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Why do so many people get away with rape? Police officers, survivors, lawyers and prosecutors on the scandal that shames the justice system

In England and Wales perpetrators of one of the gravest violent crimes, which carries a maximum penalty of life imprisonment, are very unlikely to receive…

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Today in England and Wales, an estimated 300 women will be raped. About 170 of those cases will be reported to the police. But only three are likely to make it to a court of law.

Shadow home secretary Yvette Cooper’s damning speech on the crisis at the heart of our criminal justice system in May 2022 was echoed three months later by Dame Vera Bird, the outgoing victims’ commissioner for England and Wales. In her resignation letter, Bird described a “catastrophic” period for the Crown Prosecution Service (CPS) during which rape convictions have dropped to a historic low:

As victims’ commissioner, I have shone a spotlight on the dire state of rape investigations and prosecutions … While the pandemic is abating, the criminal justice system has only sunk deeper into crisis.

Despite initiatives such as the Operation Bluestone pilot, which seeks to develop a new way of dealing with rape cases among police forces, the shocking reality is that in England and Wales today, perpetrators of one of the gravest violent crimes – which carries a maximum penalty of life imprisonment – are very unlikely to receive any punishment at all. Many police officers and lawyers agree with the suggestion that rape has effectively been “decriminalised”.

As a former senior police detective, now criminologist, I regard the rate at which rape cases fall by the wayside at every stage of the criminal process as the greatest scandal facing our justice system. As public confidence continues to plummet, leading to ever-greater reluctance to report sexual assaults and rapes, I want to explain what’s going so badly wrong.

Protesters outside New Scotland Yard following the murder of Sarah Everard by a serving Met Police officer, March 2021. Shutterstock

A deeply disturbing attrition rate

The police investigation was shockingly bad at communicating anything with me. It left me feeling like they weren’t doing anything or didn’t care, and eventually after a year my case was closed for lack of evidence. I felt as though they didn’t even try. (Rape survivor’s account extracted from this report.)

It’s not true to say that rapists in England and Wales are walking free from court in droves, because the vast majority never see the inside of a court building. Indeed, most rapes are never even reported. Evidence from both the Office for National Statistics and a coalition of rape survivor charities suggests that only two in every ten women who are raped report the crime to the police.

The reasons for this horrendous statistic demand a story of their own. However, this article focuses on the 20% of rape offences that are reported in England and Wales – around 67,000 cases each year. Of these, police send only 10% through to the CPS seeking prosecution – compared with 60% in Scotland, where the prosecutor’s office has a closer relationship with the police and is held responsible for a successful investigation, rather than working independently from the police.

The CPS typically agrees to prosecute half the cases it sees, meaning that in England and Wales, fewer than 2,500 rape complaints (less than 5%) end up with someone being charged and taken to court, of which only 1,400 (around 2% of all reported cases) result in a guilty verdict – a disturbing attrition rate.

Two protesters holding signs
Protesters at a ‘kill the bill’ march against the UK policing bill in London, April 2021. Shutterstock

In all parts of the UK, very few of the rape cases that are reported to the police are “stranger rapes” – yet these are invariably the ones that receive the most publicity. In fact, the vast majority of rape cases involve people in some kind of relationship – from a long-term partner or work colleague to a more fleeting acquaintance in a pub or a nightclub.

Unlike crimes such as burglary or car theft, where a suspect is typically never seen and has no direct contact with their victim, in some 90% of rape cases the suspect is identified – usually because the victim knows their assailant. You might imagine this would improve the prospects of a successful conviction but in fact, the reverse is true.

An adversarial system

There is no point discussing what can be done to improve the attrition rate in rape cases if we ignore the daunting “cliff face” that the adversarial criminal justice system presents when these cases reach a crown court.

There are very good reasons for this system of justice, which dates back to 1765 when English judge, Sir William Blackstone, published his influential Commentaries on the Laws of England. These included a principle that remains the basis of the adversarial criminal justice system in England and Wales today:

All presumptive evidence of felony should be admitted cautiously: for the law holds, it is better that ten guilty persons escape than that one innocent suffer.

Most people would surely agree they don’t want a system that accepts miscarriages of justice as a consequence of fighting crime. But there are other consequences of this principle that are problematic, particularly in cases of rape.

In our adversarial system, the main job of the defence team is to represent their client. If the client tells them the victim is making things up, they will try very hard to muddy the waters, to cast the victim in a bad light, and to convince the jury that he or she may be lying to them. That is what they are paid to do.

The prospect of going through this process has consequences that ripple backwards to the very start of a criminal investigation – not least for the person who has been raped, at a time when they are likely to be enduring a deep and lasting trauma.


This story is part of Conversation Insights
The Insights team generates long-form journalism and is working with academics from different backgrounds who have been engaged in projects to tackle societal and scientific challenges.


Everyone involved in each stage of a rape investigation and prosecution is aware of the hostile nature of the adversarial system, and what the person reporting the crime must endure if the case ends up in court. A consequence is that police officers and CPS lawyers can become despondent about the chances of their case ending with a successful outcome. According to a July 2021 report by the Police and CPS inspectorates:

Many investigators and prosecutors told us that rape cases are ‘difficult to prosecute’. [They] were very aware of the criticism of low charge and conviction rates, and of high-profile cases that have failed. As a result, the approach adopted sometimes appeared to be more focused on thoroughly exploring the weaknesses in a case, as opposed to focusing on its strengths.

Everything in silos

As a senior lecturer in police studies, I meet many serving detectives. For this article, I interviewed a dozen of them from four different English forces. Many appear demoralised and embarrassed that they are unable to investigate and detect more crime of all kinds.

