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The UK riots: Maplecroft analyses the impacts for the business environment and political process

17/08/2011

Image courtesy of mastermaq - flickr

Triggered by a rare fatal police shooting in Tottenham, north London, on 4 August 2011, a wave of rioting and looting swept across several towns and cities in England starting on 6 August. Initial violence against police quickly turned into vandalism, arson and looting. Police forces and fire services were at first overwhelmed by the mobility and numbers of the rioters. A change of tactics and reinforcements from neighbouring police forces eventually brought the violence under control, four days after it first broke out.

Although such events are far from unprecedented in the UK, the days of rioting and their political context were unique in several ways. Firstly, the riots caught the police and other emergency services off-guard. What was initially a violent confrontation with police in one area (a not unusual ‘public order issue’, as Prime Minister David Cameron put it), turned into a criminal free-for-all as opportunistic rioters realised that police were overwhelmed and that looting, robbery and arson could be committed without fear of immediate arrest.

Secondly, the timing of the riots is politically sensitive. The riots came at a time when most of the cuts to the UK’s budget under the government’s confirmed fiscal austerity programme have yet to be enacted. Although the Chancellor, George Osborne, has since re-iterated the government’s commitment to fiscal austerity, politicians are now debating whether the programme of cuts is partly to blame for the feelings of resentment underlying the rioting. The Conservative-Liberal Democrat coalition government has experienced tension over policies on crime and social issues before, and a resurgence of right-wing opinion in the wake of the riots may damage cooperation between the parties.

However, nothing new has come to light as a result of these riots – David Cameron has been blaming ‘Britain’s broken society’ for social evils for several years, and the poor urban areas where the majority of the riot suspects live were already problem areas for gang-related crime. In light of this, and despite a policy review of relevant social policies ordered by Cameron, there is unlikely to be a large change in the UK Government’s planned spending policies unless rioting becomes a persistent problem in the coming months and years.

There remains a great deal of uncertainty over whether these riots were a one-off phenomenon or whether they could happen again and run a similar course. It is likely, however, that a second outbreak of violence would be met with a more immediate response that takes into account lessons learned during the recent riots.

Policing failures and lessons learned

• The character of the rioting was unexpected and exposed weaknesses in current policing strategies. The rioters used means of communication (including Twitter and a secure instant messaging service available to users of BlackBerry cellphones) which allowed single criminal suspects to simultaneously contact groups of tens, hundreds or even thousands of peers in real-time. This technological advantage meant that rioters were a step ahead of police, organising attacks in a matter of minutes and then melting away before the arrival of police on the scene.
• Later on in the riots, after several of the suspects’ BlackBerry handsets had been seized by police, monitoring of rioters’ plans and movements became easier. The legality of these police methods is an area which is likely to need clarification in the aftermath of the rioting. Monitoring public information sources such as Facebook or Twitter is not problematic, but intercepting private communications using a suspect’s property without a warrant may be. Under the Regulation of Investigatory Powers Act 2000, police in the UK do not currently have the right to demand access to the content of messages sent over communications networks, although judges can order companies to reveal the contents of messages during criminal trials.
• The ‘holding ground’ riot strategy appears to have allowed groups of rioters to loot and commit arson with virtual impunity in some areas, despite heavy police presence. In conventional riot situations, experience has shown that controlling territory and limiting the spread of the unrest is often the most effective solution, although this can result in unchecked property damage and other criminal acts within the affected area. This strategy, followed most visibly on the first night of violence, reflected police chiefs’ caution about taking action which might exacerbate the already-poor relations between some Tottenham residents and the police. Heavy-handed police tactics were blamed for triggering riots in 2005 in Paris and for the infamous Brixton riots of the 1980s.
• Police tactics did eventually change, after it became clear that the rioting had changed from acts of defiance against police in a single area to widespread opportunistic vandalism and looting. In order to police this new situation, significant additional police resources were required (police numbers were increased to 16,000 in London, with reinforcements from other home counties police forces). Without changes to the ability to bring in urgent reinforcements at speed, the implications for public order and the risks to property during similar situations in future are serious. Mobile riot control tactics require large numbers of police officers.
• The deterrence dividend of the large number of successful prosecutions and the lessons police forces will have learned from this episode mean that security risks in the UK have not increased over the long-term. Much of the looting and property damage, in particular, was carried out by people who have subsequently been arrested on the basis of security camera footage and police photographs. Although the nature of the rioting was unexpected, similar situations have occurred several times in the past, both in the UK and around the world. With experience of the changing tactics of rioters in a modern context, police forces can be expected to use these lessons to avoid giving the impression of a loss of control in future. This would likely limit property damage and economic loss during future riots.

Impact and reactions

• Police budget cuts are one of the more controversial issues among the raft of cuts and policy areas which may impact on the incidence and severity of future unrest. A report recently released by Dr Timothy Brain, a former chief constable, suggested that the projected real-terms cuts of 14% in police budgets over the next four years would heavily impact frontline police numbers. Divisions between police chiefs and politicians over the handling of the riots and the expected impact of the cuts have been prominently featured in the media since the rioting was brought under control, with unusually sharp criticisms from both sides. Public opinion is likely to favour the reversal of planned cuts – a move which would lead to budgetary uncertainty in other areas.
• Damage to property had the most visible impact on businesses, but an atmosphere of uncertainty affected business more widely. Preliminary estimates of the value of damage done during the riots (predominantly through looted merchandise and fire damage to vehicles and buildings) have put the figure at £200m (US$330m). The government has confirmed that police – and ultimately the treasury – will be liable for much of the uninsured damage under the Riot (Damages) Act 1886. Most businesses in affected towns and cities experienced indirect damages, however, attributable to uncertainty about the impact of the developing security situation on employees. Retail businesses additionally struggled, with a reduction in sales as a result of empty high streets in affected areas.
• Market reactions to the violence were minimal, but an optimistic valuation of the country’s currency and sovereign debt instruments seems to be based on confidence in the rigour of planned austerity measures, which are now under more political pressure. Yields on many government bonds actually fell during the days of rioting reflecting market confidence, although there were limited falls in the value of sterling against the dollar after widespread coverage of the riots in the US. It is too early to predict how the situation will evolve, because of uncertainty over the extent to which discontent was driven by a feeling of neglect inspired by budget cuts. Pressure on the austerity plan was already clear before the rioting and was based on concerns about the performance of the economy. Further stimulus measures or a softening of budget cuts would likely dent confidence in the UK’s ability to manage its debt responsibilities, with knock-on effects on the value of sterling and gilt yields.

A more in-depth assessment of the UK riots is available. For further information on this or to enquire about Maplecroft’s assessment of other risks pertaining to the UK business environment, please contact info@maplecroft.com.

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