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Monday, February 17, 2014

Damned Statistics

Today's Western Mail carries news of a very real argument about the impact of Welfare Reform on the Welsh economy that has significance for the living standards of every family in Wales. The problem as I see it though is that once you strip away the statistical arguments we are actually left no wiser as to what is really happening on the ground.

The Welsh Labour Government argue that on average each working age adult in Wales will lose £480 as a result of welfare changes, that in some cases, Labour supported at Westminster. That  amounts to a “total loss of income of around £930m a year” by 2015-16 due to changes in social security. Labour Ministers fear there will be “wider knock-on impacts on the economy as people have less to spend in their local communities.”

Those are very real fears. However the UK Government have hit back. They are trying to reduce the dependency on welfare and get people back to work. In fact employment figures in Wales have increased so that more people are working here, though many of them supplement their income from benefits such as working tax credits.

The UK Government say that the introduction of Universal Credit will leave 200,000 households in Wales “better off” by £163 per month on average. They argue that they have taken action to cut the cost of living by freezing fuel duty and increasing the tax-free personal allowance to £10,000, which will save a typical taxpayer over £700.

And if we look at that increase in the personal allowance we find that it has benefited 1.1 million people in Wales and taken 130,000 out of tax altogether. That is worth a boost to the Welsh economy of over £800 million each year.

On balance therefore the impact on the Welsh economy of the UK Government's actions appear to be at worse neutral, at best slightly positive. It is amazing what you can do when you play with statistics. The real issue though is the impact on individual people's lives and until the Welsh economy starts to pick up properly that will always be a negative.

Both the Welsh and the UK Governments have a responsibility to deliver that upturn, so instead of playing with numbers, perhaps they should get on with it.

Update: it is worth pointing that Labour Ministers are claiming “total loss of income of around £930m a year” by 2015-16 so their figures are not for a single year. Whereas the £800 million I quote above are annual gains to the Welsh economy.

More importantly though BBC journalist Tomos Livingstone has pointed out via Twitter that the Welsh Government's argument only makes sense if they can show that GDP/GVA is down by the same amount. This is unlikely but cannot be proved either way as these statistics are not available.

Tomos also points out that the problem for Welsh Labour in saying that £930 million has been 'lost' from the economy after welfare changes is that the party is promising to be 'even tougher' if it wins the next General Election as is evidenced from this story.
Good job. cdw
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