Thursday, 25 October 2012

Labour Land Campaign Affordable Housing Supply Conference 2012

A Permanent Solution to the Permanent Housing Crisis?

Wed 14 November 2012 
 Directory of Social Change, London, NW1 2DP 
Cost £20 (Register using link below)
For further information please contact:                Mob. 078572 97049

Speakers include
Lord Larry Whitty, Chair, Housing Voice Alliance; Duncan Bowie, Senior Lecturer in Spatial Planning, University of Westminster & Convenor, Highbury Group on Housing Delivery; Eileen Short, Defend Council Housing; Gordon Nardell QC (Land and Environment); Stephen Hill, C20 futureplanners, RICS Sustainability Task Force Europe; Christine Whitehead, Professor of Housing Economics, LSE and Senior Research Fellow CCHPR; Frances Plimmer, Chair, Valuation and Real Estate Commission, International Federation of Surveyors; Jacky Peacock, Brent Private Tenants Rights Group; Bob Colenutt, Northampton Institute of Urban Affairs; David Drew, former Labour MP Stroud; Dave Wetzel, former Vice-Chair Transport for London, founder, Labour Land Campaign.
Register online

Wednesday, 24 October 2012

The Dash for Cash - the Great British Energy Rip-Off

British Gas announced a 6% increase on gas and electricity on 12 October, which will add an average £80 per year to bills (Npower will increase the gas by 8.8% and electricity by 9.1%).

Energy companies blame the rises on declining North Sea gas supplies, rising global prices, and costs of maintaining the UK distribution network. The reality is somewhat different.

Last year British Gas announced profits of £1.5 billion. It supplies to around 9.5 million households so is making £160 a year profit per household.

So even if we take British Gas at face value about their rising costs, they could have absorbed them and still made £750m profit.

But it's not just British Gas ... 

On 15 October, Scottish Power announced gas and electricity bills would go up by 7% in December. Scottish Power has 2.3 million customers – average fuel bill will rise by £100 per year.

Scottish Power made £1 billion in profits last year – this price rise will raise £230m – so just one-quarter of their profits!

This is the grotesque profiteering that has happened since our gas and electricity was sold off in the 1980s.

Last year British Gas put up gas bills by 18% and electricity bills by 16% - that’s how they made £1.5bn in profits.

We are being told we have to pay more so that the energy companies can invest in renewable energy, but this year, last year and every year for the last 25 years billions from our energy bills have been going to private shareholders’ dividends instead of into investing in the energy network.

We urgently need to invest in renewable energy. Sweden gets nearly half its energy needs from renewables, France is 12% and Germany around 10%. In Britain it’s less than 3%. 

A large reason for us lagging behind the rest of Europe is that energy companies have been siphoning every penny they can - and successive governments have done nothing to stop them.

Saturday, 20 October 2012

Can dodgy maths and economic theories ruin lives?

Mick Brooks 

The multiplier is a pretty recondite concept in Keynesian economics. Really it just expresses the fact that in the economy we’re all interdependent. So if I am plucked off the dole and get a job, I have more money to spend and my spending helps someone else to get a job. It’s called the multiplier effect.

The spool runs the other way too. If the government cuts public services and sacks public sector workers, that depresses economic activity generally.
The Tories don’t accept this. They argue that austerity and cuts will let the private sector grow instead of being ‘crowded out’, so cuts will make no difference to jobs. In effect they are arguing that economic activity will just be transferred automatically to the private sector to fill the gap. In their world everyone has a job all the time. What world is that?
If the multiplier exists, how big is it? The International Monetary Fund has reckoned in the past that it was 0.5. So if the government spends an extra £1 the economy will get an extra 50p for free. But if the government cuts £1, the economy gets 50p smaller. To that extent - 50p - the cuts haven’t worked. The IMF thinks the multiplier has changed because of the recession. It’s now between 0.9 and 1.7 (IMF-World economic outlook). As Wolfgang Munchau commented in the Financial Times (15.10.12), “It was disguised as a technical appendix, but it turned out to be an act of insurrection.”
So, on the most favourable assumptions, if the coalition cuts £1 it loses 90p of the effect in lost output. And, with a multiplier of 1.7, every £1 in cuts causes the economy to decline by £1.70. On most assumptions cuts are utterly self-defeating. Munchau goes on to calculate that, with a fiscal multiplier of 1.5, “A fiscal adjustment of 3% of Gross Domestic Product would translate into a GDP contraction of 4.5%. He explains, “The multiplier thus tells you what kind of recession Spain can expect. And it tells us that the Spanish government forecast of a 0.5% fall in GDP in 2013 is delusional.”

