Is Justice Reinvestment a viable solution to the UK Prison Crisis? Part 1

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The following is part one of a special look at the prison system in the UK. The prison population is near full capacity and incarcerating criminals is an arduous and expensive process. Justice Reinvestment seeks to allocate resources away from building and funding of prisons and looks to invest resources into greater societal schemes that could prevent crimes in the long term.

Justice Reinvestment (JR) is a simple concept, reallocating resources away from prisons and investing funds into societal schemes. The resources invested are aimed at eradicating the problems that lead onto criminal activity before they manifest. That should result in the long-term reduction of the number of incarcerations. The prison system in general is wasting resources and failing to tackle the long-term problem of reoffending.

There are currently 84,000 prisoners in the UK, full capacity, despite household and violent crime falling by 46% since 1995. Sentencing has not followed in the same direction. The inverse relationship between the drop in crime and rise in incarcerations highlight the odd relationship between high sentencing and fall in crime. Crime has fallen yet more people have been sent to jail.

Clearly the current prison situation is both inefficient and ineffective as greater emphasis should be devoted to criminal prevention rather than punishment, tackling the act once it has occurred may “solve” the crime, but the greater problem of why an individual or group have committed the crime itself highlights the need for a substantially greater understanding of crime prevention. The current prison system does not tackle crime prevention very well.

Philanthropist George Soros and his firm Open Society first expressed concerns with regard to similar problems within the US penal system, Allen and Stern suggest,

“George Soros has been questioning the cost of maintaining the current unprecedented level of imprisonment in the US and asking whether a redirection of resources away from criminal justice and into social, health and educational programmes might not make a more effective long term contribution towards creating safer and stronger communities.” (Justice Reinvestment – A New Approach to Crime and Justice 2007)

The concerns raised here share similarities to those being expressed in the UK, hence why JR could provide a realistic solution to the current penal crisis.

The prison crisis in the UK is the manifestation of both the latter stages of the John Major government (1990-1997) and more significantly Tony Blair and Gordon Brown. (1997-2010.) The manifesto promise of not only being tough on crime and more significantly the causes of crime, the current prison crisis has not benefitted from their efforts.

“On crime, we believe in personal responsibility and in punishing crime, but also tackling its underlying causes – so, tough on crime, tough on the causes of crime, different from the Labour approach of the past and the Tory policy of today.” (Labour 1995)

The idea of JR would appear to adhere to the Labour manifesto of 1995 that promised to act on the causes on criminal activity. The proactive approach is likely to provide remarkable knowledge on reoffending. The data could prove pivotal for identifying patterns and relationships between the criminal and their background. Identifying certain traits in societal behaviour would provide insightful knowledge on reoffending and resources would be in place to tackle it directly.

The crisis could be viewed as a simple problem of demand being greater than supply. Half of all prisoners reoffend. This has increased pressure on the prison system to reduce overcrowding so that prisons not only punish, but educate, rehabilitate and reform prisoners so that they can reintegrate themselves back in society reformed and not reoffend. Currently, resources are at full capacity and the prisons are struggling to provide those services due to the sheer numbers of incarcerated. The revolving door culture with criminals is putting further strain on the troubled economy. JR provides insight in reducing the long-term problem of high reoffending. This is by no means a short-term solution; it requires a more long-term approach and immediate reoffending rates are not likely to fall dramatically. However, what JR would provide is an in depth understanding of the why reoffending is so high.

No room left.

For several years tough on crime or zero tolerance translated into imprisoning record numbers of criminals. Also, building more prisons appeared to offer the solution to the growing demand for prison space. All of this occurred whilst criminal activity was falling. In hindsight, it would appear that the government at the time appeased the general public’s call for the justice system to be tough on crime. JR would provide a viable alternative to the current problem, which would appear to be a problem with central legislation and the general short-sightedness of politics in the UK, local government require much greater micro control over released prisoners. With greater control, local authorities could look to improve certain areas that are disproportionally represented in prisons and look for those funds to help improve the affected regions. It may seem unlikely at this point, due to the scope of the project. Nonetheless, stiffer discussions in Parliament should take place. The most recent reshuffle saw David Cameron remove Kenneth Clarke and replace him with Chris Grayling. Many view this move a political move to the right. Clarke was rather too ‘liberal’ for many Tories who favour a hardline approach. Robert Winnet of The Telegraph suggests

“His [Ken Clarke] pro-European stance and relatively liberal views towards criminal justice have brought him into conflict with Mr. Cameron and other senior Tories” 

In addition, for true justice, emotion (which public opinion is mainly driven by) must be removed in order to maintain the authenticity and the impartiality of Justice. However, the nature of the political system in the UK requires politicians to be rather myopic with long-term decisions.  This emphasizes why JR could offer a viable solution for the capacity problems in the UK.

