Asbestos: The lies that killed

Asbestos, now banned in the EU, kills up to 4,000 people a year in the UK alone. In this exclusive report, Ed Howker reveals how the industry hid the truth for decades and why the death toll will certainly continue to rise.

There are nearly one million documents on microfiche sitting in the office of the Manchester Metropolitan University Business School academic Geoffrey Tweedale. They expose a scandal that ranks among the biggest and costliest of our age: how the Lancashire manufacturing giant Turner & Newall (T&N), once the world's largest asbestos conglomerate, exposed millions to a lethal carcinogen in full knowledge of its dangers, using PR firms and politicians to hide a truth that it had secretly admitted to in 1961, namely that "the only really safe number of asbestos fibres in the works environment is nil".

Hidden in this massive archive are documents, revealed here for the first time, which tell the story of corporate recklessness that has led to the deaths of thousands of men and women in Britain who were once exposed to asbestos.

People living in the Spodden Valley area of Rochdale in the 1950s used to joke that they would get frost all year round. The local wood was nicknamed "the snow trees" and even the blackberries picked in late summer were covered with a fine white powder. But the "frost" was no joke - it was asbestos blown from extractor fans at the Turner & Newall factory in the heart of the valley.

Derek Philips never worked there, but for 19 years lived just yards from the site. He played bass in a band with T&N workers and recalls the factory as "the centre of the community". The guitars hang on the walls of his current home, a static caravan in the Pennine foothills where he waits to die of one of the asbestos-related diseases - meso thelioma, which appears decades after exposure to asbestos and which is killing more than 2,000 people every year in the UK.

His plight has been all too common in Rochdale. In the 1980s the New Statesman reported that on some roads near the factory every second household had lost a family member to asbestos diseases.

"I was diagnosed in October [2007]," says Philips. "A month later they drained three litres of fluid from my lungs. I couldn't even stand up properly. I've just no chance, have I? I didn't know about the risks."

In the coming months, how he was exposed to asbestos and who he was working for at that time will become vital issues as lawyers fight to win compensation for Derek.

The latest gambit of some insurers is to claim that their liabilities extend only to victims whose disease manifests (is triggered) when they are actually at work, not when they were negligently exposed, which can occur decades earlier. The union Unite is backing one of six test cases that have been presented on behalf of victims to Mr Justice Burton, who will rule in the high court this autumn. If he finds for the insurers, thousands of mesothelioma victims could find themselves without compensation for their suffering.

This long-running war between victims and insurers has an unlikely new player: Warren Buffett, the richest man in the world, who will watch the results of the "trigger issue" case with interest. Next year, National Indemnity Company, a division of the billionaire's Berkshire Hathaway, will take control of an office in the City of London that is unable to respond to telephone inquiries and has only one full-time employee. This skeleton of a business is called Equitas. It was worth $8.7bn in cash and securities when Buffett took it over in 2006. It had been created a decade earlier by Lloyd's of London to solve a multibillion-dollar crisis in insurance: the overextended liabilities of Lloyd's Names.

 

Who is liable?

 

By the 1980s, the burden of asbestos-related insurance claims underwritten by Lloyd's Names had become so great that the Names were threatened with bankruptcy. Equitas was established to manage the liabilities. Nearly half its reserves are dedicated to asbestos reinsurance claims predominantly from the United States. Some experts considered even Equitas's billions insufficient to cover the insurers. Buffett's deal augments the fund by a further $7bn to cover any shortfall and the Names will heave a collective sigh of relief when the transaction is approved formally by the high court next year.

So, what is in it for Buffett? When the Financial Times first interviewed him about the proposed deal in 2006, he admitted: "It will be long after I am dead before we know the final answers on how it all works out." Meanwhile, however, he will gain access to some of the most capable reinsurance analysts in the world.

Geoffrey Tweedale, author of Magic Mineral to Killer Dust, comments: "The deal will only be profitable if Berkshire Hathaway can limit their liabilities." In other words, Buffett would have to limit payments to the insurers that compensate victims. Alistair Darling's "bonfire of red tape" announced in the last Budget will help.

