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””
Will Straw
Thanks, Matthew. I hadn’t see the press release and spoke to Pat Boyden this afternoon.
Emma Burnell
RT @BevaniteEllie: Dear Tories, advice-steer clear of comparisons you can't defend. Regards, Ellie http://tinyurl.com/yfvrgon (via @leftfootfwd )
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’ …
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.
Coventry Labour
RT @leftfootfwd: Tory use of statistics questioned again as Philip Hammond makes "unfair comparisons" http://bit.ly/aY6Vht (h/t @alexhilton)