Over the past decade, the policing system in England and Wales has been stripped of resources leading to prioritisation. One consequence is an increased reluctance to investigate “volume crimes” such as burglary, which in turn means many officers have become generally deskilled at criminal investigation. A detective inspector complained to me: “I have people joining my team from uniform who have never been to court and never taken a case through from start to finish.”

According to another detective sergeant, “everything is in silos” in his police force as a result of being so short-staffed:

If a response officer arrests someone, they just do a verbal handover to a detective sergeant. They never investigate anything because they are so short-staffed on the shift, and are just going from job to job. There is a general lowering of investigation standards – as a workforce, we are completely deskilled.

Because investigative skills are being lost and morale and expectations are so low – exacerbated by very public police failings ranging from the Jimmy Savile scandal to the murder of Sarah Everard by a serving Metropolitan Police officer – the ability of the police to investigate serious crimes such as rape has been severely hampered. I have heard several anecdotes from serving officers that lines of enquiry are not being followed, and that the search for evidence is less robust than it could be.

Many protesters lying down in Parliament Square
Protesters occupy London’s Parliament Square following the murder of Sarah Everard, March 2021. Shutterstock

In 2020, the victims’ commissioner reported that of 500 rape survivors surveyed, many said police officers had “treated them sensitively and made them feel believed, comfortable and supported”. However, she also highlighted “many accounts of the opposite”:

Officers who were insensitive and made the survivor feel disbelieved, judged and at fault. Some [victims] felt their experience was minimised or that police discouraged them from progressing their complaint.

Grooming of police investigators

The vast majority of rape cases get dropped during the police investigation stage in England and Wales. Fewer than 10% of rapes reported to the police are sent on to the CPS for a charging decision. What happens during this police investigation stage so that, every year, around 52,000 rape cases fall by the wayside?

Many police forces have a group of detectives who are specially selected and trained to deal with sensitive crimes such as rape and domestic abuse. In my experience, the thoughtfulness, understanding and empathy towards victims that these detectives display is impressive and valuable.

However, most forces are not resourced well enough to provide this coverage 24/7. This means a rape survivor’s first contact with the police may be with a regular duty detective or, in smaller forces, a uniformed constable, to whom they will have to explain details of the most traumatic and embarrassing thing that has ever happened to them.

Rape figures in England and Wales (year ending March 2020):

Police and CPS inspectorates report

Many rape survivors withdraw their accusations during the police investigation stage, before any charges are brought. Their impressions of the first police officers they encounter can be critical to this decision, affecting their confidence about whether to persevere with the case.

According to one officer, her force (and likely many others) splits responsibilities in a rape case. While a specially trained group of officers deal with the victim and gather their evidence in a professional and empathetic way, that package of evidence is then handed over to a regular detective who is tasked with gathering other evidence, as well as arresting and interviewing the suspect.

Under this system, another detective described a phenomenon which he called “perpetrator grooming of police investigators”:

This can happen when a force has a specialist rape team dealing with the victim, and regular CID who then interview the suspect. Because these latter officers rarely deal with the victim, they’re only hearing the suspect’s story all the time – and it is possible for a manipulative suspect to blame the victim and get an officer to feel sorry for them.

The victims’ commissioner’s report also highlighted this risk. A rape survivor told her researchers:

The officer said my partner’s messages after the rape [were] “a bit cheeky”. She said he was in love with me and didn’t realise that he had done wrong. It sounded like [the officer] sympathised with him.

Police officers are human beings. While they should not exactly reflect a cross-section of society on account of their vetting, training and monitoring, there have been recent high-profile findings of officers in London’s Met Police and other forces acting like misogynistic yobs – and worse.

In one case, the Independent Office for Police Conduct (IOPC) found 14 Met officers guilty of “multiple behavioural themes including toxic masculinity, misogyny and sexual harassment”. This report is one of the most shocking things I have ever read about police behaviour.

Protesters with a banner in front of a policeman
The damage to public confidence in the police, particularly in relation to rape cases, has been severe. Shutterstock

In July 2022, two other Met police officers were convicted of criminal conduct relating to sending grossly offensive racist and misogynistic WhatsApp texts, including threats to rape. These men were colleagues of Wayne Couzens, the serving Met officer who murdered Everard.


Read more: Making public sexual harassment a crime could help increase reports – but can women trust police to follow through?


Of course, the vast majority of police officers will have been appalled by such behaviour. But it’s also extremely unlikely that these are the only groups of officers writing messages like this in their WhatsApp groups. And while there are 43 separate police forces across England and Wales, few among the general public will differentiate between a media report on something happening in the Met Police and their own force. In short, the damage to public confidence in the police, particularly in relation to rape cases, has been severe and will take much work to reverse.

A downward spiral of pessimism

Even if a police detective has a highly professional and victim-focused approach, for altruistic reasons they may still dissuade a rape victim from going forward with their complaint. In 2021, the Police and CPS inspectorates highlighted a risk-averse attitude to taking rape cases all the way through to court. This could be for a number of reasons I describe as a “downward spiral of pessimism”.

  • Police detectives anticipate how hard it will be to persuade the CPS to prosecute the case.

  • Even if it is prosecuted, they know how difficult it will be to achieve a conviction in front of a jury.

  • And they understand the pain and distress the victim is likely to have to go through, often because of legal requirements with which the police themselves will burden them.

The victims’ commissioner’s survey of rape survivors includes numerous examples of investigating officers displaying a weary fatalism about the case’s chances:

[The officers] were upfront and honest. They told me it will be his word against mine … Police discouraged me at first, outlining what I would have to go through in court in a very negative way.

