Beleaguered sadness, increasing desperation and the invisible population of our streets

You probably feel guilty when you see a homeless person, but don't know what to do for the best. Now, you can call Streetlink and they will work with local services to get the person off the street and into accommodation.

Two weeks ago, I was walking to work, head down, lost in my thoughts. Suddenly an angry, exasperated voice burst through my reverie.

"Mate! Go the other fucking way."

I looked up. It belonged to a policeman. He was a yard or two away from me, on the other side of some blue tape, which had been used to cordon off an alley I walk through to get to the tube station. I'd managed to stumble into the middle of what appeared to be a crime scene.

I stuttered an apology, and turned off down another alley. But my route to the tube meant I had to walk past the taped-off area from the other side, by the main road.

There were four or five officers there, and behind them, an engrossed crowd of 20 or so people. The officers were surrounding an elderly figure on the floor, and one of them was on his knees, frantically applying CPR to the chest. It was one of the homeless people who sometimes congregated in the alley. I walked past them most days, but they never seemed to notice me. And I, like most people who've lived in London a long time, barely noticed them.

It was bitterly cold. I looked at the officers. They gave off a strange mix of detached professionalism and beleaguered sadness. It struck me how young they all were. The officer kneeling over the body pumped at the chest with increasing desperation. The others watched him intensely. I, and the rest of crowd, were gripped by a strange consensus. None of us could help. In twos and threes, we drifted away. About suffering, they were never wrong, the Old Masters.

*

Like nearly half of all adults (according to research recently carried out by Homeless Link, the umbrella organisation for rough sleeping charities), I feel guilty when I see a rough sleeper, but I struggle with the perennial problem: you give money, you know it might well go on drugs or drink. So you do nothing; and feel bad.

Tucked away behind Shepherd's Bush Market is a shelter run by the charity Broadway. At 10am, a crowd of rough sleepers gathers outside. The mixture is diverse - many have the familiar scarred faces and tattered clothes of long-term drink or drug addicts; others are less conspicuous. There's a mix of ethnicities - most seem to be British, but there are some eastern Europeans and a couple of African origin. Once they're let in, they have access to a range of services from a hot cup of tea to medical help, various classes and counselling with drug and alcohol problems. Next to the centre is a hostel, where those who are getting ready to move back into permanent accommodation can stay.

I was here to learn about a new initiative to help rough sleepers, and I was introduced to Shaun Collins, a 53-year-old man, originally from Grimsby, who was one of its first beneficiaries.

Back in 2010, Shaun was a skilled labourer on construction sites. He met a girl, and a year later they were married. A few months after that, she told him she wanted to separate. It turned out she'd been living in the country illegally and had only married him for a passport. He was devastated. He moved out, first into a bedsit and then in with a friend. It didn't help: Shaun's friend was a big drinker, which didn't help him given how depressed he felt. He drank more and more to numb the pain, and ended up sleeping in a church yard in Barking. Pretty soon he was drinking just so that he could get to sleep outdoors.

One night three men approached him. They were wearing hoods and scarves over their faces. They tried to rob him, but he didn't have any money, so they to the floor and kicked him repeatedly. After they'd finished, Shaun phoned for an ambulance, which took him to Newham General Hospital. One of the paramedics asked Shaun what he'd do next - Shaun told him he was going back to the church. Upon his arrival, a man and a woman met him; they told him they had somewhere warm for him to stay.

The place was No Second Night Out in Islington. "It was so much better," says Shaun. "It was warm, there was tea, coffee, soup, a television - I was there for three weeks. Then they moved me into a staging post while I tried to sort out a permanent place. In the churchyard I was constantly depressed. Now I can finally see some light at the end of the tunnel. Once I've sorted out my divorce I can get my head together and get back to work."

Shaun received the help because the ambulance driver had called StreetLink, a new hotline which enables members of the public to connect with local advice and services. The London version of this service, set up in April 2011, led to nearly 2,000 calls being made to the helpline and 415 rough sleepers being helped off the streets and into accommodation in the first six months - a rate of success four times higher than traditional services.

This week it was launched nationwide. The idea is simple: save the number (0300 500 0914) in your phone, and call it when you see a rough sleeper. You give the telephone worker a description of the person and their location. They will then get in touch with the council or a local homeless service to visit the person and provide support. If requested, StreetLink will give the person who made the call an update on what's happening 10 days later.

