Could the coronavirus bring about a UK debt jubilee?

Dan Edelstyn sits down with Sarah Jayne Clifton, director of Jubilee Debt Campaign to talk about the crisis and her take on what’s being done to help the 8.8 million people who were on the verge of personal bankruptcy in the UK before the crisis..

Sarah-Jayne starts with this - and then we provide a transcript below:

I think, as you said, we're seeing at the moment a simultaneous global health crisis and global economic crisis. And really, in terms of where we're focused, the intersection between debt and finance and poverty, the real impacts of that crisis, we don't think have actually fully been felt yet. They're just starting really to be set in motion. And we actually seen that much worse impacts are on the horizon, both in terms of personal debt in the UK, but also the global South debt situation for poor countries.

Sarah-Jayne Clifton:
And I think just to start with, it's just really important to recognize that this is only coming just a decade after the 2008 financial crisis. We were already struggling to really fully recover from that crisis, and now we are being hit by another global economic crisis. And I think what we're seeing also from this is that the resilience of our economies and our health systems is really weak, and it has been weakened by the economic model that we've seen governments pursuing, not just the last 10 years but for the last 40 years. The economic model of neoliberalism, which is about free markets and weak regulation, weak investment in public services, the slashing of the social safety net, which means a lot of countries are just really ill prepared to weather this crisis now, both in terms of being able to actually have the health infrastructure set up to actually support people and get through the pandemic, but also to weather the economic impacts.

Sarah-Jayne Clifton:
So I guess what we were really concerned about for our work is the extent to which this pandemic looks set to worsen a number of major economic injustices which were existing going into the pandemic. So on the UK household debt side, obviously we had a household debt crisis before COVID-19. Household debt levels, so we mostly focus on unsecured household debt, which is things like loans, credit cards, payday loans, the level of that debt in the UK was at a record level, higher than before 2008, about 230 billion or something. We had 9 million people in this country in problem debt, and the big overlap between people in problem debt and people in poverty, this growing household debt poverty trap. I think it's 14 million people in the UK we're in poverty prior to COVID-19, so that's about 20% of our population. So we were already facing really significant problems.

Sarah-Jayne Clifton:
And as you said, we've seen actually some really quite significant action by the government in the UK to try and mitigate the worst of the economic impacts of the crisis, to really try and protect jobs and incomes, and that is really welcome. We've obviously seen the job retention scheme, where employees can be furloughed on 80% of their wages. Then they realized that actually that left out all self-employed people, so there was action on self-employed. But we know already that there are some really big gaps and there have been some big delays in this government package, that already 2 million self-employed people are just not going to be eligible for this program.

Sarah-Jayne Clifton:
Also, a lot of people have already lost their jobs, and it's laying bare something that people who cared about poverty and economic injustice have known for a long time, which is our social safety net is in absolute tatters and people are being asked to live on levels of Universal Credit and Job Seekers Allowance, which is just not possible to live on. So, in the range of 70 to 90 pounds a week. The government's just put it up, but it's obviously still not enough. Which means that people who are reliant on that safety net have no choice really, either to become destitute or to get into further debt.

Sarah-Jayne Clifton:
So it was really important for us as an organization to try and address some of these holes that we were seeing in the government's package. So last week, we wrote a letter to the chancellor with around 80 other academics and leaders and civil society organizations, charities, think tanks and others, calling for an urgent additional package of measures specifically at tackling the household debt trap. So in order to basically stop the families and households who are already in debt, getting into more debt because of coronavirus, but also stopping a load more people whose incomes have been impacted by the pandemic from falling into a debt trap as well.

Sarah-Jayne Clifton:
I can tell you a bit more about what we were proposing and we've actually seen a bit of progress on some of that stuff already, but there's still a lot more of that that needs to be done.