But there is another, less well understood reason for the officers’ widespread pessimism. On the few occasions that a rape allegation makes it all the way to a court room, the jury will often hear agreement from both parties that sex took place – but a dispute about whether consent was given. Detectives say consent is now the most common defence in rape cases – and the most difficult to disprove.

There has been a huge advance in DNA forensic technology since its first use in 1988. And TV programmes such as CSI Miami have alerted would-be rapists that if there has been physical contact with the victim, their DNA will likely be found by police forensic examiners. So while DNA technology is undoubtedly a deterrent for some potential perpetrators, it has also driven more rapists to rely on the defence of consent rather than no physical contact at all, and this can be more problematic for police and prosecutors to disprove. Without clear physical evidence such as injuries to the victim or a mobile phone recording, the police may believe that the chance of a jury being able to convict in a case of “her word against his” is slim.

If there has been a delay in reporting a rape, this can add to a police officer’s doubts that there could be a successful outcome. A detective highlighted a case where the female victim didn’t report it at the time because the offender was a distant relative:

[But] after a while she found out that he was in a relationship which gave him access to another young female, so she reported her rape to try and prevent another victim. My sergeant felt that because of the delay the jury may not convict so under the CPS guidelines, they didn’t think it was worthy of putting a file in asking for a charge.

Once again, pessimistic police officers, not trained lawyers, are second-guessing what might happen in a jury room, or what a CPS lawyer will decide in their office when they apply the “reasonable prospect of conviction” tests to the evidence bundle the police have provided.

Adding to the complexity facing these officers, it’s important to acknowledge that a very small number of reports of rape presented to the police are false. Two specialist rape and domestic abuse investigators told me that many police officers find it risky to challenge a rape victim’s story, even if they have doubts, because of a perceived fear of criticism that they are not sufficiently “victim-focused”. This phenomenon was also highlighted by a defence barrister who had been defending a woman for the crime of wasting police time after a rape report was found to be false. The barrister said it should have been obvious that the story was made up, but the police had been reluctant to challenge the account.


Read more: Victims are more willing to report rape, so why are conviction rates still woeful?


To many police officers, it can feel like a no-win situation. And the result, in England and Wales at least, is a systemic failure to see most rape reports through to the next stage of the criminal justice process, the crown prosecutor’s desk. Although an officer may have found absolutely no reason to doubt the victim’s word, they may still feel very pessimistic about the chance of a case making it all the way through to a guilty verdict.

(In Scotland, far fewer cases are stopped during the police investigation stage. This may contribute to greater confidence in the police and perhaps the criminal justice system as a whole, as evidenced by the latest Rape Crisis Scotland Report which indicates that some 70% of victims felt the police had been “supportive”.)

To charge or not to charge?

To understand what the phrase “a reasonable prospect of conviction” means in practice, I asked a former CPS chief crown prosecutor to explain how they make their decision whether or not to charge. He told me: “In theory, if it is more likely than not that a jury would convict given the evidence available, we should give them the opportunity to examine it.”

I then asked him to explain in percentage terms when a CPS lawyer would decide to prosecute a rape case:

In theory, at 51% – that is what “more likely than not” means. But if you ask me what actually happens in practice, I expect most CPS lawyers, especially in a rape case where they know the victim will get a hard time, they probably set the bar at about a 75% chance of a conviction.

He explained that CPS prosecutors can get criticism “from our own side” if too many cases are put through that are later withdrawn, either before or during a trial. He called this “a perverse incentive to not authorise a charge in rape cases”, since they are notoriously difficult to get through to conviction.

It is clear from interviewing police detectives that they always anticipate it will be hard to get a positive CPS charging decision. One detective sergeant said her local CPS was effectively asking the police to take responsibility for the judgment about whether a case was likely to succeed in court:

The CPS asks us to tick a box on a form saying whether there is a realistic prospect of conviction. Often you could get an acting sergeant – who has never been to court, with no legal training – guessing what a jury might think of the victim and her credibility. They know the CPS will be picky so they decide not to send the decision to CPS. Psychologically, they feel they are less likely to be criticised for not sending a case than for sending a weak case and wasting everyone’s time.

Again we see evidence of the “downward spiral of pessimism”, where each person is second-guessing what the next decision maker might do. But it gets worse. In her force (and this was also confirmed by an officer from another force), a detective sergeant explained:

The CPS imposed a rule that they would only deal with charging decisions in a rape case if the police had sent a full file of evidence. It takes about 200 hours to prepare a full file, so when the sergeant has to tell a detective to spend all that time on a case … If they anticipate the CPS will reject it anyway, there is a lot of pressure to just tick a box on a form – “insufficient evidence” – and get rid of the problem that way.

For other crimes, the police are allowed to send an “abbreviated” file to the CPS containing just the basic evidence, as long as they explain what other evidence will be available should they decide to run the case. Refusing to allow the police to do this in rape cases means that every statement must be taken, and potentially thousands of mobile phone messages must be examined, in advance of any CPS decision, at huge time-cost to an under-resourced police force.

Protester hplding up a sign
Many police officers and lawyers agree with the suggestion that rape has effectively been decriminalised. Shutterstock

By treating rape differently to other serious crime types it seems that, in some parts of the country at least, risk-averse CPS officials may be discouraging police supervisors from sending evidence files for a charging decision.

Since the CPS only sees about 4,000 of the initial 67,000 cases in England and Wales each year, it is perhaps easy for them to deflect criticism and say the problem of rape attrition lies elsewhere. Yet one of the reasons the CPS was set up in 1985 was to decide if there is a “reasonable prospect of conviction” and take that decision-making role away from the police.

