J | a-zofinequality

Jail is for the little people

It is a strongly supported observation that criminal justice systems focus on the crimes of the poor and disadvantaged far more than those of the wealthy and privileged, and that this disparity tends to be especially acute during periods of high and rising economic inequality [1]. Across developed economies greater inequality is associated with higher incarceration rates [2]. The prison population in the UK has been growing for decades despite crime rates actually falling since the 1990s [3] leading to worryingly overcrowded prions – nearly half of UK prisons are overcrowded according to official statistics [4]. People from disadvantaged backgrounds are far more likely to be imprisoned, and imprisonment in turns harm the ability of them and their families to improve their socio-economic conditions, thus keeping them disadvantaged [5].

These trends are often explained away on the basis that there are simply higher rates of crime among poorer, marginalised communities and that poor life choices or bad influences are to blame. It is certainly true that recorded crime rates are higher and economic deprivation can be a powerful motivator for engaging in criminality – less to lose, more to gain. However, policy itself plays a key role in shaping apparent crime levels. Choices are made regarding what to criminalise, what to concentrate scarce resources on investigating and prosecuting, and how to punish certain behaviours; the difference between crimes and other forms of wrongdoing is not an objective standard but the product of many decisions.

Tax evasion vs benefit fraud.

HMRC publishes annual estimates of the “tax gap” – the difference between how much tax revenue they think they were owed and how much was actually paid. In 2018-19 the tax gap was estimated to be £31 billion meaning 4.7% of tax liabilities went unpaid. Of this they attributed £4.6 billion to tax evasion and £4.5 billion to other forms of criminal activity such as smuggling and fraud [6]. Some commentators, including the accountant Richard Murphy, have argued for a long time that HMRC systematically underestimates the tax gap and that the real losses may be much higher [7].

Meanwhile, the Department for Work and Pensions (DWP), which manages social security expenditure, produces its own estimates of fraud and error in the benefits system. For 2019-20 they estimated that about £2.7 billion or 1.4% of their total expenditure was overspent due to fraudulent claims, up from 1.1% in 2018-19 largely due to issues with Universal Credit [8]. For context, this is a small fraction of the amount of money the DWP saves from people not claiming benefits that they are entitled to, which has been estimated at around £16 billion [9].

Despite tax cheats objectively being the greater drain on the public purse it appears that more attention and resources are directed towards catching and punishing benefit fraudsters. As of 2017 the DWP employed about 4,000 people to investigate benefit fraud, roughly quadruple the number of staff HMRC had investigating the tax affairs of “high net worth” and “affluent” individuals [10]. Even as HMRC has deliberately tried to increase the number of prosecutions for tax fraud over the past decade the annual number of prosecutions has never risen above 1,000 [11]; meanwhile prosecutions for benefit fraud have reached as high as 10,000 per year [12] with more people being prosecuted for Housing Benefit fraud alone than for tax evasion [13].

Many benefit fraud cases don’t even make it court – the DWP has the power to simply impose fines and sanctions if it determines someone has been overpaid; these do not have to be proportionate to the scale of the overpayment [14]. Meanwhile HMRC has been offering amnesties to people who have evaded or avoided taxes, allowing them to come forward and “correct” their accounts without fear of any punishment beyond repaying what they owe [15].

Rita de la Feria, Professor of Tax Law at the University of Leeds, has argued that efforts to tackle tax fraud across Europe are motivated by an economic rather than legal objective, prioritising recovering revenue over punishing offenders, and that this undermines overall compliance and leads to selective enforcement [16]. Efforts to tackle benefit fraud, on the other hand, have very much focused on punishment. In 2013 the CPS issued new guidance to encourage charging benefit fraud cases under the Fraud Act rather than social security laws so that harsher sentences of up to ten years imprisonment could be applied – in line with the sentencing of tax evasion [17] – while financial thresholds which stopped benefit fraud cases concerning payments of less than £20,000 leading to sentences of more than one year were scrapped [18].

White collar crime

The harsh treatment of benefit fraud compared to the lighter treatment of costlier tax evasion is just one example of the broader trend of criminal justice concentrating on the disadvantaged. The social harms inflicted by wealthy individuals and large corporations frequently result in little to no punishment, many damaging acts are not even considered crimes.

The 2007-08 Financial Crisis saw the actions of irresponsible bankers, mortgage-brokers and other financiers reverberate cause huge damage to the lives and livelihoods of millions of people. The sum total of criminal punishment for this disaster was a handful of convictions for relatively low-level bankers who had directly engaged in manipulation of the LIBOR and EURIBOR interbank lending rates (i.e., they defrauded other financial institutions and corporations) [19]. The most high profile prosecutions were of senior Barclays executives who were alleged to have made illicit deals to avoid needing a bailout, however all were acquitted at trial [20]. Bailed out bankers at RBS continued to receive bonuses [21] and the Chief Executive of Northern Rock who had overseen the first run on a British bank in more than a century, leading to the bank’s nationalisation, simply resigned and later ascended to the House of Lords [22].