That would explain what is happening in Greece. The government there is cutting off arms and legs in order to go on a diet! It would also explain why austerity isn’t working here and why it won’t work. It explains why the government deficit is going up in Britain despite - no, because of - the cuts.

All this is from the IMF, which Anthony Sampson called the financial sheriff. The IMF has spent past decades rampaging round the world demanding that debtor countries cut, cut and cut again. They have destroyed millions of livelihoods in the process. Now they say they got their sums wrong.

Their fellow members of the troika which has put Greece on the rack, the European Central Bank and the European Commission, didn’t say the IMF’s findings were wrong; at the recent Tokyo summit they merely declared they were “not helpful.” On the other hand Jacob Funk Kierkegaard of the Peterson Institute (Financial Times 12.10.12) points out, “The WEO section on fiscal multipliers is a very important finding, which shows the IMF is a credible empirically driven institution not shy of giving up its own dogma on these issues.”

This evidence blows the austerity programme of the Tories out of the water. Not only are they inflicting terrible hardship now – it’s won’t ever work to get the economy going again.

Monday, 8 October 2012

No curbs on predatory and calamitous capitalism

Britain’s financial regulators are still asleep and more scandals could follow, warns Prem Sikka

The banking crash exposed the “London loophole” – a phenomenon associated with feather-duster regulation and ideology where regulators do little to check predatory practices. Nearly five years on and despite vast bailouts, the regulators in Britain have shown little backbone or interest in cleaning-up predatory capitalism.

Rather than taking responsibility, the United Kingdom is dragged along by others. Recent exposure of money laundering and London Interbank Offered Rate (Libor) are just the latest manifestations of a crisis which shows that this country lacks the structures and the political will to curb predatory capitalism.

Any mention of effective regulation sends corporate elites into a cold sweat. They use their chequebooks to fund political parties and find jobs for former and potential ministers with the aim of stymying regulation.

They refer to the bogey of higher costs of regulation, even though the absence of effective regulation has resulted in an unprecedented economic crisis.

The elites forget that the state is the ultimate sponsor of capitalism, and has to coerce and cajole corporate beasts to curb their self-destructive tendencies. That lesson has been learned in the United States, supposedly the home of free markets, but not in Britain. Here are some recent examples.

In August 2012, the New York New York State Department of Financial Services claimed that, for 10 years, the Standard Chartered Bank schemed with the government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion. It collected millions of dollars in fees, but left the US financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity.

The report added that the bank carefully planned its deception and was apparently aided by its consultant, Deloitte and Touche, which intentionally omitted critical information in its “independent report” to regulators. Standard Chartered has agreed to pay a fine of $340 million. Britain’s regulators have done nothing.
In July 2012, a 300-page report by the US Senate Permanent Subcommittee on Investigations said that HSBC circumvented banking rules designed to prevent financial dealings with Iran, North Korea and Burma. Its lax systems and controls also facilitated financial movements for drug cartels and terrorists. The bank is accused of failing to monitor some $60 trillion of transactions.

HSBC has paid $27.5 million in fines to Mexico and may be fined around $1 billion by the US regulators. The revelations should have resulted in probes in the UK, too, but there is no sign of much action, aside from a belated report into the Libor rate rigging scandal concluding that the system is broken and suggesting its complete overhaul, including criminal prosecutions for those who try to manipulate it – things most observers had concluded rather earlier.

In June 2012, the US regulators took the lead in exposing the Libor scandal. Barclays Bank paid a total fine of £290 million, including £59.5 million to the UK’s Financial Services Authority, to settle allegations of manipulating Libor and the Euro Interbank Offered Rate (Euribor) lending – the rates at which banks lend to each other in the wholesale money markets. Citigroup, Deutsche Bank, JP Morgan, UBS, HSBC and the Royal Bank of Scotland are also thought to be on the US regulators’ radar.

With its reputation irrevocably tarnished by the banking crash and its imminent replacement by the Prudential Regulation Authority and the Financial Conduct Authority, the FSA now claims to be looking at some banks, but so far there is no tangible evidence of this.

