The Blog

Why Do We Keep Letting Politicians Fudge the Numbers So Badly?

In times of crisis, the need for clear information is more important than ever. Crunching the numbers in a transparent way is one of the best methods of public policy formation available to us, and data concerning jobs and growth has informed many reasonable economic arguments in recent years.

In times of crisis, the need for clear information is more important than ever. Crunching the numbers in a transparent way is one of the best methods of public policy formation available to us, and data concerning jobs and growth has informed many reasonable economic arguments in recent years. These crucial statistics that should determine our fiscal strategy, however, are being continually massaged, spun and oversold by our current crop of politicians, incumbents and opposition alike.

Take job creation for instance. Latest ONS figures indicate that, last year, 40,000 more people were employed between August and October than between May and July. Yet, digging a little deeper, one finds that nearly half this number were actually participating in employment and training programs run by the government. This means that someone on the government's Workfare program, for instance, who classifies themselves as engaging in work related activity, is included under the heading of 'employed'. Any form of work experience, work related training or other vacuous designator of something 'worky' is also included in the top line figure.

I don't believe that this constitutes sufficient evidence for the claim the government made after the figures were published: that it is successfully promoting the kind of jobs people value. When, nationwide, the number of applications for each job vacancy keeps on rising, there clearly aren't enough jobs being created. In some parts of the country, there are as many as 25 people vying for each position advertised. Many on the Workfare program are actively looking for other jobs. In fact, this is the whole point of a free labour for benefits scheme: to further ones experience in order to climb the job ladder later on.

Perhaps if less misleading data were used, the government could not so easily get away with the divisive, poisonous statements it regurgitates over and over again in the false debate between strivers and skivers. Six out of 10 people who will be affected by coalition welfare reforms outlined in the Autumn Statement will already be in work. This is a fact, one of many that the coalition has ignored in its 'pick and choose' policy of statistical reportage. I don't know why more people haven't questioned how a stagnant economy can be compatible with government data suggesting that more people are finding work in the first place.

An equally great untruth was concealed within the Autumn Statement last year. As a matter of fact, the deficit would have actually increased for the financial year of 2012 if borrowing figures were not massaged to include the estimated £3.5bn 4G spectrum auction, likely to happen early in 2013. This is far from an innocuous oversight; it allowed the Chancellor to make a far more palatable announcement than he should have been able to: that earlier targets were missed but the deficit was still falling overall. The blame, as ever, was placed on external factors.

Which brings us neatly to Eurozone data. The only argument that the Chancellor seems to have any statistical backing for is his claim that our economic prospects depend in a large part on the performance of the Eurozone. In 2011, exports of goods and services to Europe accounted for 47.5% of our total trade, despite significant growth in deals with emerging markets and the rest of the world. When nearly half our exports - including services - are being pitched at flat lining economies, this really does spell bad news for British traders.

There is some positive news in that our largest trading partner within Europe is also its most stable nation, Germany, but given British banks still have tens of billions exposed to the fate of the PIIGS, it does seem fair for the Chancellor to say that poor growth in the Eurozone has had a detrimental impact on UK economic performance.

Yet, the coalition has a substantial history of confused arguments over one of the most important issues facing us: the national debt and the deficit. This confusion has been propagated by opposition parties in an unsuccessful attempt to derail 'Plan A.' Ed Balls made a right balls up, for want of a better expression, of his rebuttal to Osborne's Autumn Statement when he tried to open with a simple statement of figures on deficit reduction: "The national deficit is not rising ... is rising, is not falling."

This slip saw him widely derided, but is also indicative of politicians failing to get to grips with the numbers surrounding the deficit and economic performance, never mind other areas of public policy.

Opposition parties must also be seen as partners in this crime. At the Labour Party Conference last year, Ed Miliband claimed that in April, when the top rate of income tax is scheduled to come down from 50p to 45p, "David Cameron will be writing a cheque to each and every millionaire in Britain for £40,000."

This claim, on further examination, turns out to be a half-truth at best, and at worst a flat out lie. For those with incomes in excess of 950,000 a year, the cut will indeed mean that they will be better off by £40,000 annually. But a serious error has been made by conflating this idea of income, cash earnings that are subject to income tax, with wealth, measured as ones asset stock.

Most millionaires aren't millionaires by virtue of a traditional, yearly flow of cash earnings. Their wealth is the product of investments, shares, generous pension pots and high value properties. Hence, whilst rich in assets, few millionaires will benefit to the tune of £40,000 as Miliband claimed from reducing charges on taxable income. Some, if their taxable income is low enough, won't benefit by a single penny.

All this obfuscation has achieved - and it has on occasion been deliberate - is to perplex the general public, making the information they need to make an informed political decision harder to get at, as well as turning them off Westminster at large.

I hope, for the sake of the country, that the aforementioned cases do not betray a fundamental lack of economic literacy on the part of British politicians. I would rather try and cast them as individual cases of chronic imprecision that must be treated as soon as possible, naïve though this may be. Journalists, and the general public, must be more vociferous in their protest of this pernicious kind of dishonesty.