Even when justice is done for such “white collar” or corporate crimes it is rarely swift. The aforementioned trial of Barclays executives did not take place until a decade after the events in question. Investigations into a range of offences that may have been committed in relation to the Grenfell Tower fire which killed 72 people, including corporate manslaughter related to the negligence of responsible authorities and fraudulent tests of flammable materials [23], are unlikely to result in any charges being made until 2021, meaning trials would not begin until five years after the disaster at the earliest. Since the offence of corporate manslaughter was introduced in 2008 it has produced jut 26 convictions, almost all involving small companies [24].

This inequality can even extend to the enforcement of the same offences which less privileged people are consistently punished for. For example, affluent professionals are much less likely to be stopped, searched or arrested for possession of illegal drugs – even if found with them they are likely to be let off with a caution – compared to working-class individuals [25]. This despite the fact that the middle-classes are some of the most prolific consumers of such drugs. Police forces are well aware of this and have repeatedly admonished middle-class drug users while nevertheless continuing to prioritise cracking down on more disadvantaged people engaged in trafficking and selling drugs [26]. Police powers to “randomly” stop and search people without requiring specific suspicions have disproportionately targeted black and other minority ethnicities [27]; for some reason suited-up white professionals are far less likely to be waylaid.

Access to justice

“In England, justice is open to all – like the Ritz hotel.”

– Sir James Mathew, judge (1830-1908) [28]

Legal aid was introduced 1949 as part of the postwar expansion of the welfare state. It was originally a very broad scheme entitling anyone of limited means to legal representation to defend against prosecution or to prosecute a meritorious civil case. Since the 1980s eligibility has been progressively reduced in an attempt to contain the growing cost of the provision [29]. The 2010-15 Coalition government made particularly drastic cuts as part of their broader policy of fiscal austerity, slashing legal aid expenditure by more than a third, tightening means-testing such that only about one-fifth of the population is now entitled to support (compared to four-fifths when first introduced), and reducing fees for lawyers leading to many choosing to abandon legal aid cases [30]. As a result many parts of the country are now “legal aid deserts” where people cannot even access aid they are theoretically entitled to due to a lack of local practitioners [31]. Many areas are also facing shortages of criminal duty solicitors who offer free legal advice to people detained by the police [32].

The broader law enforcement and criminal justice system has also faced steep cuts. The Ministry of Justice was one of the hardest hit by austerity, its budget having been cut by 40% since 2010 leading to struggles to recruit and retain judges and degrading buildings [33]. Spending on police services has declined by 16% in real terms since 2010 leading to fewer officers and stations being closed and sold off [34]. The Crown Prosecution Service has also had its budget cut by around 30% and had to reduce staff numbers [35].

While total case numbers have been declining over the past decade, the complexity of cases dealt with and the time needed to deal with them has been increasing. Combined with funding cuts this has led to huge backlogs in the justice system, recently exacerbated further by the Covid-19 pandemic adding further difficulties to proceedings. As of September 2020 there were more than 500,000 outstanding cases in magistrates’ courts and nearly 50,000 in the Crown court [36]. This has led to many victims and defendants waiting years for legal proceedings to resolve with trials being currently being scheduled several years into the future [37].

Defendants awaiting trial – who have not been convicted and therefore ought to be presumed innocent – face longer stints in prison as the government considers increasing custody time limits to ease the pressure on the courts, exacerbating prison overcrowding in the process [38]. Other proposals to cope with the backlog include reducing the number of jury trials and reducing the size of juries from 12 to 7 [39].

Jury trials already decide less than 1% of criminal cases, typically those concerning the most serious accusations where defendants face the greatest loss of liberty if convicted; the vast majority of cases are instead decided in Magistrates’ courts, either by a single judge or two or three unpaid part-time magistrates [40]. Public opinion overwhelmingly supports jury trials, perceiving them to be fairer than being tried by a judge; jury trials also appear to be the only stage of the criminal justice process in which members of BAME groups are not treated disproportionately [41]. Reducing the number and size of juries therefore risks damaging public confidence in the judicial system [42].

Many of these issues can be avoided by people who have the means to simply hire their own lawyers. Besides being assured of representation, the rich and wealthy can afford to pick and choose the best lawyers for their cases and benefit from all the defences and mitigation claims that the law offers, often leading to more lenient sentences [43].