Albertson and Fox highlight the fact that public opinion appears to at least be shifting towards policies that would appear to support many of the ideas and suggestions that are presented in the Justice Reinvestment proposal.

“The public do not rank prison highly as a way of dealing with crime. Most think that offenders come out of prison worse than they go in.”

What this shows is that the public is aware of some of the immediate concerns regarding the penal system, reinforcing the need for desperate reform. By the same token however, there does appear to be a ‘stubbornness’ or lack of understanding from large sections of the public with regard to criminal justice and members still believe that sentences are too soft. The former Justice secretary Kenneth Clarke nonetheless was advocating for substantial change to the current penal system. In an interview with The Times in 2011 he not only expressed concerns over the cost of the current penal system, but also the conditions of prisons in general.

“Prisons are financially unsustainable. It is just very, very bad value for taxpayers’ money to keep banging them up and warehousing them in overcrowded prisons where most of them get toughened up.”

Whilst Clarke’s concerns regarding the aggregate cost of the prison system in the UK is justified due to the current state of the UK economy, implementation of Justice Reinvestment would require centralized power from national government being transferred to local government. This would involve “substantial transfer of funds.” (Allen and Stern 2007) The criminal system and local governments are not exempt from the public sector cuts. This outlines why JR moves funds around, rather than demand more. So it is a question of where those funds go.

Clarke’s main concerns appear to be surrounding the aggregate cost of the current penal system, it does display why the current system is simply not sustainable. JR explicitly states that local authorities will have greater micro control over how funds are utilised. In theory at least, this would present a viable alternative to the current, unsustainable system.

In part 2 I shall look into the prison population further, look at JR in more detail and arguments against JR. 

How can the EMS crisis of 1992-93 crisis help the Eurozone today?

Norman Lamont on Black Wednesday

Learning from the past is often the best way to prevent future tragedies but the similarities between the EMS crisis of the early 1990s and the current Euro zone crisis is uncanny. I think there are certainly lessons that should have been learnt from that episode that should have reduced some of the damage the Euro zone is facing today. This is part one of a two part special on the lessons the EU should have learnt from the EMS crisis. 

The fundamental aim of the European Monetary System (EMS) was to consolidate the process of monetary integration amongst member states through monetary stability. Increased economic stability would ensure relatively smooth movement of capital, goods and services that would lead to increased intra-national trade. Additionally, the EMS was devised in order to establish a coherent system in which exchange-rate fluctuations were centralized and reduced in order to promote and maintain stability within the European Union. EU members were advocating for a system of governance that would establish economic cohesion, minimalize exchange-rate uncertainty and safeguard themselves from external shocks. The EMS system could be seen because of the failure of the Bretton Woods system that left many European nations somewhat disillusioned with a scheme that placed international monetary fundamentals in the direct control of the United States.

The EMS comprised of two main mechanisms, firstly there was the creation of an artificial unit of account named the European Currency unit (ECU) and a fixed exchange-rate system named the Exchange Rate Mechanism (ERM). The ECU was a unit of account rather than a medium of exchange, although, it shared the similarities of a common currency, no coins or notes were issued. In effect, it was an accounting unit, which all member currencies were expressed. Nations were allowed to fluctuate within the specific limits of ±2.25%. Additional features of the EMS included the Divergence Indicator and The System of available Credit Facilities. The Divergence indicator was measured in terms of ECU to enhance economic coordination. Hence, it measured the divergence of a nation’s given market rate with the central rate. Despite the system of available credit never coming to fruition, the ECU, ERM and the divergence indicator were mechanisms designed to enhance economic integration and more specifically exchange-rate stability amongst member states.

