The roots of the rough sleeping crisis

Emergency shelters opened up across London this weekend as the mercury dropped and the risk of death for those sleeping rough on the capital’s streets rose.

The government last month announced more funding for shelters and specialist support in cities across England. It is implementing a £100m rough sleeping strategy.

There are signs that politicians have belatedly woken up to the national rough sleeping crisis.

But have they woken up to the causes of it? The government’s own figures suggest the numbers sleeping rough have more than doubled since 2010, rising to almost 5,000 in 2017.

And the estimates for 2018, due later this month, are expected to show another sharp increase.

The response of the housing secretary, James Brokenshire, has been to argue that rough sleeping is a “complex” issue. And in one sense this is obviously true. As charity workers and other experts attest, rough sleepers tend to have overlapping and interacting problems, from family breakdown, to bereavement, to mental health issues to drug and alcohol addiction.

Yet there’s also a danger of over-complicating things. While the individual cases are idiosyncratic, the sharp overall rise in recent years suggests a common factor.

“Sanctions” for those claiming jobless benefits who fail to cooperate with the state’s efforts to ease them into work have been around for decades. But the coalition cranked up sanctions in 2012, making the penalties for non-compliance more severe.

And these sanctions are likely to be responsible, to a significant degree, for the surge in both homelessness and rough sleeping across the country.

A study by Sheffield Hallam University researchers in 2015 found around a fifth of the people using homeless services had been put in that position directly because of these new benefit-withholding penalties.

Iain Duncan Smith, the former work and pensions secretary, described the jacked-up sanctions system as a way of ending “the something for nothing” culture.

The six-week wait for new universal credit claimants is a decision that could only have been made by those ignorant of the cash flow problems it was likely to cause

But a comprehensive independent evaluation of the regime last year found they were ineffective at getting claimants into work and were more likely to push people into “avoidable crises relating to worsening mental and physical health, poverty, hardship, unmanageable debt, insecurity or eviction”.

The conviction that what jobseekers needed was more stick was, to put it mildly, out of touch.

Speaking of out of touch, last month the former chancellor George Osborne dismissed the suggestion his austerity policies had been in any way responsible for the spike in rough sleeping.

Yet the National Audit Office noted in 2017 that the government has not launched an official evaluation of the impact of its welfare reforms, more broadly, on homelessness. Perhaps ministers are afraid of what the conclusion would be.

A broader lesson is the danger when administrative changes impacting the lives of those who are extremely financially vulnerable are taken by those who are, themselves, not financially vulnerable, or have scant experience of poverty.

As with the six-week wait for new universal credit claimants – which Iain Duncan Smith now says was a stipulation of the Treasury – this is a decision that could only have been made by those ignorant of the cash flow problems it was likely to cause.

America last week witnessed the swearing in of the most diverse Congress in the country’s history in terms of ethnicity, religion, sexual orientation and gender.

These kinds of diversity among lawmakers are undoubtedly important. But, as events closer to home demonstrate, diversity of financial background is also valuable.

There is, of course, no guarantee that policymakers and MPs with direct personal experience of the details of the benefits system would not inflict the kind of unnecessary damage we’ve seen in recent years.

But it’s a line of defence we should welcome, in any kind of weather.

#benefitsanctions #homelessness #roughsleeping

Financial volatility matters less than we're told

Stock markets have been up and down like Santa in the world's chimneys this Christmas.

After taking a record unfestive pummelling on 24 December, American shares experienced a record oneday gain on Boxing Day. It's a fitting way to end a year that has been characterised by an unusual level of financial volatility.

The MSCI World Index covers most of the developed world's largest listed companies. It raced up in January to a record high. But since then the index has shed around a fifth of that value.

And consider some of the constituents of such indexes. Apple crossed the $1 trillion (£790bn) valuation threshold in August, becoming the first listed company ever to do so. But four months on and the iPhonemaker is worth "just" $740bn. On 26 July Facebook's shares dropped by 20 per cent. That translated into a paper loss of $120bn - the worst day of value destruction suffered by a single company in US corporate history.

The global oil price has bounced around wildly too this year. In October it hit a four-year high of $86 a barrel, prompting concerns about a potential surge of global inflation. But now, within a few months, the black stuff is back down to $54 a barrel.

Sterling peaked at $1.43 in April, up from $1.34 in January. Now the pound languishes at a measly $1.26, beaten down by fears of a no-deal Brexit.

An honorary mention is due to bitcoin. The original cryptocurrency shot up at the start of the year to $17,500. Now one unit trades for only $3,600.

Why does this kind of financial volatility - these surges and slumps in prices - matter? Perhaps it seems obvious. If you own something and it halves in value that's likely to be alarming, not to mention expensive. If you're going abroad on holiday you obviously don't relish discovering that the value of the currency in which you are paid has fallen by a tenth.

Perhaps it might even be ruinous if you were planning on selling a financial asset to realise the cash for something important such as paying off a debt that's falling due. Those who have borrowed in dollars and invested in bitcoin are unlikely to have had an enjoyable year. If you were planning to retire in 2019 and your pension has collapsed in value over the past 12 months you can also see the problem.