Reform.

The criminal justice must aspire to unbiased to be fair and unbiased. The rule of law is a vital foundation for capitalism, providing the basis for private ownership, exchange, contracting and incorporation [44]. This is something that capitalism cannot provide itself; unequal access to and treatment by the judicial system on the basis of financial means will lead to cronyism, corruption and popular reaction.

Acts are criminalised by choice and those decisions should be reviewed such that the law is applied fairly and proportionately to the harms done. The vigour with which authorities pursue and punish those who cheat the public purse should be informed by the cost of the wrongdoing – both the financial cost and the cost to social trust and cohesion. Cracking down on tax fraud would even be profitable; HMRC collects about £2 of tax for every £1 they spend [45].

We should also reconsider whether certain offences, for example, the mere possession and use of drugs should be criminalised and result in incarceration rather than being treated as a public health matter, as has been done with some considerable success in Portugal [46]. To the extent that such acts are criminalised, enforcement should take the illegal behaviour of affluent people just as seriously as that of poor and marginalised groups. Press releases admonishing the middle-classes for rampant cocaine usage hardly make up for the uneven treatment of people according to their class and race.

The damaging actions of wealthy and powerful individuals and corporations ought to be taken seriously and subject to more legal action. Convicting individuals for actions that have damaged the economy and wider society is often very difficult because while identifying systematic wrongdoing is relatively easy, proving personal responsibility to the satisfaction of a judicial system which rightly presumes innocent is much more difficult [47]. This could mean that the appropriate avenue for reform is to make it easier to hold corporations and other institutions responsible, with better standards of corporate liability for failing to prevent economic crimes under serious consideration already [48]. This could be extended to strict liability for executives and other individuals who can reasonably be held responsible for the culture and strategy of a company and therefore to some extent liable for organised wrongdoing. Punishments for serious corporate wrongdoing ought to be more serious than fines which allow for businesses to consider punishment for illegality just another cost of doing business [49].

The criminal justice system needs to be properly financed in order to ensure equal access to justice. Jury trials, already a rarity, are perhaps the single fairest and most trustworthy part of the whole system and further attempts to reduce their prevalence ought to be resisted. Deciding cases based on the judgement of just one or a few people makes it more likely that defendants will be subject to biases and have their fate decided by people who do not represent them; a jury of twelve peers is a safeguard against this. Cases decided by magistrates and judges tend to have higher conviction rates and this trend seems to include past experiments with abandoning jury trials for serious cases such as the Diplock courts used in Northern Ireland during the Troubles [50]. The current backlog of cases is a poor excuse for expediting cases unfairly. While Covid-19 has certainly exacerbated the crisis, it was a pre-existing problem fundamentally caused by funding being cut beyond what the system could bear. Justice is a public good, one of the most fundamental things that a government is expected to provide, and recent years have shown that it cannot be done on the cheap.

Justice can only be done if there is sufficiently equal access to it. Cuts to legal aid have only resulted in people with limited incomes and wealth being left without recourse or representation. More and more are left in the unreasonable position of trying to represent themselves in court, while the end of legal aid for early advice regarding family and housing issues allows resolvable problems to spiral out of control [51]. Access to legal advice and representation ought to be treated seriously as a universal right like healthcare and education – people can obtain private services if they want, but a sufficient standard should be available to all.

1http://eprints.lse.ac.uk/68133/1/Newburn_Social%20Disadvantage%20and%20Crime.pdf

2https://www.equalitytrust.org.uk/imprisonment

3https://www.ons.gov.uk/peoplepopulationandcommunity/crimeandjustice/bulletins/crimeinenglandandwales/yearendingjune2020

4https://researchbriefings.files.parliament.uk/documents/SN04334/SN04334.pdf

5https://www.jrf.org.uk/report/poverty-and-disadvantage-among-prisoners-families

6https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/907122/Measuring_tax_gaps_2020_edition.pdf

7https://www.taxresearch.org.uk/Blog/2019/06/19/the-uk-tax-gap-is-90-billion-a-year/

8https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/888423/fraud-and-error-stats-release-2019-2020-estimates-revised-29-may-2020.pdf

9https://www.entitledto.co.uk/blog/2020/february/16-billion-remains-unclaimed-in-means-tested-benefits-each-year/

10https://fullfact.org/economy/benefit-fraud-tax-inspectors-numbers/

11https://www.fieldfisher.com/en/services/tax-structuring/tax-deductions-blog/the-number-of-prosecutions-for-complex-tax-fraud-h

12https://www.channel4.com/news/factcheck/factcheck-benefits-fraud-tax-evasion