*

After years of decline, the problem of homelessness is getting worse. According to Homeless Link, the number of people sleeping rough grew by more than a fifth last year. There has also been an increase in the number housed in temporary accommodation and in B&Bs, and as I wrote about recently, a 34 per cent increase in people housed in a different local authority.

The reason for this last issue is highlighted by the latest development in Shaun's tale. People have to be housed in the private sector due to a lack of social housing, but prices are high and quality is low. He says:

"When they gave me a list of phone numbers I phoned an agent up, and he put me onto a place in Hackney. It was terrible. There was a fridge and just two hob rings to cook on. There's five studios in the same building, the front door had been kicked in twice, it was filthy. They were charging £240 a week. But I only get £170 from a private pension."

Shaun went to the council's offices. "The man there told me I'd have to pay £55 towards my benefit and another £35 to council tax. That means the Government expects me to live on £71 a week. I said to the man behind the desk, I worked for 30 years, I'm going through a hard time - do you think £71 a week is fair? He didn't have an answer." Now he's waiting to hear back from another letting agent, whom he says has £100 of his money and isn't answering his calls. Broadway is working with him to resolve the issue.

StreetLink is a Government-funded initiative. I spoke to Howard Sinclair, Broadway's CEO, and put a question to him: if the likes of Shaun are successfully brought in from the streets but then find themselves confronted by problems like this, is the hotline little more than a sticking plaster?

"No," he says, "It's absolutely not. There have always been three prongs to the way we reduce homelessness. The first is prevention - helping with family breakdown, mental health, stopping people taking out pay day loans; these sorts of things. The second is getting people in housing as soon as possible, so that they don't end up in the entrenched patterns of behaviour that keep them on the streets. That's where StreetLink and No Second Night come in. And the third is helping people back on their feet once they've lost their tenancy. To invest in one simply isn't sufficient, but the Government - especially Grant Shapps and the Mayor's Office - still deserve big ticks for the funding they've given projects like StreetLine."

Sinclair is open about the difficulties people in Shaun's position face:

"We're seeing so much of what he describes in Hackney. In fact, Hackney Citizens' Advice Bureau recently found that only 10 per cent of private lets are affordable on local housing allowance, and only 10 per cent of those had landlords willing to rent to people on benefits. So one per cent of borough's housing is available to someone like Shaun. It won't be good housing. This is the result of successive governmental failures."

And he adds:

"On top of this, while we haven't seen that many obvious signs of cuts, like hostels closing down, there has been a real cutback in less visible services, such as floating mental health teams. The reality is that local authorities have to make cuts, and those are the easiest to make. For our clients it's not just about putting a roof over their head - it's about dealing with things like drugs, drink, mental health issues - so the stress caused by little things like increased transport and heating costs all interact. The group with which we work will all be affected by the changes to benefits - for you and me it's a fiver here and there: for someone on £70 a week it's four per cent of their income. The cost of not putting in preventative measures is far higher in the long term."

I ask how we can stem the increasing flow of people onto our streets. He feels the way StreetLink was implemented could be a model:

"Here local and central Government and the charities worked in partnership. A national helpline, but local teams to deal with the problem. That's how problems get solved: when the various sectors cooperate, identify the issues and play to their strengths. If I look back 25 years ago, I'd go out in Piccadilly and see people sleeping rough all over the area. Today you don't see the numbers you used to. Partly, that's because there's more money in the system. But more importantly, the various sectors had a common recognition of the problem, and there was leadership from successive governments. This Government has shown leadership on the measures required to help people who are on the streets. Now it needs to show the same on preventative measures."

I conclude by asking him the same question I always ask people who work in this sector. Would he give money to a rough sleeper? "No one has the authority to tell anyone else how to spend their money. But I know what I would do personally. I'd give them a hot drink, and some time for a chat." It's a response I think about later that day, as I walk through the now-empty alley that leads to the tube station.

 

A homeless man rests in the doorway of a branch of a Lloyds Bank in central London. Photograph: Getty Images

Alan White's work has appeared in the Observer, Times, Private Eye, The National and the TLS. As John Heale, he is the author of One Blood: Inside Britain's Gang Culture.

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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?