Victims of trafficking are failed by our state-led approach

The reliance on state actors to deliver support is inadvertently compounding the suffering experienced by some of the most vulnerable people in the UK.

Faith travelled to the UK aged 14 with a couple who had promised her parents that she would support her. When they arrived she was locked in the house and made to work day and night for no pay. She was raped by her exploiter and made to have sex with other men. Her trafficker told her that if she went to the police they would put her in jail.

After a number of years she escaped when a door was left open. She saw a policeman but hid until he passed. Instead she approached a woman on the street. She stayed with her for a while however after being abused she escaped again and stayed on the streets for a period. Help came when she befriended a woman at a local church. After telling her about her experiences the woman told her about a local support group who in turn encouraged her to approach the police. Four years after coming to the UK she approached the authorities and told them about her experiences. Her trafficker has never been identified.

Faith was one of the women who participated in IPPR’s in-depth case study report on human trafficking between Nigeria and the UK. In 2011 alone, over two thousand potential victims of trafficking were identified in the UK. Despite notable efforts by government, border officers and police, human trafficking is a crime that the UK is not getting to grips with. To start to do this, we need to acknowledge that state- led approaches alone cannot combat trafficking.

People who have escaped trafficking need to be supported. A lack of alternative support (whether real or perceived) was a key reason given by trafficked people for staying with their traffickers and exploiters. Even if they did manage to escape from their initial situation, without adequate protection people are vulnerable to further trafficking and abuse. Many exited one trafficking situation only to enter into another. Some were caught by their trafficker, others were ‘rescued’ and then re-trafficked into another situation. Others entered into informal support that was highly exploitative; including abusive relationships or support where they were obliged to offer sex or servitude to their hosts in return. Furthermore, with no access to safe support, our research was clear that trafficked people will feel less confident to pursue the prosecutions of traffickers. Addressing these issues is difficult. Trafficking victims need and deserve support, but too often their irregular immigration status prevents them from receiving it.

Perhaps acknowledging this, the UK has invested in systems to identify victims of trafficking. A process has been put in place to identify whether someone has experienced trafficking (the National Referral Mechanism or NRM, hosted within the UK Border Agency). Agencies including the police and border officials have received training in spotting signs of trafficking. Last week, the government announced that this training will be further rolled out to other professionals including social workers and GPs.

All this is welcome, but the government needs to broaden its approach. Part of the problem is that state-led solutions alone are unlikely to ever deliver a full and effective response to protect trafficked people. Due to the hidden nature of exploitation none of the forty people who participated in our research were referred into support as a result of a ‘raid’ by the police. Whether due to experiences in Nigeria or the threats of traffickers, people interviewed were afraid to seek support from authorities such as the police, border agents or social workers. Very few approached the police themselves and some actively avoided them. Instead they sought support from members of the public or people in community spaces such as churches. Critically, those they sought support from also lacked confidence in the authorities and many advised against approaching them. Often, interviewees only came forward when they came into contact with a trusted member of their community who was able to refer them into official support. By this point many were in detention, prison or had experienced lengthy periods of abuse.

Delivering training to frontline services in identifying trafficking is an important step. However, our research shows that we must go beyond state agents and ensure that the people in communities that victims of trafficking seek support from are equipped to help them. This means delivering training to people in community settings such as churches and community groups on the laws on trafficking in the UK, the support available and the routes into support. The voluntary sector also need to be involved. Finally, in order to ensure that people will engage with official agencies, the government need to make the NRM independent of the immigration system.

The reliance on state actors to deliver support is inadvertently compounding the suffering experienced by some of the most vulnerable people in the UK. We must recognise the importance of engaging communities in the response against trafficking in order to ensure trafficked people can access the help they need.

Jenny Pennington is a researcher at IPPR

Posters are displayed in Quezon City suburban, Manila, as part of the annual observance of International Day against Human Trafficking. Photograph: Getty Images.

Jenny Pennington is a researcher at IPPR

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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?