Lies, Lies and Damned Statistics

Saturday 25th January

Ed Milliband has been good at setting the Agenda and the Tories are once again on the back foot.  This time about the cost of living.  And they have just published figures that ‘show’ that all but the top 10% of earners are better off comparing take-home pay to a year ago.  One wonders quite how these numbers have been compiled.  There have been cuts to child benefit kicking in, and then the tax-cut to those earning over 100,000.  Plus of course the pay-freeze in the public sector, now in its fourth year.

Then we dig a little deeper, and they are comparing the year-ending April 2013 with the previous year. And of course the child benefit cuts did not come in until  this tax-year.  Also the 5% tax cut for top-earners came in only in this tax year too.   And yes, some people on low incomes had their tax threshold increased so this meant a lot are paying less tax.  Very commendable that is too, and a lesson I hope that Labour learns for the future.

But actually whichever way you present the figures the truth is that the Government has taken a lot of Public Spending out of the economy, so overall there is less money being spent than a few years ago.  And the rate of inflation is a bit of a red herring too.  When poor people spend the vast majority of their money on rent, food and heating and travel – all of which have risen far higher than inflation.  Wealthier people have effectively had a freeze put on their mortgages with many paying considerably less than a few years ago, and a lower proportion of their money is spent on essentials.

The truth is that people feel far poorer than they did a few years ago.  And no matter how many statistics you throw at them, until they begin to feel better they won’t believe them.