In the face of such disastrous overall statistics, it is surely incumbent on the CPS to reclaim this role in a way that reduces police workloads – while, in cases of rape in particular, building police confidence that all cases with a reasonable prospect will indeed be prosecuted.

Why victims still don’t go ahead

There are two main reasons why victims still decide not to proceed even when a case is evidentially strong. The first is the length of time the prosecution process will take, as this police sergeant highlighted:

We have a lot of victims who want to retract their statements because the cases are taking too long. It can easily take over a year for a case to come to court and victims just want to move on. They don’t want the court cases dominating their lives.

It’s not just police officers who lament the long delays in cases coming to court. A criminal barrister recently wrote:

I am increasingly numb to the cruelty of telling broken human beings that the worst thing that ever happened to them will not be resolved for years. Trial dates creep into 2023 – then, 2024.

The UK government’s austerity policies from 2010 did not just affect the police side of the criminal justice system. Over the following decade, 164 of 320 magistrates’ courts in England and Wales (51%) were closed. According to the Law Society, by June 2021 these closures had contributed to a backlog of more than 386,000 cases in the magistrates’ courts and – because every serious case starts off with a brief hearing in a magistrates’ court – more than 58,000 delayed crown court cases, including many rape cases.

Of the few cases that end up going to court, for the first time the average duration between a rape offence occurring and the final verdict exceeded 1,000 days in 2021. Yvette Cooper commented on these delays in her speech to parliament in May 2021:

I was told about a horrendous rape case where the brave victim was strung out for so long and the court case was delayed so many times that she gave up because she could not bear it anymore. I have heard about police officers tearing their hair out over Crown Prosecution Service delays because they know that the victim will drop out if they cannot charge quickly.

The second major disincentive for rape survivors to proceed, even when the CPS approves a prosecution, is the intrusiveness of the process – and this has been accentuated by the mobile phone revolution. In her final report, the outgoing victims’ commissioner highlighted how rape campaigners coined the phrase “digital strip-search” to describe the police’s “routine requests” for a rape complainant to hand over their mobile phone almost immediately upon making a complaint.

Her comments followed the then-UK attorney general Suella Braverman issuing a directive in May 2022 which restated that, should a rape survivor take part in counselling before a criminal trial in England or Wales, any notes from these sessions may be examined by a police officer and possibly disclosed to the suspect’s lawyers to see if anything was said that could help their client’s defence.

Outrage over Braverman’s guidance led to 100 Labour MPs writing to the prime minister, Boris Johnson, warning that this could “cause many survivors to avoid seeking therapy, and make it more likely that cases will collapse when the prolonged stress of waiting for trials becomes too much”.

Protesters holding a banner
Disclosure of personal material has become a controversial issue in rape cases. Shutterstock

In fact, there is nothing new in this legal requirement placed upon the police. The Criminal Procedure and Investigations Act 1996 (CPIA) imposed an obligation on the police to pursue all reasonable lines of enquiry when undertaking a criminal investigation, whether these point towards or away from the suspect. If the police have any relevant material in their possession, or if they are aware that a third party holds relevant material, that material must be revealed to the CPS and then the defence team.

In the many cases of rape where the victim and defendant knew each other, any notes which may reveal the extent and nature of that relationship would be relevant for the defence team. In her 2022 guidelines, Braverman did not make counselling notes exempt from this process.


Read more: Why so many rape investigations are dropped before a suspect is charged


A police officer has to make the initial judgment about what material is relevant – the law says this is anything which may assist the defence case or undermine the prosecution case. And the police are well aware that they will be heavily criticised if they contribute to a miscarriage of justice.

But they are also clear that under our adversarial system, their decision will be subject to heavy scrutiny in the crown court if the defence barrister asks if there is any material, such as mobile phone texts or counselling notes, which that officer decided was not relevant. Many officers therefore take a risk-averse view by revealing anything to the CPS which could remotely be construed as being of assistance to the defence. As a detective inspector put it:

We seem to lose more cases because of [a lack of] disclosure than anything else. No one gets any prizes for causing a miscarriage of justice.

‘All my privacy was gone’

In 1996, those drafting the CPIA legislation probably did not imagine that a quarter of a century later, everyone would be carrying around storage devices that can hold 120 gigabytes of written and photographic data.

It is clear from the victims’ commissioner’s survey of rape survivors that many are very confused and upset at the intrusion into their private lives caused by handing over their phone to the police:

I was happy to provide my mobile phone for them to download all the vile messages that supported my assaults. The police said they would download all messages between me and my ex-husband, but they actually downloaded all of my phone – every message. All my privacy was gone.

Several survivors said the request made them feel like they were under suspicion – that they were the criminal:

I felt anxious, confused and infuriated. I was under far deeper investigation than the rapist. [The police] had refused to take physical evidence – my clothing from the night of the attack – but wanted to investigate my private life.

The victims’ commissioner stressed that a complainant “cannot be coerced into handing over their private digital information by threatening that the investigation will be closed should they fail to comply”. However, when the case finally comes to court, a defence barrister may well still ask for this information.

In the case of student Liam Allan, for example, his trial collapsed in December 2017 after it emerged that police had not disclosed a download of the rape complainant’s phone that had been taken during the investigation. Once the judge ordered this to be examined, it became clear that there was evidence within the text messages that the complainant had not been truthful in her evidence in court, and the case was abandoned by the CPS.

