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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16 Responses to “Tory stats questioned again as Hammond makes “unfair comparison””

  1. Andrew Regan

    @leftfootfwd "Tory stats questioned again a…": In the week when Chris Grayling was rebuked by the Chair of… http://bit.ly/9MvN2T #labour

  2. Steve Hanlon

    RT @leftfootfwd: Tory use of statistics questioned again as Philip Hammond makes "unfair comparisons" about insolvency http://bit.ly/aY6Vht (h/t @alexhilton)

  3. alexhilton

    RT @leftfootfwd: Tory use of statistics questioned again as Philip Hammond makes "unfair comparisons" about insolvency http://bit.ly/aY6Vht (h/t @alexhilton)

  4. Ellie Gellard

    Dear Tories, advice-steer clear of comparisons you can't defend. Regards, Ellie http://tinyurl.com/yfvrgon (via @leftfootfwd )

  5. NorthernJohn

    “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? …”

    What we want is for people not to get into unsustainable in the first place and to allow people to walk away from the debt without consequence will do nothing to encourage responsibility. It’s not like the debt can be abondoned – someone has to bear it. If it’s borne by the lender – often a financial institution – it will be passed on to other customers and/or taxpayers. How is that fair? Live within your means and pick up the tab for everyone else.

  6. uberVU - social comments

    Social comments and analytics for this post…

    This post was mentioned on Twitter by leftfootfwd: Tory use of statistics questioned again as Philip Hammond makes “unfair comparisons” about insolvency http://bit.ly/aY6Vht (h/t @alexhilton)…

  7. Ben Cooper

    RT @BevaniteEllie: Dear Tories, advice-steer clear of comparisons you can't defend. Regards, Ellie http://tinyurl.com/yfvrgon (via @leftfootfwd )

  8. Mark

    All politicians twist numbers to suit their arguments. Take debt, we’ve seen policy distorted for the sole reason of hiding the debt off the public books, PFI has proved more expensive, more awkward but it’s been used simply because it allowed debt to be parked off the Treasury’s balance sheet. Even stats were misused by former Home Secretary Jacqui Smith.

    It’s important to be alert to these things and thankfully the blogosphere is often quick to expose the moves of sly politicians like Philip Hammond or Gordon Brown.

  9. Matthew Taylor

    Gee, did PriceWaterhouse Coopers issue a press release this morning, in the hopes of getting their brand out there on the back of these figures?

    Wouldn’t it have been more honest to link to the press release: http://bit.ly/dCL1aU

    It includes some wonderful titbits you didn’t bother with, like:

    “Total household borrowing currently stands at £1.5 trillion. Unsecured borrowing remained broadly constant over the past 12 months at around £230 billion (in stark contrast to the 6% growth seen in 2008). Average household debt stands at £60,000 per house made up of £50,000 in secured debt and £10,000 in unsecured debt. The average household will need to spend approximately 15% of net income just to service interest payments arising from this debt”

    and

    “Figures released today by the Government’s Insolvency Service revealed that levels of personal insolvency in the UK have increased for the eighth consecutive quarter and are at the highest level since records began.”

    ‘course focusing on those bits of the release might attract questions about how we reached that situation.

    Lets not even mention the fact that PWC are a bit accountancy firm which earns lots of money from…yes, you guessed it – insolvencies!

    Wonder if big accountancy firms might be keen to avoid criticism of the high level of insolvencies? Just a thought.

  10. Matthew Taylor

    A quick comment from me http://bit.ly/bl6o9c on this @LeftFootFwd piece http://bit.ly/bAsnue Pays to think about people's motives

  11. Will Straw

    Thanks, Matthew. I hadn’t see the press release and spoke to Pat Boyden this afternoon.

  12. Emma Burnell

    RT @BevaniteEllie: Dear Tories, advice-steer clear of comparisons you can't defend. Regards, Ellie http://tinyurl.com/yfvrgon (via @leftfootfwd )

  13. Evan Price

    Have a look at this page – http://www.insolvency.gov.uk/otherinformation/statistics/201002/index.htm – it is the current data produced by the Insolvency Service.

    If you scroll down through the data you will find Figure 5 – Individual Insolvencies in England & Wales – and you will note that Bankruptcy Orders are the most numerous they have ever been since 1987.

    I don’t believe that you will find any cautions about comparing the data in the release from the Insolvency Service, because they don’t believe that the data (which is actual numbers, rather than estimates) is not comparable.

    Yes, IVA’s are easier than they were; yes the effect of a straightforward BO are less than they were; but to point to the bare facts that we are seeing more individual insolvencies than at any time since the introduction of the 86 Act is not ‘deceptive’ or ‘unfair’. The consequences of bankruptcy, even with the changes brought about by the 2000 and 2002 Acts, are severe – on the individuals and their families – and a personal tragedy in each and every case.

    No-one I know would consider the reduction from 3 years to 1 for the time to be able to seek automatic discharge from bankruptcy as being an incentive to make yourself bankrupt. Legal changes went both ways – assisting a cooperative bankrupt and assisting creditors and trustees to deal with uncooperative bankrupts.

    BTW, Insolvency forms about 40% of my practice at the Bar and I don’t believe that you would find many lawyers involved in Insolvency litigation who would say that the comparisons are ‘unfair’ …

  14. Matthew Taylor

    Will, as we discussed on Twitter, I take what you say at face value, but it does seem likely that Pat Boyden’s press release was at the root of the article that prompted this post.

    I think Evan’s made the case for comparison pretty well, and, if there’s any credibility in the idea the numbers aren’t comparable, I’m sure we’ll see some of the MSM taking this angle in due course.

  15. Coventry Labour

    RT @leftfootfwd: Tory use of statistics questioned again as Philip Hammond makes "unfair comparisons" http://bit.ly/aY6Vht (h/t @alexhilton)

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