George Osborne, followed by Mark Carney, arrives at the Lord Mayor's Dinner at Mansion House. Photograph: Getty Images.
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Why an interest rate rise could help the Tories

It would benefit savers and could be seen as a sign of a return to economic normality.

It was just a month ago that Mark Carney sought to dampen expectations of an interest rate rise, stating that rates may remain low "for some time". But in his Mansion House speech last night, the Bank of England governor took a dramatically hawkish turn. He told the inhabitants of the City of London: "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect." With the markets currently forecasting a rise in spring next year, Carney's remarks suggest rates could increase from their record low 0f 0.5 per cent (where they have been for more than five years), before the end of 2014. Increasingly troubled by "early signs" of a housing bubble, the governor has signalled his willingness to deploy the most powerful weapon in the Bank's arsenal.

While economists debate the merits and demerits of the move, what would the political consequences be? It's generally assumed that a rate rise would be damaging for the Tories, one reason why cynics suggested that Carney (who was personally apppointed by George Osborne and awarded a bumper £800,000 salary) would postpone any increase until after the general election. Past Conservative governments, disproportionately reliant on the support of homeowners, consistently sought to avoid rate rises clashing with polling day. Indeed, it was precisely to end such politically motivated policy that Gordon Brown made the Bank of England independent in 1997.

But the politics of a rate rise may be more complex than they appear. A poll last year by YouGov for the Times found that 31 per cent of people believe an increase would leave them better off, compared to just 23 per cent who believe they would be worse off and 32 per cent who thought it would make little difference either way. While some Conservative supporters would curse a rise in their mortgage costs, others would be cheered by a better return on their savings. As Osborne's most recent Budget demonstrated, there are votes to be won in courting this group. The over-60s, who have suffered most from ultra-loose monetary policy, are desperate for signs of a return to normality and, crucially, are the most likely group to turn out.

More broadly, a rate rise could be viewed as a signal that the economy is finally back on track after years in intensive care . Osborne has already publicly claimed that the possibility of an increase is a "mark of success", an assessment that some voters will undoubtedly agree with. Labour argues, with much justification, that a rate rise would be more accurately described as a mark of a failure. As Ed Balls said in response to Osborne's Mansion House speech, it is the government's unwillingness to act on housing supply that has led to the danger of "a premature rise in interest rates to rein in the housing market which ends up hitting millions of families and businesses." But if Osborne is as relaxed as he appears about the possibility of a rate rise, he may not be wrong to be so.

George Eaton is political editor of the New Statesman.

A small dose of facts could transform Britain's immigration debate

While "myth-busting" doesn't always work, there is an appetite for a better informed conversation than the one we're having now. 

For some time opinion polls have shown that the public sees immigration as one of the most important issues facing Britain. At the same time, public understanding of the economic and social impacts of immigration is poor and strongly influenced by the media: people consistently over-estimate the proportion of the population born outside the UK and know little about policy measures such as the cap on skilled non-EU migration. The public gets it wrong on other issues too - on teenage pregnancy, the Muslim population of the UK and benefit fraud to name just three. However, in the case of immigration, the strength of public opinion has led governments and political parties to reformulate policies and rules. Theresa May said she was cracking down on “health tourists” not because of any evidence they exist but because of public “feeling”. Immigration was of course a key factor in David Cameron’s decision to call a referendum on the UK’s membership with the EU and has been central to his current renegotiations.  

Do immigration facts always make us more stubborn and confused?

The question of how to both improve public understanding and raise the low quality of the immigration debate has been exercising the minds of those with a policy and research interest in the issue. Could the use of facts address misconceptions, improve the abysmally low quality of the debate and bring evidence to policy making? The respected think tank British Future rightly warns of the dangers associated with excessive reliance on statistical and economic evidence. Their own research finds that it leaves people hardened and confused. Where does that leave those of us who believe in informed debate and evidence based policy? Can a more limited use of facts help improve understandings and raise the quality of the debate?

My colleagues Jonathan Portes and Nathan Hudson-Sharp and I set out to look at whether attitudes towards immigration can be influenced by evidence, presented in a simple and straightforward way. We scripted a short video animation in a cartoon format conveying some statistics and simple messages taken from research findings on the economic and social impacts of immigration.

Targeted at a wide audience, we framed the video within a ‘cost-benefit’ narrative, showing the economic benefits through migrants’ skills and taxes and the (limited) impact on services. A pilot was shown to focus groups attended separately by the general public, school pupils studying ‘A’ level economics and employers.

Some statistics are useful

To some extent our findings confirm that the public is not very interested in big statistics, such as the number of migrants in the UK. But our respondents did find some statistics useful. These included rates of benefit claims among migrants, effects on wages, effects on jobs and the economic contribution of migrants through taxes. They also wanted more information from which to answer their own questions about immigration. These related to a number of current narratives around selective migration versus free movement, ‘welfare tourism’ and the idea that our services are under strain.

Our research suggests that statistics can play a useful role in the immigration debate when linked closely to specific issues that are of direct concern to the public. There is a role for careful and accurate explanation of the evidence, and indeed there is considerable demand for this among people who are interested in immigration but do not have strong preconceptions. At the same time, there was a clear message from the focus groups that statistics should be kept simple. Participants also wanted to be sure that the statistics they were given were from credible and unbiased sources.

The public is ready for a more sophisticated public debate on immigration

The appetite for facts and interest in having an informed debate was clear, but can views be changed through fact-based evidence? We found that when situated within a facts-based discussion, our participants questioned some common misconceptions about the impact of immigration on jobs, pay and services. Participants saw the ‘costs and benefits’ narrative of the video as meaningful, responding particularly to the message that immigrants contribute to their costs through paying taxes. They also talked of a range of other economic, social and cultural contributions. But they also felt that those impacts were not the full story. They were also concerned about the perceived impact of immigration on communities, where issues become more complex, subjective and intangible for statistics to be used in a meaningful way.

Opinion poll findings are often taken as proof that the public cannot have a sensible discussion on immigration and the debate is frequently described as ‘toxic’. But our research suggests that behind headline figures showing concern for its scale there may be both a more nuanced set of views and a real appetite for informed discussion. A small dose of statistics might just help to detoxify the debate. With immigration a deciding factor in how people cast their vote in the forthcoming referendum there can be no better time to try.