The UK is a soft touch compared to the US where the Securities Exchange Commission and Department of Justice have shown some willingness to investigate, prosecute and fine corporations, although the scale and severity of this have been insufficient to curb predatory capitalism.

In contrast, the UK regulatory impulse is to protect elites by sweeping things under dust-laden carpets. A couple of examples serve to illustrate these points.

Sani Abacha, the late Nigerian dictator is estimated to have looted between $3 billion and $5 billion of public money. Despite the extensive anti-money laundering legislation, most of the loot ended up in Western banks. Around $1.3 billion is estimated to have passed through 42 bank accounts in London. Unlike Switzerland and even Jersey, the British Government has neither named the banks nor repatriated the stolen money.

The Bank of Credit and Commerce International was the biggest banking fraud of the 20th century. The Bank of England, then the banking regulator, closed it in July 1991.

Some 1.4 million depositors lost around £7 billion of their savings. In the US, Senate hearings were held and the CIA published some of its reports on BCCI’s activities. A US Senate Committee report concluded that the Bank of England and BCCI auditors Price Waterhouse (now part of PricewaterhouseCoopers) were engaged in a cover-up”.

It also released 99 per cent of a report, censored by the Bank of England, codenamed the Sandstorm Report, which described some of the frauds and named the wrongdoers and various movers and shakers.
However, the Sandstorm Report has remained a state secret in the UK. Various parliamentary committees held hearings on the BCCI scandal, but none were given sight of the Sandstorm Report.

Last year, after some five-and-half years of legal battles against the Treasury and the Information Commissioner, I managed to secure the names of the wrongdoers and some related parties.

These included members of the Abu Dhabi royal family, prominent Middle East businessmen, the head of Saudi intelligence, prominent political advisors and even the biggest funder of al Qaida, then considered to be an organisation friendly to Western interests.

Evidently, the British Government prioritised the appeasement of commercial interests over its citizens’ right to know, or even the desire to create effective banking regulation.

The UK lacks an effective regulatory system and a political culture to curb predatory capitalism. Its patchwork quilt of regulators includes the Financial Services Authority (and its successor bodies), the Bank of England, the Serious Fraud Office, Her Majesty’s Revenue and Customs, the London Stock Exchange, Office of Fair Trading, Financial Reporting Council and myriad private sector regulators.

They are poorly equipped to call multinational corporations to account.

With an annual budget of £37 million, the SFO is incapable of mounting effective corporate prosecutions. In contrast, the US SEC has an annual budget of $1.3 billion.

Almost all of Britain’s watchdogs come from the private sector and are usually too sympathetic to the games played by corporations. After a stint as a regulator, they return to the private sector and know the hands that they must not bite.

The UK’s patchwork system encourages duplication, buck passing and obfuscation. And it is hard to think of any timely intervention by any regulator.

Britain needs to replace the ineffective patchwork of regulators with its own equivalent of the SEC, which could be called the Business and Finance Commission. This would need to be controlled by a board representing a plurality of interests, including taxpayers, employees, customers and other stakeholders, so that elites could not easily sweep matters under the carpet.

The board should be required to meet in the open and its files should be publicly available so that we could all judge its efficiency and effectiveness. No document should be withheld from parliamentary inquiries into scandals.

All political parties need to recognise that additional financial and human resources are needed for swift investigation and prosecution of corporate misdemeanours. Without change, the UK will not have an effective regulatory system.

This article first appeared in Tribune magazine

Thursday, 20 September 2012

How to save money without saving money

There are a few rather odd points in the economists’ letter to George Osborne which was published in The Times on Tuesday.

Firstly, the term ‘crowding out’ seems to be thrown around a lot at the moment. In its classic sense, it is used to describe a situation where loose government fiscal policy increases the goods market equilibrium and therefore the demand for money, bidding interest rates up and thus reducing the expansionary effect of the government expansion. There is little evidence to suggest that this is the case in the UK economy at present.

In the labour economics sense, government ‘crowding out’ seems to be used to describe a situation whereby public sector wages are significantly above the local market rate for a job, so that private sector firms are unable to recruit the staff they need. (The corollary is that public sector wages are ‘too low’ in high-wages areas such as London, which is something trade unions happily acknowledge and suggest is addressed with an increase in London weighting).

Leaving aside the fact that crowding out in regional labour markets seems not to be happening (as the recent UNISON/IDS report detailed, and as one would expect in a time of slack labour markets), there are some other puzzling aspects in the detail of the letter.

