Why is the American right closing prisons?

In the US the tide on criminal justice reform has started to turn as conservatives recognise the huge inefficiency of the prison system. Could the same happen here?

Characteristically liberal policies that would be dismissed out of hand by right-wing commentators in Britain, such as keeping non-violent offenders out of prison and investing in rehabilitation in the community, are all the rage on the US right right now.

The Republican Governor of Texas has scrapped plans to build three new prisons, saving $2bn. This money has instead been reinvested in treating offenders with mental health and addiction problems. The state has reduced its prison population by 6,000, while keeping crime at historic lows.

The Republican Governor of Georgia has signed legislation that will reduce the number of low-level drug possession offenders in prison and expand the use of drug courts, which help treat addicts and hold offenders to account in the community.

And the Republican Governor of Pennsylvania has signed a law directing low level non-violent offenders into community supervision, which is set to save the state $250m over five years. Similar reforms have been adopted by Arkansas, Kentucky, Michigan, Missouri, New York, North and South Carolina, Oklahoma and South Dakota.

So, why are Republicans across the US pursuing what on the face of it are liberal policies on crime and punishment? The first reason is that many on the anti-state libertarian right look in horror at the amount of money being spent on the prison system. The US prison population has risen at a phenomenal rate, from 338,000 in 1970 to 2.3m today. In 2012, the states spent $54bn on prisons. In state budgets, one out of every $14 went to corrections, which employed one of every eight state workers. As budgets have tightened, other important functions of government have been squeezed to pay for this.

At the same time, many US conservatives have come to recognise that prison is ineffective at rehabilitating offenders. Half of prisoners released are expected to be back in prison within three years. Many Christian conservatives have come to see prison as a particularly poor method of achieving redemption for crimes committed.

So, what can we take from this for our own debate on criminal justice reform? The US debate clearly needs to be understood in context - the US is not Britain. For example, evangelical Christians and low tax libertarians play a much stronger role in the Republican party than they do in the Conservative party in this country. Also, the US prison population and levels of overall expenditure on it dwarf those in Britain.

Nevertheless, the shift in the US debate provides some useful lessons for those of us who wish to see a smarter debate about crime and punishment in this country. It shows that there are good conservative grounds for being sceptical about the use of prisons, some of which are reflected in the work here carried out by the right-leaning Centre for Social Justice, and indeed in some of the reforms introduced by the coalition. This opens the way for an alliance between conservatives and the liberal centre left on criminal justice reform.

It also shows how important it is on the question of crime to use conservative language even when pursuing progressive ends. Majority opinion on crime in Britain is essentially communitarian rather than liberal: people want to see breaches of widely shared social norms properly punished and are unsympathetic when it comes to issues such as conditions in prison.

However, people can also see that it is a colossal waste of public money to send tens of thousands of low level offenders into prison only to see them come out and reoffend. They want to see prisoners work hard in prison, rather than sitting around in their cells all day which is what most do at present. This means an emphasis on productive work and education, which liberal prison reformers have been advocating for years.

For years British politicians have looked across the pond for ideas on how they could be ever more 'tough on crime', which has fed into our escalating prison population. In the US the tide on criminal justice reform has now started to turn. Is it too optimistic to hope that, on this issue, where it leads Britain might follow?

California's Department of Corrections officer looks on as inmates at Chino State Prison exercise in the yard. Photograph: Getty Images.

Rick Muir is director of the Police Foundation

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation