Friday, 20 May 2016

Lies, damned lies, and statistics

The expression “there are lies, damned lies, and statistics” has never been definitively attributed but it has become a political cliché. And in some ways an unfair one, since it is a way of discrediting any and every statistic. Even so, there are some statistics which are palpably lies, and the campaign for Britain to leave the EU is replete with them.
The most egregious lie is the statistic used as the headline claim of the Leave campaign (appearing on the side of the campaign ‘battle bus’ and on all its leaflets and web sites) that “the EU costs us £350 million a week”.  This has been debunked numerous times, not least by the Office for National Statistics. It arises from the fact that in 2014, the last year for which full figures are available, the UK gross contribution to the EU was £18.8 billion. Divided by 52 this gives the figure of £350M per week. But stated as a cost to the UK it is a lie. Why?
Because it is the gross contribution. The net contribution is reduced by the UK’s budget rebate, which in 2014 was £4.4 billion, and payments received back in grants to for example agriculture and science funding which in 2014 were £6 billion. So the net contribution in 2014 was £8.4 billion – less than half what is claimed. And there is also the lie that this is what the UK pays ‘each year’. In fact, the figure varies each year and 2014 was the second highest contribution on record. Nor is the figure rising – the 2015 predicted out turn is lower than 2014.
In the face of this (although they have never acknowledged the fact that this was an unusually high year) the Leave campaign have made two defences. First, they say, that is the amount that we actually hand over, so it is what the EU costs, even if we get some back. That is a crazy logic in itself, of course. It is like saying that if I go into a shop and buy something priced at £5 and give a £10 note and get £5 change, then my visit to the shop has cost me £10. But it isn’t even true in this crazy sense: the rebate part is never even handed over.
Their second defence is that it is justified to quote the gross figure because, outside the EU, all this would be available to spend on what the UK wanted, whereas the £6 billion that comes back has to be spent on what the EU determines. The problem with that, though, is that Brexit campaigners have, whenever challenged that leaving would reduce UK agricultural subsidies or science funding, said that these payments would continue to be made by the UK government, and some have even said they would be increased. So if that is true, then only the net figure would be available to the UK.
But let’s look at that. First, it assumes that nothing else whatsoever changes in the economy on Brexit, which no analyst, even pro-Brexit, thinks. Second, it neglects how that contribution benefits the UK by, for example, boosting the economies of less developed members of the EU which in turn leads to demand for UK exports. Third, in 2014 it was about 1% of UK government expenditure anyway – almost a rounding error in the public accounts. And, fourth, the impact of the rebate (negotiated by Margaret Thatcher in 1984) is that the UK is exempt from the general rule of contributing 1% of GDP. The consequence is that in every single year the UK is the lowest contributing EU member as a percentage of GDP.
The zombie statistic of £350M a week refuses to die, no matter how often it is discredited, but it is not the only offender. This week, the Leave campaign produced what became a widely reported statistic supposedly showing that UK exports to the EU had dropped by over 18% in the last decade. The idea was to try to counter the argument that the single market is important to the UK economy. Buried in what they said was that this didn’t take account of exchange rate fluctuations between the pound and the Euro, which sounds rather boring and technical. But of course it is crucial. If a UK firm sells a good for £1 and the exchange rate is £1=2Euros and next month sells the same good at £1=1.5Euros then the value of exports has fallen by 25% - in Euros – but not at all in sterling. And in the period 2006-2016 the £-Euro exchange rate has fluctuated considerably.  So I checked and - surprise, surprise – the value of UK exports to the EU actually rose in sterling over the last decade. And that was a decade no doubt carefully chosen to encompass the global financial crisis – if one took the 20 years from 1996 the growth would be larger.
These two examples are taken from many that could be chosen, and this week several more were pulled apart by InFacts. The other headline lie, apart from the budget contribution, is that 65% of UK law is made in the EU when in fact is 13%. Of course in all political debates statistics are bandied about, and they are often dodgy, and the Remain campaign are surely guilty of cherry picking statistics to suit their cause. But that is not the same as lying and what I find extraordinary about the Leave campaign is not that they present figures that support their case, which would be one thing, but that every statistic I have seen them produce has been palpably – often absurdly – dishonest. Maybe I am biased – but if you think so watch Vote Leave’s Dominic Cummings being questioned by the Treasury Committee about the £350M a week claim, and judge for yourself.

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