On the one hand, the signatories make it clear that the “total public sector pay bill” in each area should be unchanged, while simultaneously claiming that “any savings [would be] used to enhance local services”. As a humble economics student my maths isn’t up to much, but I’m pretty sure if A, B, C and D all remain unchanged, A+B+C+D also remains unchanged, so there can be no savings. Are they arguing that installing ten sets of regional pay negotiations will reduce overhead costs compared with one national pay negotiations body?

Secondly, and most significantly, I fail to understand how public sector wages can be brought into line with private sector wages in, say, the South West if the total wage bill for the South West has already been pre-determined. Hospital negotiators may decide that a clinic secretary's salary can and should be cut by (x) to bring it into line with private sector secretaries, but that leaves them with (n.x) in wages which has to be spent on other staff in the South West, whatever the ‘needs’ of other local labour markets. This runs completely contrary to the stated aims of the Chancellor (and the signatories) to allow wages to be more closely dictated by individual micro-labour markets.

The only possible explanation I can think of is that they wish for the pot of money in the South West to be redistributed from ‘overpaid’ lower-wage secretaries and cleaners towards higher-waged public sector staff (doctors, experienced teachers) where skills are less in competition between private and public sectors, even where there is no market mechanism demanding higher wages for them. This would naturally have the effect of being regressive in terms of income distribution, and possibly also of reducing economic activity as money is redistributed from those who spend to those who save. If this is what the signatories are intending, they would do well to state it openly.

Being charitable, I assume that many of the signatories have simply not read through the detail of the letter. Some may be in favour of local pay bargaining per se. Whatever the case, the political effect of their letter has been to bolster the position of a Chancellor whose aim is to abolish national pay bargaining without ringfencing existing spending levels.

Tuesday, 10 July 2012

Durable change a long way off for scandal-ridden UK banking system

The role of Barclays bank in manipulating the London Interbank Offered Rate (LIBOR) continues to dominate international financial media.

The bank has already attracted fines from regulators in the UK and theUSA.
But further revelations are likely as US Senate Committees are flexing their muscles, the UK parliament has launched an inquiry and the UK’s Serious Fraud Office (SFO) has announced a criminal investigation. The temptation will be to look for scapegoats and prevent consideration of the systemic factors.

Barclays has a dark history. For example, in 2010, Barclays Bank paid US$298m in fines for “knowingly and willfully” violating international sanctions by handling hundreds of millions of dollars in clandestine transactions with banks in Cuba, Iran, Libya, Sudan and Burma.

In February 2012, the UK government introduced retrospective legislation to halt two tax avoidance schemes that would have enabled Barclays to avoid around £500 million in corporate taxes. However, Barclays is not alone. Only last month, the UK financial regulator reported that Barclays, HSBC, Lloyds and Royal Bank of Scotland mis-sold loans and hedging products to small and medium sized businesses. The financial sector has been a serial offender.

Here are a few examples.

The UK experienced a secondary banking crash in the mid-1970s. The crash revealed fraud and deceit at many banks. The UK government bailed them out and in turn had to secure a loan from the International Monetary Fund.

In the 1980s, the financial sector sold around 8.5 million endowment policies, which were linked to repayment of mortgages. The products were not suitable for everyone but were pushed just the same, and the risks were not explained to the customers.

A 2004 parliamentary report found that some 60% of the endowment policyholders have been the victims of mis-selling and face a shortfall of around £40 billion. This was followed-up by a pensions mis-selling scandal where 1.4 million people had been sold inappropriate pension schemes. The possible losses may have been £13.5 billion.

The 1990s saw the precipice bonds scandal. Around 250,000 retired people been persuaded to invest £5 billion in highly risky bonds, misleadingly sold as “low risk” products. Thousands of investors lost 80% of their savings. Then came the Split Capital Investment Trusts scandal. Once again financial products had been mis-sold and deceptively described as low risk. Some 50,000 investors may have lost £770 million.

New millennium came with a new financial scandal – the payment protection insurance (PPI) scandal. People taking out loans were forced to buy expensive insurance, which generated around £5.4 billion in annual premiums for banks and provided little protection for borrowers. This scandal is still being played out and banks may be forced to pay £10 billion in compensation.

The above has been accompanied by money laundering, tax avoidance, tax evasion, fraudulent practices to inflate share prices and of course the banking crash, which has brought the global economy to its knees.

