Leveson's purpose is to give ordinary victims fair redress against the media

Beyond the celebrities and politicians, there are ordinary people who often find themselves in the glare of the media through no fault of their own.

At the heart of the Leveson report is an indictment of some of the past practices of parts of the press when it came to their treatment of ordinary people. Not celebrities or politicians but ordinary people who have, often for reasons entirely out of their control, suddenly found themselves in the media glare. In some of these cases, Leveson writes "there has been a recklessness in prioritising sensation stories, almost irrespective of the harm that the stories may cause and the rights of those who would be affected (perhaps in a way that can never be remedied), all the while heedless of the public interest."

The judge cuts through the misleading impression that his inquiry was somehow about protecting the private lives of public figures, as some newspapers have claimed. He has made recommendations on the basis of evidence that a range of titles – not one rogue newspaper – were found to be routinely ransacking the lives of ordinary people with no suggestion of a genuine public interest, or any consideration for the repercussions on people’s lives. He references phone hacking, email hacking, covert surveillance, blagging, deception, harassment, blackmail, combined with a "reckless disregard for accuracy".

In some instances, this was abuse of power against ordinary people on a grand scale. There are, the Metropolitan Police now say, over 2,500 victims of phone hacking. The Dowlers and others who gave evidence to the inquiry were the tip of the tip of the iceberg. There are the victims of the 7/7 bombing – including Professor John Tulloch and Paul Dadge (both praised for their heroism at the time); the bereaved families of victims of Iraq and Afghanistan; the parents of Holly Wells and Jessica Chapman (murdered in Soham); people in the Witness Protection Programme. All allegedly hacked.

Then there are the hacking stories that have hardly been told. Patricia Bernal, the mother of Clare Bernal who was shot by a stalker in Harvey Nichols in 2005. Her phone was reportedly hacked the same day her daughter was shot. Jane Winter (director of British Irish Rights Watch) whose emails, which included names of Northern Irish people whose exposure could put their lives in danger. Shaun Russell, whose wife and daughter were murdered in 1996. Christopher Shipman, son of serial killer Dr Harold Shipman. Tom Rowland, freelance crime reporter. Joan Smith, journalist and free speech campaigner. All allegedly hacked.

Neither was this simply about hacking. There was also a thriving illegal trade in other personal information, as revealed in two 2006 reports by the Information Commissioner’s Office. These reports, which identified national newspapers as some of the biggest players in this trade, also made very clear that this was not just about celebrities or public figures. The private investigator employed by the newspapers was asked to go for anyone even connected to a story:

A few of the individuals caught up in the detective’s sights either had no obvious newsworthiness or had simply strayed by chance into the limelight, such as the self employed painter and decorator who had once worked for a lottery winner and simply parked his van outside the winner’s house. This group included a greengrocer, a hearing-aid technician, and a medical practitioner subsequently door-stepped by a Sunday newspaper in the mistaken belief that he had inherited a large sum of money from a former patient. (from What Price Privacy, p.17).

The ICO has still not released the details of individual cases from the reports, but some of the names have been published. We know for example, that those people targeted included the families of Aimie Adam and Matthew Birnie, children shot at Dunblane; the families of Jessica Chapman and Holly Wells, murdered at Soham; Frances Lawrence, widow of Philip Lawrence, the headmaster stabbed outside his school; and Pam Warren, survivor of 1999 Paddington rail crash.

Those who dismissed the ICO reports as historic are reminded in the Leveson report of some of the victims of press abuse since then. Abigail Witchalls was stabbed for no reason in April 2005 while walking with her 18-month-old child. She was then harassed by the press while in hospital and highly personal information discovered and published without permission (including the news – which was not public – that she was five weeks pregnant). Robert Murat, who tried to help the police and press during the Madeleine McCann case in 2007 and was grossly defamed as result. Parameswaran Subramanyam eventually gained apologies and damages from the Daily Mail and the Sun in 2010 after both papers falsely accused the Tamil protestor of breaking his hunger strike in Parliament Square to eat burgers. Before winning his case he was ostracised by the Tamil community and contemplated suicide. Rebecca Leighton was wrongly alleged to be the "saline serial killer" by a number of papers, lost her job in nursing and was virtually unable to leave her home. In 2010 Christopher Jefferies endured trial by media for a murder he did not commit. In 2012, while the Leveson Inquiry was going on, the Bowles family, whose 11-year-old son was killed in a bus crash in Switzerland, were intruded upon and harassed, despite appeals to the press for privacy. This, the report makes clear, was not historic.

There are many other cases Leveson did not have space, even in his 2,000 page report, to mention. Sylvia Henry, a social worker, was wrongly accused of being negligent in the Baby P case, and, as a consequence, was banned from carrying out child protection work. Elaine Chase, a paediatric community nurse, was falsely accused by the Sun (on the front page and inside) of hastening the deaths of 18 terminally ill children by over-administering morphine.

These and lots of other ordinary people have variously been wrongly accused, misprepresented, hacked, harassed, monstered. Newspapers have, with notable exceptions, failed to report on many of the ordinary victims of press abuse, and have left it to Lord Justice Leveson.

The judge has, in a measured and proportionate way, sought to make sure these people had some access to fair redress. When the Prime Minister enters cross-party talks on the Leveson report, before he leaps to any more conclusions, he should dwell on the reasons why this inquiry happened in the first place.

Martin Moore is the Director of the Media Standards Trust

The Leveson report. Photograph: Getty Images
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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?