Coalition rebuked again by UK Statistics Authority- this time on flood defence spending

Statistics head Andrew Dilnot says a Treasury graph on infrastructure left readers with "a false impression of the relative size of investment between sectors".

After entering office in 2010, David Cameron promised to lead "the most open and transparent government in the world". But once again, the coalition has fallen foul of the number crunchers at the UK Statistics Authority. This time, the dispute centres over the Treasury's presentation of figures on infrastructure investment in the government's National Infrastructure Plan.

When the document was published last December, several were struck by how the unusual logarithmic scale used on one of the graphs made it appear as if investment was balanced across all sectors, including, most pertinently, flood defence. In fact, the government had spent £4bn in this area, compared to £218bn on energy, £121bn on transport and £14bn on communications. But the graph, as shadow chief secretary to the Treasury Chris Leslie noted in a letter to UK Statistics Authority head Andrew Dilnot, suggested otherwise. 

Dilnot has now responded to Labour, stating that "the chart could leave readers with a false impression of the relative size of investment between sectors" and including a redrawn version by stats officials. 

The Treasury version

UK Statistics Authority version

And that wasn't the only correction he issued. 

The coalition also boasted that "average annual infrastructure investment has increased to £45 billion per year compared to an average of £41 billion per year between 2005 and 2010". But as Labour MP John Healey noted in a letter to Dilnot, a footnote to the document admitted that there were "challenges when collecting this data", that the figures did not derive from consistent source material and that they were not comparable with the other data used. He added: "Despite these admissions, the methodology by which the figures were produced is not made clear, nor are the timeframes which have been selected for comparison - 2005-10 and 2011-13 - explained or justified." In response, Dilnot writes that "It would have been good practice for this analysis to have been accompanied by full information about the methods used."

As I noted earlier, this is far from the first time that ministers have been rebuked for their statistical chicanery. In December 2012, Jeremy Hunt was ordered to correct his false claim that spending on the NHS had risen in real terms "in each of the last two years". A month later, David Cameron was criticised for stating that the coalition "was paying down Britain’s debts" (the national debt has risen from £828.7bn, or 57.1 per cent of GDP, to £1.25trn, or 75.7 per cent of GDP since May 2010) and then in May 2013, Iain Duncan Smith was rebuked for claiming that 8,000 people moved into work as a result of the introduction of the benefit cap. 

Here's Chris Leslie's response to today's letter: 

Time and again Ministers are being warned not to mislead the public with false claims, dodgy statistics and biased graphs.

Now George Osborne and the Treasury have been told off for misleading people about the government's investment in infrastructure. For example, their chart made it look like investment in flood defences was roughly the same as in other areas, when in fact it was a tiny fraction.

This government has a track record of trying to pull the wool over people's eyes. David Cameron has now been rebuked several times for making false claims: on NHS spending, the rising national debt and the impact of his tax rises and spending cuts on economic growth.

And only last month the Tories came up with more dodgy figures to claim people are better off, but which totally ignored the impact of things like the rise in VAT and cuts to tax credits.

In their desperation to paint a rosier picture than the truth David Cameron and George Osborne are showing just how out of touch they are from reality.

David Cameron talks with residents and environment agency workers in the village of Yalding in Kent on December 27, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Stability is essential to solve the pension problem

The new chancellor must ensure we have a period of stability for pension policymaking in order for everyone to acclimatise to a new era of personal responsibility in retirement, says 

There was a time when retirement seemed to take care of itself. It was normal to work, retire and then receive the state pension plus a company final salary pension, often a fairly generous figure, which also paid out to a spouse or partner on death.

That normality simply doesn’t exist for most people in 2016. There is much less certainty on what retirement looks like. The genesis of these experiences also starts much earlier. As final salary schemes fall out of favour, the UK is reaching a tipping point where savings in ‘defined contribution’ pension schemes become the most prevalent form of traditional retirement saving.

Saving for a ‘pension’ can mean a multitude of different things and the way your savings are organised can make a big difference to whether or not you are able to do what you planned in your later life – and also how your money is treated once you die.

George Osborne established a place for himself in the canon of personal savings policy through the introduction of ‘freedom and choice’ in pensions in 2015. This changed the rules dramatically, and gave pension income a level of public interest it had never seen before. Effectively the policymakers changed the rules, left the ring and took the ropes with them as we entered a new era of personal responsibility in retirement.

But what difference has that made? Have people changed their plans as a result, and what does 'normal' for retirement income look like now?

Old Mutual Wealth has just released. with YouGov, its third detailed survey of how people in the UK are planning their income needs in retirement. What is becoming clear is that 'normal' looks nothing like it did before. People have adjusted and are operating according to a new normal.

In the new normal, people are reliant on multiple sources of income in retirement, including actively using their home, as more people anticipate downsizing to provide some income. 24 per cent of future retirees have said they would consider releasing value from their home in one way or another.

In the new normal, working beyond your state pension age is no longer seen as drudgery. With increasing longevity, the appeal of keeping busy with work has grown. Almost one-third of future retirees are expecting work to provide some of their income in retirement, with just under half suggesting one of the reasons for doing so would be to maintain social interaction.

The new normal means less binary decision-making. Each choice an individual makes along the way becomes critical, and the answers themselves are less obvious. How do you best invest your savings? Where is the best place for a rainy day fund? How do you want to take income in the future and what happens to your assets when you die?

 An abundance of choices to provide answers to the above questions is good, but too much choice can paralyse decision-making. The new normal requires a plan earlier in life.

All the while, policymakers have continued to give people plenty of things to think about. In the past 12 months alone, the previous chancellor deliberated over whether – and how – to cut pension tax relief for higher earners. The ‘pensions-ISA’ system was mooted as the culmination of a project to hand savers complete control over their retirement savings, while also providing a welcome boost to Treasury coffers in the short term.

During her time as pensions minister, Baroness Altmann voiced her support for the current system of taxing pension income, rather than contributions, indicating a split between the DWP and HM Treasury on the matter. Baroness Altmann’s replacement at the DWP is Richard Harrington. It remains to be seen how much influence he will have and on what side of the camp he sits regarding taxing pensions.

Meanwhile, Philip Hammond has entered the Treasury while our new Prime Minister calls for greater unity. Following a tumultuous time for pensions, a change in tone towards greater unity and cross-department collaboration would be very welcome.

In order for everyone to acclimatise properly to the new normal, the new chancellor should commit to a return to a longer-term, strategic approach to pensions policymaking, enabling all parties, from regulators and providers to customers, to make decisions with confidence that the landscape will not continue to shift as fundamentally as it has in recent times.

Steven Levin is CEO of investment platforms at Old Mutual Wealth.

To view all of Old Mutual Wealth’s retirement reports, visit: products-and-investments/ pensions/pensions2015/