Dan:
Yeah. Tell us. We were also proud to be a signatory onto your letter, and it feels as if the wider mainstream media are more receptive to your demands or to our demands, we should say, because hitherto, in effect, I don't know if you felt this, but Jubilee Debt Campaign and a lot of the organizations who were signatories to that letter are left out of the main debate in many ways, pushed to the sidelines and ignored largely. However, you got, probably an email from me this morning when I was excitedly reading something about how Boris Johnson was doing, and then it led down to all sorts of stuff about your campaign to write off, I think it was international debt of the poorer countries. So are you feeling that there's more traction, that people are more receptive to listen and that there could be change?

Sarah-Jayne Clifton:
Absolutely, yeah. So I think there's been quite a seismic shift in what's considered politically acceptable intervention in the economy in the last two weeks. We've seen it not just here in the UK, but also across the world. Sorry, my upstairs neighbor's child seems to be making quite a lot of noise.

Sarah-Jayne Clifton:
Yeah. So there's been this really seismic shift and we've seen it not just in the UK but in other countries. A lot of intervention in the economy, which in the basic functioning of the economy, which governments have not been willing to do for the last several decades. And this is extremely welcome. This is a shift that a lot of us in the economic justice movement have been campaigning for, for a long time. Like I said, it hasn't gone far enough, but it's exactly the right type of action. And I think a lot of the things have been put in place aren't necessarily going to be able to be undone again, particularly because we're going to have so many more people relying on the social safety net now. We're going to have a really big struggle to get out of the recession or even depression that comes because of the coronavirus. So we do think a lot is possible.

Sarah-Jayne Clifton:
So the things that we are immediately calling for in the household debt fund are, first of all a freeze in debt payments for people who are affected by coronavirus. So we think that people whose jobs or whose livelihoods have been impacted, should be eligible for a freeze in their debt payments with no interest built up, and also no impact on their credit rating.

Sarah-Jayne Clifton:
We have actually already seen some progress on that front. So the bank regulator, the Financial Conduct Authority, they announced a proposal to do something along those lines on Friday, which is again, very welcome. However, they still want to say to banks that it's okay for banks to charge interest during the period of a payment holiday, and we think that's obviously totally unacceptable. This is a time when everyone is really struggling. It would be a moral and unacceptable for the banks to make extra profits off the back of this.

Sarah-Jayne Clifton:
We understand that freezing interest could lead to some cashflow problems to the banks because obviously banks owe money to other people, but we think that could be easily dealt with by the Bank of England setting up an interest loan facility, which then the banks just pass on to consumers.

Sarah-Jayne Clifton:
Then the other things that we're calling for, we for a while have felt that the only way really to lift the major household debt trap that is phased in this country would be through some form of debt write off. But, as you said, that was just not something which was considered politically acceptable up until quite recently. But we think now actually is the time to make some progress on that. We think actually, a much bigger household debt write off is going to be needed to help get the UK out of the economic slump that happens because of coronavirus.

Sarah-Jayne Clifton:
But we can actually start now by writing off the social security debts and the council tax debts which are hanging around the necks of some of the poorest families in this country. A lot of debt, which basically people have never intended to get into in the first place, which has come about because our social safety net is so degraded, and so complicated, and so full of problems and mistakes. And actually, writing off that debt now would be relatively easy to do because it's just the government making some decisions and then refunding local authorities. We think it's critical that local authorities don't take the hit, that actually this is a government debt write off. And it's a measure now which could really benefit some of the people who are really, really struggling, because everyone is facing increased costs as well because of this pandemic, particularly if you're on low incomes already.

Sarah-Jayne Clifton:
So those are the top two priorities, but we also think the government needs to do more actually to support households on low incomes with payments at this time. People are still having to pay their rent, they're still having to pay their utility bills, their council tax. And as we've said, a lot of people can't work because of the lockdown, the social security system is too weak. So we'd like to see actually some support on there, in terms of payment freezes with no build up of arrears.