The police understandably consider it a reasonable line of enquiry to explore whether there was any previous or current relationship between victim and suspect, and so they routinely ask for a download of the victim’s phone. But the amount of data they are presented with is enormous. I was told by one officer:

It can take days to go through texts, WhatsApp messages and photographs, checking whether there has been any contact between the two parties, and any conflicting or supporting information relating to the rape report.

Inside the courtroom

The crown court can seem a hostile environment for rape survivors. But most judges are well aware that if they fail to give the defendant every opportunity to clear themselves, the case will end up in the appeal court – and they may be criticised for their handling of the trial. Judges are, of course, cognisant of cases like Allan’s, who might have become a victim of a miscarriage of justice because his defence team was not provided with information from the victim’s phone which would have exonerated him.

The victims’ commissioner called upon the government to “commit to free, independent legal advice for rape complainants … provided by a qualified lawyer who can counsel on matters affecting the victim’s human rights, such as disclosure”.

Excellent support and advice is already offered by organisations such as Rape Crisis, but I suggest there is merit in having an independent person, perhaps a lawyer or legal executive, appointed by the court to manage the disclosure issues around a victim’s private personal data – but this is a political issue that would require a law change, not just extra guidance.

If the UK’s system was based on the French “inquisitorial model”, it would be possible for the court to appoint its own expert that each side must rely on. The problem of intruding into a rape survivor’s privacy could then be alleviated by having an independent, legally trained expert take possession of the victim’s phone downloads, diaries and counselling notes and then, without revealing any content, provide a report assessing their relevance for the police, CPS, defence lawyers, and ultimately the trial judge. If agreed by the judge this independent report would then be binding on all parties.


Read more: How tackling 'rape myths' among jurors could help increase convictions at trial


In respect of certain sensitive material, such as the name of a police informant, trial judges already have a role in deciding whether it is in the public interest to disclose it to the defence team. So the principle in respect of a rape victim’s sensitive information is perhaps not that different – although expanding this system would require the Ministry of Justice to find additional budget to fund these experts.

Certainly, it is possible to make radical improvements to the criminal justice system when there is enough pressure to do so. In the late 1990s, for example, a system of trained, independent intermediaries was created to help vulnerable witnesses communicate with both the police and the courts.

A criminal justice disaster

Shamefully, the experience of rape victims whose cases actually reach the crown court is overwhelmingly negative. A report by the Centre for Women’s Justice contains harrowing quotes from survivors who have survived being cross-examined under the adversarial system. One admitted that:

Being cross-examined was as traumatic as the rape, except with the added humiliation of a jury and a public gallery.

Potential attempts to reduce these stresses include the extension of video-recorded witness testimony (common practice since 1991 for children and other vulnerable witnesses including rape survivors) to include the video cross-examination of witnesses by both legal teams long before the case reaches court.

The advantage for survivors is that their role in the trial would be over much sooner, which would perhaps alleviate one of the key reasons so many drop out even when the CPS wishes to send their case to court. However, these plans have been repeatedly delayed since the recommendation was first made by the Pigot Report back in 1989. Currently there are only three pilot sites trialling such a scheme for the witness category which includes adult rape survivors.

Nor will this eradicate the long wait for the outcome of the trial itself. The Labour party has announced plans to prioritise rape cases through the court system. But improving the courtroom process is far from a complete solution to our current rape crisis, of course, because few cases ever even reach a court.

The attrition rate at every stage, but particularly during the police investigation, should be regarded as a criminal justice disaster. It is so detrimental to public confidence that tinkering around the edges of a failing system is not enough.

As one detective constable said to me with a look of weary resignation:

I went on our rape team because I really thought I could make a difference to people’s lives. Yet we often seem to just let victims down and make things worse. It is so awful.


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Dr John Fox is affiliated with the Labour Party (member, non-activist), the British Society of Criminology, and the Association of Child Protection Professionals.

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International

COVID Lockdown Protests Erupt In Beijing, Xinjiang After Deadly Fire

COVID Lockdown Protests Erupt In Beijing, Xinjiang After Deadly Fire

Protests have erupted in Beijing and the far western Xinjiang region…

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COVID Lockdown Protests Erupt In Beijing, Xinjiang After Deadly Fire

Protests have erupted in Beijing and the far western Xinjiang region over COVID-19 lockdowns and a deadly fire on Thursday in a high-rise building in Urumqi that killed 10 people (with some reports putting the number as high as 40).

Crowds took to the street in Urumqi, the capitol of Xinjiang, with protesters chanting "End the lockdown!" while pumping their fists in the air, following the circulation of videos of the fire on Chinese social media on Friday night.

Protest videos show people in a plaza singing China's national anthem - particularly the line: "Rise up, those who refuse to be slaves!" Others shouted that they did not want lockdowns. In the northern Beijing district of Tiantongyuan, residents tore down signs and took to the streets.

Reuters verified that the footage was published from Urumqi, where many of its 4 million residents have been under some of the country's longest lockdowns, barred from leaving their homes for as long as 100 days.

In the capital of Beijing 2,700 km (1,678 miles) away, some residents under lockdown staged small-scale protests or confronted their local officials over movement restrictions placed on them, with some successfully pressuring them into lifting them ahead of a schedule. -Reuters

According to an early Saturday news conference by Urumqi officials, COVID measures did not hamper escape and rescue during the fire, but Chinese social media wasn't buying it.

"The Urumqi fire got everyone in the country upset," said Beijing resident Sean Li.

According to Reuters

A planned lockdown for his compound "Berlin Aiyue" was called off on Friday after residents protested to their local leader and convinced him to cancel it, negotiations that were captured by a video posted on social media.

The residents had caught wind of the plan after seeing workers putting barriers on their gates. "That tragedy could have happened to any of us," he said.