In July, the Treasury amended the Employers' Liability Regulations to revoke the requirement for businesses to keep insurance records for 40 years. But, in asbestos-related cases, decades can pass between exposure and the development of the disease. Without records, victims may be unable to establish who is liable. Tony Whitston, who runs the Asbestos Victims Support Groups Forum UK, says: "It's a body blow to our groups who have to pick up the pieces when victims are unable to obtain justice."

The people of Rochdale have long experience of that.

Samuel Turner was a pioneer, spinning fireproof and corrosion-resistant textiles from Canadian asbestos on secondhand cotton machinery in the 1870s. From meagre beginnings, T&N grew to be the biggest asbestos conglomerate in the world, as well as a popular local factory.

Brian Penty worked at the site from 1963 until 1996: "There was a bowling green and Christmas parties for the kids," he explains. "It was a family thing. People never really took on board what was being said about asbestos."

Beneath the rosy tale of northern endeavour lurked a darker story. As early as 1898, government factory inspectors were warning that asbestos "easily demonstrated danger to the health of the workers". The T&N files first refer to asbestos cancer in Rochdale in the 1930s.

By 1947, the national factory inspector's report emphasised the incidence of lung cancer among asbestos workers but, astonishingly, no detailed research was undertaken by the government. Only in 1955 did Richard Doll, then a junior academic (and later famous for establishing the connection between tobacco-smoking and cancer), complete an epidemiological study in Rochdale which established the link between asbestos and cancer. He had been approached by T&N but the company initially refused to allow him to publish the findings. Later T&N persuaded its own scientist, Dr John Knox, to draft a paper discrediting Doll's work. Knox encouraged academic scepticism about asbestos diseases but clearly knew there was a problem. He regularly X-rayed employees and when the results showed them developing signs of disease moved them to less dusty jobs. They were not told why.

The signed witness statement of a worker who later died states: "They did not say in 1974 that I had asbestosis but I expect there was something on my X-ray which made them think it was time I came out."

And Brian Penty remembers a so-called "blood pressure survey" in 1982: "They actually drew blood. A couple of years later I was at my GP's surgery - he'd been sent the results. Apparently they were testing for asbestos in my bloodstream."

In public, T&N strove to be portrayed as a responsible employer. In 1944, a manager of the plant wrote to factory inspectors: "In a number of cases we make ex-gratia payments in addition to the statutory compensation. Where an employee has no standing for some technicality we pay compensation, as it appears desirable to deal with the problem on broad lines, and not to rely on some legal point in our favour."

Yet, when the first official asbestosis victim, Nellie Kershaw, died in 1924, the firm wrangled about paying compensation to her bereaved family. Finally they decided not even to contribute towards funeral expenses since, as one company manager warned, it "would create a precedent and admit responsibility". She was buried in an unmarked grave.

 

The T&N archives are full of death certificates of former employees, placed with internal correspondence never disclosed to grieving families. The official cause of death attributed to Edna Penham, a 64-year-old asbestos stripper at T&N, for example, was peritonitis. The company's personnel manager noted that his records showed she was "40 per cent disabled due to asbestosis", though there was no reference to this on her death certificate. It appears the coroner did not know. There was no inquest.

 

Keeping quiet

 

Eventually T&N employed the insurance giant Commercial Union to administer a fund for diseased employees. Geoffrey Tweedale found examples of former employees being placed under surveillance by the firm - desperate not to be held liable. Company policy appeared to be to mislead coroners' inquests, pay compensation only if forced and avoid payouts that might create precedents.

In 1964, T&N solicitors warned the directors: "We have, over the years, been able to talk our way out of claims but we have always recognised that at some stage solicitors of experience . . . would, with the advance in medical knowledge and the development of the law . . . recognise there is no real defence to these claims and take us to trial."