Sarah-Jayne Clifton:
And then the final thing is, so the bailiffs association have said that they've stopped chasing people for a few different types of debts, but not across the board. So people now obviously are having to deal with everything that's going on, some people with problem debt are still being pursued by bailiffs through letters, through phone calls, and we think actually in some cases, also through door knocking, which is both obviously really problematic from a health point of view, but also just totally unacceptable that people facing that amount of stress could then actually be having to deal with debt collectors as well. So we've called for the immediate cessation of all of that kind of that enforcement activity.

Dan:
I come back to my original point. You have been so busy during this crisis. I've literally been in awe of all the different things coming out of the Jubilee Debt Campaign, and I just take my hat off to you. And I'm just so pleased that at this time, in a way, it's like drama has revealed something, at the point of a crisis, what's been apparent to us as campaigners for the last, I haven't been the campaign of for 40 years, but what's been apparent to many people on the progressive side for a long time has now been revealed, not only in the sense of the crisis and the safety net, but also the ability for government to intervene and solve these problems without everything crashing down and grinding to an absolute halt.

Dan:
Because often people say, "Well, you'll never have a debt write off without busting the banks." Martin Wolf said that to me when I interviewed him in the film. But actually, that's just not the case. We've just seen that the NHS has had a lot of it's PFI debt written off, just like that, just overnight. So all sorts of amazing things are happening in terms of the demands of the campaign for debt cancellation and for economic justice.

Dan:
I guess, I'm just astounded by all the things that are happening. And I suppose my worry is, and you've kind of addressed this before, but my worry is that, at a point of a crisis, people pick up whatever ideas are around, and clearly on the progressive side, we're all gunning for economic justice in the way that analysis leads us, which is towards debt cancellation, and then a fairer and more just economy following in the wake of that. And possibly, where I'm sort of headed towards the Green New Deal, to stimulate production and to solve the climate crisis as well.

Dan:
But my worry is that the right and the extreme right and people who are in power, let's not forget that the governments that we have in Britain and America are quite far right, conservative governments, aren't they? My worry is that they're going to try at the end of this to somehow claw back or to push a more extreme version of their policies back onto us. How do you feel about, in terms of the longer term retention of the progress that's being made during this crisis? Or how do we effectively organize to try and keep this momentum moving forwards, when our governments are so to the right?

Sarah-Jayne Clifton:
Yeah. So I think you're absolutely right. Already some people are benefiting a lot, in a way which we would consider really immoral or problematic from the measures that had been taken. So some of the really big UK companies are going to make some extra profit because of the measures that the government has put in place, some of those companies are ones which are insured in offshore tax havens. They don't pay their taxes to this country, but they're benefiting because of the response.

Sarah-Jayne Clifton:
And I think the answer to your question, we have to think and work at a number of levels. So, a lot of the great work which is being done by think tanks at the moment, like New Economics Foundation, the IPPR is really looking at the conditions that we have to attach to the bailouts which are happening and which you're going to need to happen so that we don't repeat the mistakes of 2008 and previously, where we were just handing over public cash to keep private businesses afloat, many of which don't pay their taxes in this country, don't pay their workers properly, all of this. So being quite hawkish and having a real eye on the detail of these packages as they're coming out, and really pushing hard to make sure that they're advancing the most fair and just economic plan as possible is really critical.

Sarah-Jayne Clifton:
I think the other thing which is going to be really important for us, and obviously this is really hard when everybody is working from home in their bedrooms, is just keeping a lot of dialogue and communication between campaigners working in different areas, to make sure that we're not falling into silos. Because actually, I feel slightly less bleak about the longer term trajectory on the economic justice side now. I think where we're probably going to need to be much more alert is on the human rights side of these things. I think the shift in terms of that we saw in the election and the commitment to redistribute wealth in the UK, and bringing all the red wall constituencies suddenly from all getting behind the conservative party, that for me, suggests that we are locked into a slightly more fair economic trajectory now. The problem is how that plays out in terms of vilifying immigrants, vilifying people of color, how we treat the tens of thousands of people who are refugees, who are trying to come into Europe, who are being locked up on the shores on the outskirts of Europe, and we won't let in.