By Saturday evening, at least ten other compounds lifted lockdown before the announced end-date after residents complained, according to a Reuters tally of social media posts by residents.

Tyler Durden Sat, 11/26/2022 - 12:00

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Government

US Jobs and Eurozone CPI Highlight the Week Ahead

Two high-frequency economic reports stand out in the week ahead:  The US November employment report and the preliminary eurozone CPI. The Federal Reserve…

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Two high-frequency economic reports stand out in the week ahead:  The US November employment report and the preliminary eurozone CPI. The Federal Reserve has deftly distanced itself from any one employment report. As a result, it would take a significant miss of the median forecast (Bloomberg survey) to alter market expectations for a 50 bp hike when the FOMC meeting concludes on December 14.

Economists are looking for around a 200k increase in US non-farm payrolls after 261k in October. In the first ten months of the year, the US has created 4.07 mln jobs. This is down from 5.51 mln in the Jan-Oct period last week but a strong performance by nearly any other comparison. In the same period before the pandemic, the US created about 1.52 mln jobs. Non-farm payrolls rose by an average of 150k in 2018 and 2019. It is averaging more than twice that now.

Average hourly earnings have increased in importance now with greater sensitivity to inflation and fears among policymakers that it could get embedded into wage expectations. The year-over-year increase in average hourly earnings peaked in March (when the Fed began hiking rates) at 5.6%. It has fallen or been unchanged since and fell to 4.7% in October. Economists expect the pace to have slowed to 4.6%. The 4% rate, seen as more consistent with the Fed's goals, assumes 2% productivity, which has been difficult to sustain outside crises (around the Great Financial Crisis and Covid) since the middle of 2004.

The ECB is a different kettle of fish. Nearly all the voting members at the Fed that have spoken, including the leading hawks, seem to accept a downshifting from 75 bp to 50 bp. However, at the ECB, there appears to be a genuine debate. It hiked rates by 75 bp at the last two meetings after starting the normalization process with a half-point move in July. As a result, the month-over-month headline inflation surged by 1.2% in September and 1.5% in October. The year-over-year rate stood at 10.7% in October, 300 bp above the US. On the other hand, core inflation was 5% above a year ago in the eurozone compared with 6.3% in the US. The median forecast in Bloomberg's survey sees the headline rate easing to 10.4%, with the core rate unchanged.

This is leading some, like the Austrian central bank governor Holzmann to suggest that unless there is a sharp fall in the November report, he would be inclined to support another 75 bp hike when the ECB meets on December 15. The preliminary estimate of November CPI will be released on November 30, but the final reading will not be available until the day after the ECB's meeting. That said, revisions tend to be minor. While Holzmann is perceived to be one of the more hawkish members of the ECB, the more dovish contingent seems to be pushing for a slowing the pace to 50 bp. It is a bit too simple to make it into a North-South dispute. The ECB's chief economist, Lane, from Ireland, is in the 50-bp camp. The swaps market sees a little more than a 30% chance of a 75 bp hike next month. Countering the elevated price pressures is recognizing that the eurozone is slipping into a recession. Still, officials say it will likely be short and shallow, arguably giving them more latitude to adjust rates.

To be sure, the US also reports inflation. The Fed's targeted measure, the PCE deflator for October, will be released the day before the employment report. But, in this cycle, in terms of the Fed's reaction function, it seems to have been downgraded, and the thunder stolen by the CPI. Indeed, when Fed Chair Powell explained why the Fed hiked by 75 bp instead of 50 bp in June as it had led the market to believe, he cited CPI and the preliminary University of Michigan consumer inflation expectation survey (which was later revised lower). While the methodologies and basket of the PCE deflator are different than CPI, the former is expected to confirm the broad developments of the latter. A 0.3% rising in the headline PCE deflator will see the year-over-year pace slip below 6% for the first time since last November. It peaked at 7.0% in the middle of the year. The core rate is stickier and may have eased to 5% after edging up in both August and September.

The US economic calendar is packed in the days ahead. The S&P CoreLogic Case-Shiller house prices 20-city index are expected to have fallen for the third consecutive month (September). That has not happened for a decade. The FHFA house price index is broadly similar. It fell by 0.6% in July and 0.7% in August. The median forecast (Bloomberg survey) is for a 1.3% decline in September. If accurate, it would be the largest monthly decline since November 2008. The October goods trade balance and inventory are inputs into GDP forecasts. There continues to be a significant gap between the Atlanta Fed's GDPNow tracker (4.3%) and the median estimates in Bloomberg's survey (0.5%).

The JOLTS (Job Opening and Labor Turnover Survey) has become a popular metric in this cycle and has often been cited by Fed officials. It peaked in March at nearly 11.86 mln. It has erratically trended lower and stood slightly below 10.72 mln in September. It is forecast to have softened in October. The low for the year was set in August at 10.28 mln. In the three downturns since 2000, the peak in JOLTS has come well before a recession, and the bottom after the recession has ended.

While the cost-of-living squeeze is impacting consumption, the supply chains are normalizing, which is a powerful tailwind. This is at least partly the story in the auto sector. US auto sales reached 14.9 mln (SAAR) in October, the best since January and almost 15% from October 2021. In fact, in the three months through October, US auto sales are running 8.8% above the same three-month period a year ago. Still, US auto sales have averaged 13.73 mln through October, nearly 11% lower, at an annualized pace in the first ten months of 2021. Still, S&P Global Mobility analysis warns of softer November figures (14.1 mln). However, if the projection is accurate, it would be about 9.6% more than in November 2021.

