Ankle deep in the poverty trap
Labour Party efforts to turn the tables on David Cameron’s attack on the poverty trap show some desperation.
Two weeks ago the party issued a background note saying that in 1998, 130,000 families faced marginal deduction rates of over 90 per cent. That meant if they increased their earnings, 90 per cent was lost due to increased taxation and the withdrawal of benefits or tax credits.
Now that number has fallen to 60,000, they chortled.
Today, in response to furthers words from Cameron on the subject, Employment Minister Jim Knight (pictured) weighed in, making exactly the same point but in a different way. “When the Tories left power 130,000 families faced deduction rates of more than 90 per cent” he said. “Today, thanks to the minimum wage and tax credits – opposed by the Tories – only 0.2 per cent of the working population is in this position.”
Wow, Jim, only 0.2 per cent! Sounds much better. But 0.2 per cent of the working population is, er, 60,000. Same fact, glitzier presentation.
Today’s note helpfully refers readers to page 90 of the Budget Red Book. Here’s what that tells us.
So there are now almost two million people on marginal rates of over 60 per cent, 10 per cent higher than the penal rate of 50 per cent designed to punish those greedy bankers.
Anonymous (not verified) wrote,
Wed, 28/10/2009 - 10:10
Small point: the footnote to the table does say these figrues are cumulative, so there is no point (or sense) in 'totting up' the figures. 0.76 million and 1.96 million are the numbers of people on marginal deduction rates of 60% or more.
Of course you can subtract successive cumulative figures to get estimates of numbers of people on rates of between 60 and 70 per cent (say).
To make comparisons fairer, an idea of the change in size in working population would help complete the picture.
Nigel Hawkes (not verified) wrote,
Wed, 28/10/2009 - 10:21
Absolutely fair point. I've deleted the sentence you rightly complain of, a resolved to read footnotes in future!
BenTreehill (not verified) wrote,
Mon, 02/11/2009 - 12:02
I strongly believe in the need for Straight Statistics, but I'm not sure this article is entirely fair. The question here is clearly NOT a misuse of statistics - the figures quoted by Jim Knight are not challenged in themselves.
The argument is that there is some 'desperation' in quoting the 90% figures when the numbers of people on 60% marginal deduction rates has gone up. It would seem that the success of Labour's policies depends on evaluating whether a decline in 90% deduction rates of 70,000 is worse an increase in 60% deduction rates of 1.2m - which would seem to be a matter of values rather than statistics.
It's perfectly possible to argue that Labour has failed here, but it's also possible to argue that 90% deduction rates are much, much more unfair than 60% deduction rates, and that overall Labour's policies have made the situation better. Given that there are so many examples of politicians on all sides being genuinely misleading in their use of statistics, I'm not sure that it's helpful to frame this as a misuse of statistics rather than a difference in opinion in what matters.
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