Sarah-Jayne Clifton:
So I think it's the wider political freedoms, democracy, human rights and anti-racist stuff that I think we need to be super careful of, and making sure that all of the economic justice policies that we're putting forward are truly intersectional and are thinking about how people who are most... trying to find the words, most exploited by these systems and most put on the outskirts of these systems are supported through this process.

Dan:
Okay, that's great. This might sound slightly inappropriate, but if you are a gambling woman, what would you say about whether a debt write off will be coming for those 9 million people, who were last year, before all of this, massively over-indebted? Do you think they're going to get any support? Or do you think that it will be kicked into the long grass?

Sarah-Jayne Clifton:
I think that actually that write off is really quite possible now. Yeah. In terms of the session security stuff, I think a bigger debt write off is can seem probably as common sense and needed as part of a massive package of measures. The scale of the recession that we're looking at in terms of the UK, but also globally is enormous. And really, I don't think it's hit home yet at all.

Sarah-Jayne Clifton:
And we're seeing these big dramatic shifts every day. So yesterday, the new head of the Bank of England said he wasn't really into the idea of monetary financing, which is the Bank of England printing out money to basically directly fund the government. And the Financial Times has come out today in favor of it. So we're seeing these really quite powerful centrist institutions on a daily basis, making big shifts in what they consider to be acceptable. So I definitely think debt write off is one of a number of policies which are seen to be, not just a socially just thing to do, but something which is necessary to really kickstart and economy after all this is over.

Dan:
It's amazing, really, isn't it? That we have these suite of right-wing governments, or certainly in Britain and America who are now resorting to stimulus policies, which are usually associated with Keynesian left-wing economic theory.

Sarah-Jayne Clifton:
Yeah.

Dan:
It's like a suspension of conservatism.

Sarah-Jayne Clifton:
Yes, absolutely. But it's because they can't use those tools that they used in 2008 anymore. Interest rates were at 0.1%. There's nowhere else they can really go in using those conventional monetary policy tools that they used last time.

Sarah-Jayne Clifton:
I also think we did manage to make enough of a fuss about the bank bailouts being unacceptable. The civil society response in 2008 was really not good enough. But I think we've managed to at least show, to draw some lines that they can't do that again. And I think the banks know that as well, that they're not going to be able to get away with that kind of behavior again as well. So you're right, the only toolbox now that the governments have is quite a radical set of policies around fiscal stimulus, and we just really hope they'll continue to be really open to using them in such a concerted way that we've seen so far.

Dan:
How do you feel emotionally, to have gone from a situation where we had a Tory landslide victory in December, which felt to me anyway, as someone on the left, as relatively depressing, to suddenly becoming a mainstream economic theorist?

Sarah-Jayne Clifton:
I don't know if I could be called a mainstream economic theorist.

Dan:
Well, I mean, your ideas and now being taken into the heart of government.

Sarah-Jayne Clifton:
So I think that learning from this, it just shows the value of the plugging away that campaigners do in times in between these moments. Sometimes when things are really bleak and it feels like we're talking about things that no one considers to be acceptable, all you're really doing is keeping these ideas alive, but that's actually a really important thing to do. And then suddenly, these moments happen, quite often in moments of crisis, but also moments where suddenly everything is on the table again. And then all of that work that you've done, just keeping those relationships alive, keeping those ideas alive is really, really critically valuable.

Sarah-Jayne Clifton:
I think that's something that we should also take hope from, but also not expect, as you said that this is going to continue like this. There will be a backlash. Things will get very hard again, but I think we just need to work as quickly as we can in this moment to get as much as we can, whilst also not burning out, and really taking care of ourselves and each other.