But all these examples assume the investor needs to realise the cash imminently. If you're saving for retirement several decades hence, even a 5 per cent daily swing, like the one we saw in US stocks on Boxing Day, is really neither here nor there.

What about the real economy? It's true that financial volatility can damage a normal business, perhaps even ruin it. Think of a goods importer that sees its import costs go up due to a currency slide. Think of a small oil driller that watches the value of the black stuff suddenly plummet. When those companies expire their workers can lose their jobs and livelihoods.

But it's necessary to separate out the micro from the macro. At an economy-wide level, idiosyncratic shocks will tend to balance out in the medium term. Sharply lower energy prices are bad for energy producers but good for energy consumers. A cheaper currency can be bad for importers but can be beneficial to exporters. A currency plunge certainly harms living standards by pushing up inflation. But the impact of a revaluation on prices is temporary if it's a one-off, as we've seen since the Brexit vote.

Some economists, such as Roger Farmer, think stock market crashes lead to domestic recessions. But the causality of that relationship is disputed. And as the Nobel economics laureate Paul Samuelson caustically observed, "The stock market has predicted nine of the past five recessions."

It would be fatuous to argue that financial market volatility doesn't matter at all for ordinary people. Yet it matters rather less than we're sometimes led to believe by the noise of excited speculators and the dramatic media headlines. Sometimes it's better not to pay too much attention to the puffs of smoke emitted by the chimney of markets.

#financial-markets, #RogerFarmer, #stock-market, #volatility

Could 'peak stuff' be in sight this Christmas?

Many parents of small children will be familiar with the depressing Christmas Day rubbish routine.

Presents are unveiled. The paper is eagerly ripped off. And packaging starts to accumulate around your ankles at such a rate that you start to empathise with those flood victims you see on TV wading through their own living rooms.

Disposing of the mountains of trash that are the by-product of the joyful gift unwrapping is as much a part of the festive workload as peeling the potatoes, keeping relatives refreshed and sweeping up the tree's pine needles. It's estimated we collectively throw out around 100 million black bin bags full of packaging at this time of year.

It's not a new observation of course, but nothing illustrates our materialist and ecologically insouciant economy quite like Christmas.

But is change, along with sweet notes of carollers and the whiff of mulled wine, in the air this year? One of the eye-catching business stories last week was the profit warning from the previously unstoppable online fashion chain Asos.

We all know that traditional bricks-and-mortar retailers are, as Mike Ashley put it recently, being "smashed to pieces" by savage trading conditions. But their market share was, we thought, being devoured by the internet players. Yet if the online leviathans like Asos are suffering too could that mean that we're collectively simply buying less than we used to? Will we look back on the Christmas of 2018 as the moment where we reached a "post-consumer moment"? Let's reserve judgement on calling that one until we see the retail sales figures for the end of the year.

"Peak stuff" has been called before only for us to discover that "stuff" was only, in fact, taking a breather.

There's been no dip in the upward growth trajectory in UK retail sales since Ikea's head of sustainability said we'd reached the top of the western physical consumption market in 2016.

Yet that doesn't invalidate the concept. Maybe it's just a question of timing. After all, it's manifestly true that the rise of the digital economy makes the possibility of less stuff than before feasible.

There's no need to buy DVDs or CDs anymore in the era of downloads and streaming. We can read a whole library of books on a single tablet. And Independent readers don't need to be told that no one needs to hold slices of dead tree in their hands any more to consume a newspaper.

Presents, even Christmas ones, don't need to be manufactured. We can gift "experiences", whether a ride in a hot air balloon, a visit to the spa or concert tickets. Some surveys have suggested that many young people now value soul-enriching experiences more than physical possessions.

The retail sales data may also be misleading. The Office for National Statistics has looked at the amount of material consumed in the UK and estimates it declined from around 12.5 tonnes per person in 2000 to just 9 tonnes per person in 2016.

Some economists argue that advertising doesn't create demand from nothing, but rather only persuades us to buy a particular brand of a good that our underlying preferences inclined us to desire anyway.

But this feels too simplistic. Before NW Ayers' "A Diamond Is Forever" advertising campaign in the 1940s there was no mass market for diamond engagement rings in the US. And as my colleague Adam Lusher reported last week, Charles Dickens gave a push to the Christmas industry in the 1840s (even if claims the novelist "invented" it are exaggerated).

An interesting question is whether we could go in the other direction? Is it conceivable campaigns could stimulate lower consumption of physical goods, not just at Christmas but generally? In fact we did have something along those lines recently with David Attenborough's Blue Planet BBC series which showed how plastic pollution is throttling the oceans. This gave a significant boost to anti plastic public sentiment and has put a great deal of pressure on manufacturers and politicians to take action.

The conditions of peak stuff are arguably in place this Christmas. But we may require nudges to get over the top.

#christmas, #consumption, #material-footprint