Whichever way you look at it, banks have been serial offenders and continue to act with impunity. The entrepreneurial culture of making private profits at almost any cost has had disastrous social consequences. Fines and forced compensations have just become another business cost and the usual predatory practices have continued.

There are two main drivers of the financial scandals. Firstly, markets exert incessant pressures for ever rising profits and don’t care much whether they come from normal trade, money laundering, tax avoidance and other dodges. Secondly, the idea of assessing people’s worth through wealth is deeply embedded in western societies.

Profit-related pay became the mantra from the 1970s onwards and has been a key driver of the abuses. The typical tenure of a FTSE 350 companies CEO is around four years and declining. In this time, people at the top need to collect as much personal loot as possible and have little regard for any long-term consequences. The performance related pay applies at the lower echelons as well and again encourages short-termism and neglect of any social consequences.

In principle, regulators and politicians should be able to able to check the abuses, but the UK political institutions are weak. There is little competition amongst the political parties to devise socially responsible policies.

For the last 40 years, they have all offered various shades of light-touch regulation and veneration of markets. There has been no attempt to alleviate market pressures by forcing banks to operate as cooperatives or mutuals. Corporate and wealthy elites fund political parties and have organised effective regulation and accountability off the political agenda.

The regulators of the financial sector come primarily from the same industry and have sympathies for the narrow short-term interests of that industry. After a stint as a regulator, they then return to the same industry. The revolving-doors and ingrained conflicts of interest have prevented effective regulation and accountability.

Reforming political institutions is a necessary condition of controlling banking frauds, but a durable change is not on the horizon.

Saturday, 7 July 2012

Bankers try more of the same to solve crisis

From the Morning Star

Alarmed Bank of England policy-makers pressed the red button today and printed another £50 billion to try to boost the struggling British economy.

The bank's Monetary Policy Committee voted to increase the quantitative easing programme from £325bn to £375bn in a desperate attempt to drag the country out of a double-dip recession.

It held interest rates at a record low of 0.5 per cent.

They took the decision amid signs that the economy deteriorated in June, with the construction sector in reverse and the services sector suffering its worst performance for eight months.

The bank said the decision to pump more money into the economy came as Britain's output had barely grown for a year and-a-half amid signs its main export markets are slowing.

Left Economics Advisory Panel co-ordinator Andrew Fisher said: "The use of quantitative easing is based on the assumption that our economic system is in crisis due to a lack of available credit.

"But the economy does not suffer from a lack of credit - it suffers from a lack of demand.

"Unemployment, underemployment and wage constraint have all produced a situation in which living standards are falling.

"The Bank of England's now £375bn quantitative easing programme has clearly not been used to extend credit to meet any growing demand.

"Instead, the banks have used the extra liquidity to speculate in derivatives markets and to invest in safer foreign markets. It's good for the banks, but bad for the UK economy."

TUC leader Brendan Barber added: "This will only stop things getting even worse, not kickstart the economy."

Monday, 2 July 2012

Banks are serially corrupt. But Vince Cable's shareholder plan won't work

Prem Sikka

Banks are serial offenders and can't be controlled by shareholders. Vince Cable, the business secretary, has correctly identified the problem of corruption at banks, but his policy prescription of asking shareholders to invigilate abusive organisations and executives has not worked and will not work. Contrary to Cable's claims, shareholders are traders and speculators rather than owners. They barely hold shares for more than three months and do not have a long-term interest in the business. They have been utterly ineffective at curbing corrupt practices at banks, as evidenced by the tide of scandals.

Banks are under the spotlight for the Libor scandal and mis-selling of loans to small businesses, but they are serial offenders. The mid-1970s secondary banking crash highlighted fraudulent practices, which also engulfed the property and the insurance sectors. The government bailed out the banks and in turn had to resort to loans from the International Monetary Fund.

In the 1980s the financial industry sold around 8.5m endowment policies for repaying mortgage loans. These were not suitable for all borrowers. Banking staff received commission for selling the policies. The risks were often not explained to the borrowers. Banks made profits but eight out of 10 policies failed to pay the promised returns and did not even provide the amounts needed to redeem the mortgages. A 2004 UK Treasury committee report estimated that 60% of borrowers had been the victims of mis-selling, facing a shortfall of around £40bn.

This was followed by the pensions mis-selling scandal where people were encouraged to abandon good employer-based pension schemes and join a private one instead. The £13.5bn scandal affected some 1.4 million people.

