Home Secretary Theresa May wants to expand powers to remove UK citizenship. Photo: Getty
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Theresa May's citizenship-stripping proposal is worse than medieval banishment

The Home Secretary should remember the US Supreme Court's description of making someone stateless: "a form of punishment more primitive than torture".

In medieval England, those who had been forced to “abjure the realm” and go into exile would be required to walk barefoot, carrying a wooden cross, to the nearest port.  There, they were to take passage on the first available ship; until they were able to do so, they had to wade, daily, into the sea, as testimony to their willingness to leave the country.

This specific provision is absent from the Home Secretary’s proposed expansion of her powers to arbitrarily deprive Britons of their citizenship – expected to be considered again by MPs this week.  But the echo of the medieval punishment of banishment in the modern measure of ‘citizenship-stripping’ is impossible to ignore. It has perhaps been best summed up by the Supreme Court of the United States, which has described the practice of making someone stateless by removing their citizenship as “a form of punishment more primitive than torture.”

And in some ways, the modern procedure of which Theresa May is so fond is worse than its centuries-old equivalent.  By and large, those medieval unfortunates forced to abjure the realm were not at risk of further punishment from the state provided they stayed out of the country.  The same cannot be said of those who have been deprived of British citizenship under the current government's existing, limited powers, which they are currently seeking to expand.  According to the Bureau of Investigative Journalism, of the estimated 37 people who have had their passports torn up by the current British Home Secretary, two have so far been killed in covert US drone strikes, and one has been kidnapped and “rendered,” also by the US. 

Conveniently for both governments, the removal of British nationality from these people means that the obligations on the British authorities – in terms of the provision of consular services to those detained, or the carrying out of an inquest into the deaths of those killed overseas – are lifted.

As leading lawyer Baroness Kennedy QC put it during the Lords debate on these proposals, contained in the Immigration Bill:

“Is... the purpose of this change of law, that we might be able to do things that make people vulnerable and deny them their rights, creating yet more black holes where no law obtains but where we cannot be accused of complicity?”

Notably, this was not a question to which the government minister responded.  Despite a growing body of evidence demonstrating the UK's involvement in CIA activities ranging from rendition and torture to the covert drone programme, the British government – on the grounds that it must avoid at all costs embarrassing its US ally – has refused to come clean over its role in any of them. 

This way of thinking is not limited to parliament – it has also infected the British Courts.  Last year, a High Court judge told one of the victims of CIA torture that although he had a “well-founded claim,” he should not be allowed to pursue his case for fear of damaging UK-US relations.

Meanwhile, on the covert drone programme, despite a wave of reports demonstrating that the UK supports it by providing everything from intelligence to crucial infrastructure at US bases on British soil, UK ministers have stonewalled, refusing to go any further than the bland statement that “the use of unmanned aerial vehicles against terrorist targets is a matter for the states involved.”

The picture that emerges from all this is of a Britain which is prepared to take measures that even the US has long determined to be beyond the pale.  It is worth returning here to that US Supreme Court ruling mentioned above, which railed against “subject[ing someone] to banishment, a fate universally decried by civilized people,” and making them “stateless, a condition deplored in the international community of democracies.”

Home Secretary Theresa May's measures – which would lift the ban on depriving someone of citizenship, even where doing so would render them stateless – were defeated in the Lords last month.  But the government is expected to seek their return in the Commons this week.  Aside from putting Britain beyond the “civilized... community of democracies,” in the US Supreme Court's words, they will open up many millions of Britons to the threat of the arbitrary loss of their citizenship, and, potentially, leave them vulnerable to the lawless excesses of the ‘War on Terror’: kidnap or death by drone.

It seems safe to say that the sight of would-be exiles wading into the sea at the Channel ports is not set to return.  But the arbitrary nature of these powers, which allow the Home Secretary to act without any legal process and without any crime having been committed, would be all too familiar to the medieval despots of this country’s past.

Donald Campbell is Head of Communications at Reprieve

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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?