There was some optimism that after the 20th Party Congress, China's Xi would have the authority and inclination to pivot on Covid, property, and foreign relations. Yet, Chinese and international medical experts have warned that China is woefully unprepared to relax its Covid policy regarding inoculation rates and medical infrastructure. The surge in cases has seen restrictions imposed on an area responsible for more than a fifth of the country's GDP. China's composite PMI has been falling since the year's peak at 54.1 in June. It fell below the 50 boom/bust level in October for the first time since May, and Q4 GDP appears to be slowing from the 3.9% quarter-over-quarter jump in Q3 after the 2.7% contraction in Q2. The world's second-largest economy may be growing around a third of the pace in Q4, with risks to the downside. The median forecast (in Bloomberg's survey) is for Q1 23 growth of 0.9%.

Aid to the property market may help stabilize the sector in the short term. Iron ore prices surged by more than 27% at the end of October through November 18 amid the optimism. However, this seemed anticipatory in nature as many of the new measures are slowly rolling out. Many observers share our doubts that the excesses of a couple of decades have been absorbed or alleviated. News that separate from the list of 16 measures to support the property market announced earlier this month, the PBOC is considering a CNY200 bln (~$28 bln) of interest-free loans to commercial banks through the end of Q1 to induce them to provide matching funds for stalled property markets, seems to be a subtle recognition that more efforts are needed. While new supply has stalled, we are concerned that the more significant issue is effective demand.  

Japan, the world's third-largest economy, unexpectedly contracted (-1.2% annualized rate) in Q3 but appears to be rebounding, likely aided by the new support measures (JPY39 trillion or ~$275 bln). Japan reports October employment figures. The unemployment rate has been 2.5%-2.6% since March. Japan has been successful in boosting the labor force participation rate. It was at 61.8% in early 2020 before Covid and has been at 62.9%-63.0% for four months through September. This is the highest since at least 2001. Retail sales, reported in terms of value (nominal prices), rose 1.3% and 1.5% in August and September, respectively. Another strong report would not be surprising. Government travel subsidies were widened in October. 

Japanese businesses were pessimistic about the outlook for industrial output in October. They anticipate a 0.4% decline after production fell 1.6% in September. The auto sector is a source of pessimism. Supply chain disruptions were cited for the dour outlooks of Toyota and Honda. Foreign demand is weakening, and Japanese exports are slowing. Japan's preliminary November manufacturing PMI slipped below the 50 boom/bust level to 49.4, its lowest in two years. 

Australia reported October retail sales and some housing data, but the newly introduced monthly CPI may have the most significance. The market is not sure that the Reserve Bank of Australia will hike rates at the December 6 meeting. The futures market has a little better than a 60% chance of a quarter-point hike. The cash rate is at 2.85%. In September, CPI made a new cyclical high of 7.3%. The trimmed mean measure stood at 5.4%, which was also a new high. We would subjectively put the odds higher than the market for a quarter-point hike. The next RBA meeting is on February 9, which seems too long for Governor Lowe to make good on his anti-inflation commitment.

Canada reports Q3 GDP and the November jobs. The Canadian economy is downshifting after enjoying 3.1% and 3.3% annual growth rates in Q1 and Q2, respectively. The pace is likely to be a little less than half in Q3 and appears to be slowing down more here in Q4. The median forecast (Bloomberg's survey) is for the Canadian economy contract in the first two quarters of next year. Canada created an impressive 119k full-time positions in October. Adjusted for the size of the economy, this would be as if the US created 1.3 mln jobs. In four of the past five quarters, Canadian job growth has been concentrated in one month. As one would expect, the following month has been a marked slowdown, and twice there were outright declines in full-time positions. After hiking by 100 bp in July, the Bank of Canada slowed its pace to 75 bp in September and 50 bp in October. The central bank meets on December 7, and the swaps market seems comfortable with a quarter-point hike.

Lastly, we turn to the Taiwanese local elections on November 26. The key is the mayoral contest in Taipei. It is seen as the most likely path of the presidency when Tsai-Ing's term ends in 2024. The great-grandson of Chiang Kai-shek is the candidate for the KMT, which wants closer ties to Beijing but rejects claims it is "pro-China." The DPP candidate is the health minister and architect of the country's Covid policy. The Deputy Mayor of Taipei is running as an independent candidate, but it looks like a two-person contest. Despite the US and Chinese defense officials agreeing to improve their practically non-existent dialogue, there is unlikely to be a meeting of the minds about Taiwan. Changes in the constellation of domestic political forces within Taiwan seem to be the most likely component that may change what appears to be an inexorable deteriorating situation. Both Beijing and Washington have good reason to believe the other is trying to change the status quo. 




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China’s Housing Crisis: What Investors Need to Know

China’s economy has grown from near irrelevance to the second largest in the world in less than half a century. Perhaps more incredible than its meteoric…

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China’s economy has grown from near irrelevance to the second largest in the world in less than half a century. Perhaps more incredible than its meteoric rise is the fact that it’s done so without any kind of significant economic contraction. Nearly fifty years of consistently positive GDP growth is practically sorcery in the eyes of the west, as our more democratized and less managed economies seldom manage to go a single decade without at least some kind of bust, let alone five.

The assumed impossibility of eternally uninterrupted economic growth has raised more and more eyebrows and elicited more and more dire predictions about China’s economy as time has passed. Surely the ruling Chinese Communist Party can’t stave off the fundamental economic forces indefinitely. Surely the other shoe is going to drop soon, and all will be right with the world.

It has to. Right?