The company found government representatives only too pliant. One medical adviser is recorded as advising T&N to keep quiet about the cancer dangers of their product. In correspondence between two directors of the plant, the opinion of Professor Archie Cochrane, director of epidemiology at the Medical Research Council, was noted: "In tackling a problem of this nature [mesothelioma] one should either be completely frank with everyone or maintain complete secrecy - it is the latter that he feels is best at the moment."

In 1968, T&N circulated a confidential five-point plan entitled "Putting the Case for Asbestos". Drafted by the international PR firm Hill & Knowlton and designed to enable staff to field questions about asbestos cancer, it began, in capital letters: "Never be the first to raise the health question."

When government departments did raise questions about the safety of asbestos, the Board of Trade intervened, arguing that any suggestion that asbestos presented a danger would damage British jobs. So, the sale of asbestos products continued to grow in the UK throughout the 1960s and 1970s.

T&N also relied on the assistance of Cyril Smith, the larger-than-life Rochdale MP and parliamentary pioneer of the Saturday-night television chat-show sofa. During the summer recess of 1981, Smith wrote to Sydney Marks, the head of personnel, informing him that the House would debate EEC regulations on asbestos in the next parliamentary session.

The letter asks simply: "Could you please, within the next eight weeks, let me have the speech you would like to make (were you able to!), in that debate?"

T&N's draft is almost identical to the speech delivered by the Rochdale MP, stressing the need for less regulation and arguing that substitutes for asbestos should be approached "with caution". "The public at large are not at risk," said Smith. "It is necessary to say that time and time again."

Writing in the local paper, he claimed to have "worked very hard on the speech and have spent hours, both in reading and in being at the works, trying to master the facts about safety in asbestos".

A year later he declared 1,300 shares in the company. Six months after that J B Heron, the chairman of T&N, wrote to Smith again, thanking him for his assistance with the Commons select committee meetings which followed Alice, a Fight for Life, the Yorkshire Television documentary that highlighted the plight of T&N employees.

When last month the New Statesman approached Smith for a comment, he said: "If you've got the documents, it is all true."

 

Some may receive nothing

 

By 1999, the game was up for T&N when the European Union banned the import and production of asbestos throughout the EU. But with the factory's demise came the greatest in justice of all. In the UK, neither T&N nor its insurers faced substantial product liability claims or decontamination costs. Instead, the company was purchased by Federal-Mogul, a US company which later declared Chapter 11 bankruptcy - a status that ring-fenced its compensation liabilities.

With the company protected from its creditors, a UK-based T&N asbestos compensation scheme of just £100m was established by Federal-Mogul's UK administrators.

Those who, like Derek Philips, may have been victims of environmental exposure at T&N's factories may end up receiving little or nothing.

"The hardest thing," says David Cass, a solicitor specialising in compensation for mesothelioma victims, "is having to tell people who walk into my office, 'I won't get you an apology.'"

Who is left to provide one? T&N is now a shell. The civil servants and politicians who failed to regulate the industry are no longer in post; the insurers who took on the liabilities are long retired. They cannot account for their decisions now. But we will live, and many will die, with the consequences.

 

 

 

Asbestos: the killer facts

 

 

 

1

asbestos is the single greatest cause of work-related death in the UK

4,000

number of asbestos-related deaths in the UK in 2005

79

number of teachers who died from mesothelioma between 1991 and 2000

13,000

schools in Britain may have been built using asbestos materials

60

number of years after exposure to fibres it may take for an asbestos-related disease to manifest itself

25%

of victims of mesothelioma work in the building or maintenance industry

2.2 million

tonnes of asbestos were mined worldwide in 2005

Research: Adam Lewitt

 

     

    This article first appeared in the 01 September 2008 issue of the New Statesman, The truth about GM food

    MILES COLE
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    The new Brexit economics

    George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

    George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

    Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

    To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

    In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

    Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

    ***

    The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

    In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

    By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

    Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

    Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

    It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

    An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

    The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

    ***

    In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

    Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

    In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

    Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

    It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

    Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

    As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

    It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

    Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

    Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

     Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

    This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt