If you believe New Labour really has room for some Budget electioneering, then you’ll believe anything.
I confess to still being in shock about the press reaction to the new set of UK deficit statistics from the ONS. It’s not that I mind being out of step – this is by nature a contrarian site – but I do worry a lot about the gullibility that went into much of the media reportage.
At even the most basic level, it must be obvious that an ‘undershoot’ of £7 billion in the borrowing requirement on a debt of £842 billion doesn’t add up to much. It’s good to know, but one kid urinating into the Pacific is hardly comparable to the alleged effect of melting icecaps.
People say over and over that statistics are worse than damned lies, but this simply isn’t so. Statistics will reveal the truth if one takes the time to look at the small print – and think about the broader ramifications of the numbers. Looked at in this light, the Government got away with murder yesterday. And there are three solid reasons why that observation represents sound observation rather than sour grapes.
Lets look first of all at the green undershoots of recovery. Go to the data period explanations further along in the ONS report, and you will see that revised methods of collecting the data mean that this last period isn’t strictly comparable with most of last year’s.
There’s no jiggery-pokery going on here: it’s the dilemma faced by every good statistician – how do I refine the collection accuracy but at the same time provide continuity? The answer is, it’s impossible – a fact of life, but one which casual observers usually forget.
The point is, the new methodology has had the effect of underestimating the borrowing requirement by £3 billion.
That’s not my interpretation: it’s there in the notes, in black and white.
So that’s 40% of the Chancellor’s Budget Party-Bag gone for a start.
Now let’s look at an assumption that the Cabinet Office was keen to get out there yesterday. Beware Cabinet Office releases that bear shifts: the release said that Alistair has changed his mind a bit about the unexpectedly ‘high’ tax-take: he ‘thinks it will be longer-lasting than most people expect’.
I’m not an intimate of the Chancellor and so I have no idea what goes through his mind from one hour to the next. But I’d be willing to bet that this particular thought is miles out.
For a tax uplift to be maintained, you need to be at the start of a major recovery – one that’s showing itself through the arrival of more full-time jobs. (I say full-time, because like it or not the Revenue doesn’t see anywhere near 100% of the money given to part-timers). The fact is that – as The Slogger has reported several times – this just isn’t the case. Private sector employment fell by 61,000 in the fourth quarter of last year. And manufacturing output slumped in January. Production is now at its lowest monthly level since last August, when even the Government admitted that the recession was in full swing.
There was a minute rise of a few thousand in full-time employment last month…and a 95,900 rise in people working only part-time. Out of 36 countries polled by the employment group Manpower at the start of March, 27 were taking on new hires. Britain wasn’t one of them.
Darling may think there is good cause to expect tax income to be maintained. Those of us not trying to win an election might disagree.
Finally, perhaps the mammoths in the room deserve a mention. I refer of course to RBS and Lloyds, and I know I am justified in calling them mammoths because the ONS itself agrees, calling them ‘huge and complex’ and thus very difficult to include in the public sector finances report. In fact, say the ONS notes, ‘they may not be included for some time’.
This is a polite (and on the part of the ONS, entirely justified) way of saying that the banking money-pit has as yet defied the attempt by small armies of accountants to measure it accurately – or even at all, as such. Nevertheless, leaving what the report coyly refers to as ‘financial interventions’ off the current account makes Brown’s decision to leave the NHS private finance disaster out of his Budget statements look like a minor clerical error.
Again, there is no ONS plot to hide the black hole up in Scotland (and that’s where it mainly resides) but if the size of the exposure to risk is as yet impossible to calculate, how on earth can the Government say that its ‘on target’?
When it comes to financial ruin, the UK is on target in pretty much the same way as Icarus was on target for the sun. If you doubt this, return with me again to some more numbers.
Last November – just eleven weeks ago – the Treasury quietly announced with no preamble that the taxpayer had thrown another £34 billion at the RBS Wall of Death.
The main outcry at the time focused mainly on asking why a bank lending diddly-squat to small businesses was being given all this money. But that outcry too is naive: RBS was given the money because – despite its ‘profit improvement’ last year (another piece of fantasy) – the bank’s balance sheet is about as solid as Nottingham Lace. Look at the RBS report: the bank paid back ‘a substantial sum’ in Government loans – and borrowed 50% more than it had paid back.
Now this may seem like wonkery on my part, but just surf across the main news websites this morning: the general tone is quite ridiculously optimistic, but there is no justification whatsoever for this mood.
Apart from those people employed in the public sector, there are very few people left in Britain keen on a another five years of Gordon – or whoever declares a Regency once the election is done and dusted. Yesterday, the media pack did the British people a massive disservice – and helped those really writing the upcoming Budget to hide naked bribery behind apparent success.