitled to a wage, however. A amendment to the National Minimum Wage Regulations in 1999 exempts charities and other institutions from paying workers, if prior to entering a work scheme they were homeless or living in a hostel.

It seems this amendment was passed with Emmaus in mind. During a debate in the House of Lords in 1999, The Lord Bishop of Ely cited Emmaus UK as an intentional community that is “a modern off-shoot of the monasteries which are very much a feature of our culture. They are places where men and women practise an extremely modest way of life as a vocation in order to benefit their fellow human beings.”

One could argue that Companions do receive remuneration in exchange for their labour in the form of accommodation, food, and their allowance. However, Companions do not work in exchange for their accommodation as this is covered by housing benefit. In St Albans, the amount someone living in shared accommodation can claim in housing benefit is £78.50 per week. But this cap does not apply to claimants living in supported accommodation, and before I left the St Albans community in 2016 I was receiving £182 per week in housing benefit. 

This cost to the taxpayer is addressed in a 2008 economic evaluation undertaken by the Cambridge Centre for Housing and Planning Research, which is often cited in Emmaus’s promotional material. The evaluation, which used the Village Carlton Community as a case study, claimed that the hypothetical annual saving to the taxpayer from housing 27 Companions in Emmaus rather than in alternative accommodation is £557,362.

The reporting mechanisms used, however, can be questioned. The figure is based on interviews with just 11 Companions in one week of the year. 

“Emmaus was there for me when I was at my lowest”

I was eventually evicted from Emmaus St Albans in January 2016, for reasons that were entirely justified. Emmaus communities are insular places where every move you make is under close scrutiny, and after six months I felt as if the walls were closing in on me. I was at odds with the staff, not only for allowing the Companion who threatened me with a knife to return, but for the inconsistent way they treated other Companions too.

One day, I was delivering furniture with a Companion that I didn’t get on with. I can’t recall what the argument was that day, but it ended with me demanding that he pull the van over so I could get out and walk home. Before I got out I punched the windscreen, shattering it. The day after the incident I was told by the support manager that I was banned from the community for 28 days, and was given a week to find alternative accommodation.

Emmaus did not work for me, but it does work for others. Many Companions adjust well to the structures in Emmaus, in part because their existence prior to moving in were so austere and the state-run alternatives can be very bleak.

The Companions who suffered the most outside of Emmaus are the most enthusiastic about the charity. One I spoke to came to the UK to escape persecution in his country of origin. Before he was accepted into Emmaus he described himself as being mentally and physically broken.

“I was almost finished before I came here,” he says. “This is a wonderful place for people who temporarily cannot manage their lives. Doing work is much better than sitting idle, as it makes you ill.” He acknowledges that “voluntary work is compulsory to stay here”, but says he is “very happy, as it's good for my health and social wellbeing. And I’m satisfied that I’m doing something for people like me.”

Many more Companions see Emmaus as their home, and fully support the ethos of the charity. Gary, a Companion who I met while at Emmaus Mossley, told the Emmaus website that life in the community had given him the opportunity to do things he couldn’t have done on his own: “Emmaus was there for me when I was at my lowest, and has helped me to rebuild my confidence and my life. I can say with all sincerity that I honestly don’t know where I would be without Emmaus, it really doesn’t bear thinking about.”

And then there are people like Michael Leadbetter. Michael was from Hull, and had lived in the Mossley Community for six years when I met him there in 2013. He was from a generation of working-class hippies who – hypnotised by Pink Floyd and Sixties psychedelia – dropped out, and never quite managed to drop back in.

Michael was found dead earlier this year in the River Tame near Mossley. His death shouldn't have surprised me; I'd witnessed him – paralytic on black lager and co-codamol – fall over walls, into the canal, down steps, and over his shoelaces on many occasions. I can recall people telling him that if he ever fell into the canal on his own he'd be in dire straits.

Michael was a hopeless drunk, and an incredibly warm and intelligent man. Even after three litres of White Storm he would still humiliate me on the chess board. He was also fond of taunting me at every opportunity. At Emmaus Mossley our rooms were next to each other, and Mick would blast out Bonzo's Dog Band's "Slush" every morning, as he knew that the maniacal laughter that loops throughout the track really freaked me out. He also enjoyed preying on my lack of work experience by asking me to fetch a long stand, tartan paint, or a left-handed screwdriver.

Many Companions like Mick are far better off within Emmaus's walls than left to their own devices. But the fact that formerly homeless people have seen a material improvement in their circumstances does not alter the fact that many Companions have had negative experiences. I am not the only one to have left feeling unsupported, unappreciated, and exploited by being forced to do unpaid labour just because I was unfortunate enough to end up homeless.

Just like the Victorians with their workhouses, we in the 21st century still behave as if homelessness was the result of an individual's moral deficiencies, rather than the result of political choices and social ills.  

The homeless are the only members of our society who can be forced by poverty to work for no pay. It is surely wrong that, even if a charity like Emmaus works for some, so many vulnerable people have no choice but to submit to being institutionalised, stuck doing voluntary work that is compulsory for decades in a “community” from which they could be expelled at any time.

I would often chat with Mick after work about Emmaus. He understood my criticisms, he said, but maintained that the charity had saved his life. Mick said he was very proud of the work he did there, and felt like he was contributing to the wider community. He told me he intended to spend the rest of his life with the charity – and in the end, he did.

*Some names have been changed

This article first appeared in the 24 November 2008 issue of the New Statesman, How to get us out of this mess