The importance of the ERM cannot be understated because the very nature of the EMS was to strengthen monetary integration by enhancing stability for member nations. Thus, the systemic failure of the mechanism is arguably the most significant factor contributing to the EMS crisis. The ERM adopted an asymmetrical system in which the Deutsche Mark became the reserve currency, in effect, the members of the ERM handed substantial monetary control to the German monetary authorities. Germany assumed a role similar to that of the United States in the Bretton Woods arrangement. Because monetary authority was effectively concentrated with Germany, when its own domestic interests conflicted with that of other ERM members, it caused severe economic shocks. Both Jones (2001) and Copeland (2005) concur to the suggestion that the domestic economic issues in Germany caused the greatest threat to ERM stability and thus the EMS came under severe threat.

“Because the DM was the linchpin of the system, the fate of the ERM was greatly influenced by developments in the German economy.” (Jones 2001, 56)

The reunification of both German states had severe economic consequences on the ERM members. Firstly, the amalgamation of a large and wealthy nation with a small and less economically developed one had an impact on West German current account. In order to make the transition function, the West German government transferred savings revenue to the East, and the government budget deficit rose from 5% to 13.2%. (Weerapana 2004, 4). This reduction in economic power as a result of the increased structural deficit forced the Bundesbank to increase interest rates in order to reduce inflationary pressure. Unemployment in the UK in 1990 (the year in which they joined the ERM) was 7.1% (Eurostat 1990). Because the UK had effectively handed monetary control to the German authorities in the sense that exchange-rates were determined by the ERM as oppose to the UK government, there was very little in terms of expansionary monetary policies that the UK could adopt.

Moreover, it is likely that the Conservative government at the time would have opted to devalue the Sterling in order to stimulate export demand, which would have increased economic growth through high levels of investment and thus job creation. However, this was not the case and it highlights one of the main problems with the ERM, conflicting monetary interests from nations with contrasting monetary agendas. The dominant German authorities had no incentive to reduce interest rates; the reunification process meant that saving revenue had to be released in order to bring the East German economy to a competitive level, hence high interest rates in order to reduce the internal government deficit. Furthermore, this is a clear example of one of the mechanism’s fundamental macroeconomic failures; it was created in order to establish economic cohesion through marginalizing exchange-rate fluctuations but it left the UK facing high levels of unemployment and high interest rates, due to the lack of economic stability because of a conflict in economic agendas.

On Wednesday 16 September 1992 the UK was forced to withdraw it’s currency from the ERM. Not only did this event drive market confidence extremely low, mainly because of the interest rate fluctuations, which in turn lead to speculative attacks[1] on the currency, it also had severe economic consequences for the domestic economy. McDonald and Dearden suggest the UK currency was increasingly vulnerable to speculative attacks:

”For the UK, international investors watched as growing political pressure to address the recession forced the Government into a series of interest-rate cuts between October 1990 and September 1992.” (McDonald and Dearden 2005, 90)

There are various similarities with the present crisis. If Greece were to leave the Eurozone and affectively the EU, the costs of such a decision may be politically detrimental, but economically beneficial. When the UK left the ERM the decision damaged their economy in the short-run, unemployment levels were high and investment confidence was low, the years following however, saw the economy recover rapidly. Figure1.1 displays the steady fall in unemployment after 1992.

Eurostat.

Monetary integration had always been an objective for European nations. In order to establish and maintain economic stability within Europe and particularly the EMS zone, domestic nations had to merge monetary policies in order for their goals to be achieved. Hitiris suggests that four fundamental principles were adopted in order for this process to occur; “free trade in goods and services and free mobility of capital and labour.” (Hitiris 2003, 128) Domestic currencies could therefore be viewed as a barrier to achieving these economic goals. The realization of an economic monetary union was perhaps best formulated in Jacques Delors[2] report of 1989. The report made several recommendations to improve the efficiency of European monetary affairs through the convergence of macroeconomic affairs. The general theme of the Delors report was clear, the extension of a united economic European union, with little or no barriers preventing the flow of capital between member states.

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[1] The most famous example of an individual profiting on short-sell Sterling was George Soros who profited just over $1billion on ‘Black Wednesday.

[2] Jacques Delors was the President of the European Commission from 1985-1995. It was under his premiership that a proposal for a common European

currency and more importantly, a European monetary union was to established. He was the first President to serve three terms.