The late 1990s saw the precipice bonds scandal. Some 250,000 retired people were lured to invest £5bn in investments misleadingly described as low risk. Thousands of investors lost 80% of their savings.

The 21st century did not provide any respite from financial scandals. Payment protection insurance is still being played out; some 3 million people were sold expensive and unnecessary insurance and are battling for compensation which could top £10bn. Now we have the Libor and small-company loan scandal.

In between the above, banks engaged in organised and aggressive tax avoidance, tax fraud, money laundering, corruption and feeding misleading stock market research to investors to drum up business and higher fees – just to mention a few of their misdeeds.

Fines, penalties, forced compensations and regulatory action have become part of normal banking business and the costs are just passed on to customers. It is hard of think of any instance when shareholders have sought to curb rapacious behaviour of banks or their executives. They have always been focused on short-term gains and cared little about the social consequences of the quest for higher returns.

Democracy and public sunlight are effective antidotes to institutionalised corruption and should be applied here in large doses. If the government is serious about changing the predatory culture of banks then it needs to change the whole system of corporate governance. The market pressures for higher returns should be checked by turning all banks into mutuals and co-operatives. Employees, customers and borrowers have a long-term interest in the business of banks and should be empowered to elect and remunerate directors. Directors need to be made personally liable for the cost of criminal practices. At the moment banks are fined, but executives walk away with a stash of profit-related pay, with virtually no penalties. All major banking contracts should be publicly available so that we can all see the shady dealings.

The banking regulators have frequently come from the finance industry and are too close to banks. They act only after the stench of scandal has become too strong, and frequently they have been part of what a US senate report described as a "cover-up". This inertia should be checked through annual hearings by the Treasury committee. All policy meetings of the banking regulators should be held in the open, and information in the regulator's possession – including background papers – should be made publicly available.

The above is not a magic bullet for eradicating institutionalised corruption, but the beginning of reforms necessary to curb the worst excesses of an industry that has damaged the lives of millions of people.

This article first appeared on Comment is Free

Thursday, 28 June 2012

Nude rambling, Barclays and moral hazard

In February this year, Leeds Magistrates Court fined Nigel Keer (pictured left) £315 for rambling through a popular beauty spot naked except for a backpack, boots and a baseball cap. (Read report here)

Why do I mention this case? And what on earth has it got to do with Barclays? (apart from an amusing link to 'moral hazard')

Well, the penalty handed down to Mr Keer for a minor public order offence (he provoked an onlooker to frown!) is tougher than the fine handed down to Barclays.

Barclays was handed a fine of £290 million on Wednesday for its role in conniving to fix the LIBOR rate (the interest rate used for inter-bank lending) as you may have seen (if not, a reasonable article here). 

So how is the £315 Mr Keer was fined more than the £290m Barclays fine ?

Well, the BBC's Paul Lewis tweeted this morning that Barclays fine was just ten days' profits for the banking behemoth.

So, assuming Mr Keer is an average earner, then his 10 day 'profit' (his disposable income after tax) is £205 - as the Telegraph reports that the average disposable income is £144 per week.

So there we have it, wandering scantily clad around the hills of the Leeds hinterland is worse than international banking fraud. 

Tuesday, 12 June 2012

A Tale of Two Frauds

In 2009, a Lancashire mother was found guilty of defrauding the state of £45,000. She claimed over £45,000 in housing benefit, council tax benefit and income support by not including her husband’s details on the claim forms.

She pleaded guilty and was jailed for 16 months.

A week ago, two men from Leeds were also found guilty of defrauding the state of £45,000. They made up false invoices and documents in order to make false VAT claims worth £45,000.

They pleaded guilty, but avoided jail. Instead they were given community sentences, and made to pay court costs.

What makes these cases interesting is that they were for exactly the same amount: £45,000 dishonestly defrauded from the state - and all defendants pleaded guilty to the charges. So why is it that benefit fraud is considered so much worse?

Why, when benefit fraud costs us £1.1 billion per year and tax evasion an estimated £70 billion, is so much more effort and opprobrium directed at benefit fraud?

Of course both crimes were wrong. But is someone who commits benefit fraud a danger to society - who needs to be locked away for over a year of their life? I don't think so.

It's the inevitable result of a society where successive governments and the tabloid media (step forward the Sun and Daily Mail) have whipped up hatred against those out of work. That prejudice is reflected in the sentences.

The same economic crime means very different time.