We’re supposed to be living in a post-Soviet world. A world where the question of managed versus free economies is long-settled fact. But if the CCP is able to keep China’s economy—an economy encompassing the interests of over a billion people—from experiencing so much as a recession, that settled fact starts to look more like an open question with each passing quarter.

The current situation facing China’s real estate market is the latest and perhaps most convincing sign that China has finally reached a tipping point. A generation’s worth of breakneck growth, urbanization, and unintended consequences may be coming to a head.

(Un)Real Estate

China’s housing market is currently the biggest asset class in the world, with a notional value of nearly $60 trillion, more than the entire capitalization of the stock market. About one third of China’s economic activity involves the real estate sector (compared to 15 to 18% of the American economy), a staggering figure that becomes even more so when combined with the fact that housing accounts for about 70% of Chinese household wealth.

The reasons for the outsized role that housing and real estate play in China’s economy are complex and numerous, though they all trace their roots back to the CCP.

The current real estate crisis began shortly after China relaxed its rules on private home sales back in 1998. This change in policy roughly coincided with the explosive economic growth that’s characterized much of the past decades, much of which relied on the importation of cheap labor from the Chinese countryside into rapidly growing metro areas. Over 480 million Chinese moved from the country to the city in pursuit of better economic opportunities, and real estate developers were only too happy to provide the accommodations that the newly urbanized Chinese both needed and could suddenly afford.

Real estate developers and construction firms weren’t the only ones to profit from the unprecedented mass urbanization. Regional governments—many of which relied heavily on land sales for revenue—encouraged as much development as possible, and the seemingly endless demand for housing gave yield-starved Chinese investors a place to park their capital. Developers soon found themselves unable to keep up with the pace of demand and began to take on massive amounts of debt, much of it in dollar-denominated offshore bonds, and even started selling properties in developments that hadn’t even begun construction.

China’s government took notice of all this rampant speculation and took what it saw as reasonable steps to mitigate the threat of the collapse of the real estate market. It imposed new financing restrictions for developers based on their liabilities, debt, and cash holdings, as well as imposed new rules for banks to limit the amount of mortgage lending. Some developers, including the giant China Evergrande Group, were pushed into default by these new restrictions and were forced to put ongoing projects on hold while they sorted out their balance sheets.

Quirks in China’s real estate system meant that the newly paused or canceled projects were more than just the developers’ problems. Chinese homebuyers who had gotten mortgages and purchased unbuilt properties suddenly found themselves on the hook for properties that may never be completed, and many were understandably upset. More and more people began to protest the situation by refusing to pay their mortgages until upwards of $295 billion worth of loans were affected before the CCP started interfering with data collection on the subject. So far China’s government has been unsuccessful in trying to get the situation under control, though they are stepping up support for distressed developers and providing some special loans to help ensure certain projects are completed.  

How Will China’s Housing Collapse Affect the World?

Planned demolition of unfinished building project in Kunming

The current crisis has severe implications for the wider China economy, some of which are already being felt. S&P Global Ratings has claimed that around 20% of the Chinese developers it rates are at risk of going under, and that falling land sales have impacted local governmental revenues to the point that 30% of local governments may have to cut spending by the end of the year. Nonperforming real estate loans held by state-owned banks increased by a full 1% in 2021, a figure that is sure to grow as more recent data is made available. There is every reason to believe that the real estate market will suffer in the short to medium-term.

Harvard professor Kenneth Rogoff estimates that a drop of 20% in real estate-related investments could cut 5 to 10% out of China’s GDP, and that the subsequent drops in real estate and construction employment could create significant instability in China’s job market. Or, more broadly: “On the medium term, China faces a multitude of challenges, ranging from extremely adverse demographics to slowing productivity…Until now, the housing boom has been sustained by a broad economic boom that now faces steep headwinds.”

The intentionally opaque workings of China’s government make it difficult to predict exactly how the current crisis will play out. It is, however, possible to extrapolate the kind of impact the crisis may have on the global economy if China’s real estate market continues to deteriorate. The first and most obvious consequence of a serious slowdown in China’s economy will be felt by companies with significant exposure to China. Firms like Wynn Resorts, Apple, Tesla, and Disney would all suffer from the ensuing loss of revenue from China’s market, as would firms like Qorvo, Boeing, Caterpillar, and any other firms that rely on supplies from or sales to China.

In terms of Chinese companies, the ratings agency Fitch identified three main sectors that would be most vulnerable to a slowdown in the real estate market: Asset management companies, engineering and construction firms, and steel producers. Fitch also believes that small and regional banks would be most vulnerable to continuing difficulties—particularly if the trend of homebuyers refusing to make mortgage payments on properties that may not ever be built continues—though this may have little impact on the global economy beyond the consequences of a slowdown in China’s economy at large.

Conclusion

As dire as things may seem, however, it is important to remember that China’s government is acutely aware of the risks its economy faces from the current crisis. Pundits, analysts, and observers alike have been warning about an imminent collapse in China for years now, yet the closest we’ve seen was a self-imposed downturn that resulted from the government’s draconian attempts to eradicate COVID-19 within their borders. There is little reason to assume that China’s government’s control over their economy has slipped to any significant degree. Anathema as it may seem to western sensibilities, China’s government still possesses the tools, the will, and the monopoly on violence it needs to prevent the real estate market from destroying their economy as a whole.

The best response, for now, is to maintain the course. It may be a good idea to close positions concerning firms with significant exposure to China’s economy, but treat all other investments the same way you would when facing any other kind of economic headwinds. If the economies of Europe and the United States made it through the 2008 housing crisis, chances are China’s economy will weather this storm as well.

The post China’s Housing Crisis: What Investors Need to Know appeared first on Wall Street Survivor.

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