Tory stats questioned again as Hammond makes “unfair comparison”

The Conservative's use of statistics have again come under scrutiny. Philip Hammond has made an "unfair comparison" of insolvency figures before and after 1997.

In the week when Chris Grayling was rebuked by the Chair of the UK Statistical Authority, and a candidate in Putney misused burglary statistics, the Conservative’s use of statistics have again come under scrutiny.

A press release quoting Philip Hammond this evening titled ‘Labour’s legacy of debt,’ details that:

Official Insolvency Service figures show that under Labour the number of people who have gone bust is double the rest of recorded history…

Before the third quarter of 1997, there were 400,000 personal insolvencies in England and Wales.

But Conservative Party research shows that, under Labour, 800,000 people went bust – double the rest of recorded history. The IMF recently warned that the high level of personal debt in Britain could hold back an economic recovery.

But leading personal insolvency expert, Pat Boyden of PriceWaterhouse Coopers, told Left Foot Forward:

“There have been changes in legislation, changes in attitude, and changes in lending patterns so it’s a bit too naïve to say it’s all down to the government…

“Without look at all the factors, it’s an unfair comparison.”

The 1986 Insolvency Act, introduced by the Conservative party, created Individual Voluntary Arrangements (IVAs) a formal alternative for individuals wishing to avoid bankruptcy. This has resulted in 300,000 to 400,000 additional insolvencies, according to Boyden.

A minor change in 2000 dispensed with court applications and made it easier for IVAs to be carried out while the 2002 Enterprise Act, which took legal effect in 2004, pushed up the number of insolvencies by reducing the length of time that someone could be discharged from bankruptcy from three years to one.

As Boyden asks:

“What do we want as a modern democracy? Do we want people to be hung up on debt for a number of years or do we want people to get on with their lives? … It’s better than it was in the 17th century when they use to hang them for debt.”

Although there should be no excuses for the increases in personal indebtedness in recent years, the comparison by Hammond appears to be spurious at best.

Hat tip: Alex Hilton

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