Tag Archives: ratio

Listen to this, then try to say the government isn’t victimising the disabled

Disability rights campaigners protest outside the Houses of Parliament, in Westminster, London, after they had disrupted a session of Prime Minister's Questions.

Disability rights campaigners protest outside the Houses of Parliament, in Westminster, London, after they had disrupted a session of Prime Minister’s Questions.

In the same week David Cameron tried to put us off signing the petition on ESA deaths by saying mortality statistics would be published – but failed to mention that the numbers would be fudged into an ‘Age-Standardised Mortality Rate’ ratio, rather than be a straight statement of the number of deaths…

In the same week that the Gentleman Ranker, Iain Duncan Smith, tried to tell MPs that his Department for Work and Pensions doesn’t collect those figures…

In the same week that the Labour Party told us the DWP’s flagship Universal Credit will take nearly 500 years to roll out across the UK at the current rate, while the cost has increased to £15.8 billion…

… a disabled pensioner named Susie called an LBC radio phone-in and spoke emotionally to Iain Dale about her worries over the forthcoming budget and its implication for another benefit, Disability Living Allowance. Here’s what she had to say:

It is abundantly clear that this poor lady is being driven out of her mind with anxiety about her future – a future which the Conservative Government is deliberately keeping uncertain by refusing to give any hints about its plans for sickness and disability benefits.

The DWP has stated – repeatedly – that it is “irresponsible” to connect the deaths of people claiming sickness and disability benefits with the stress that its ministers have gleefully encouraged, by making changes to the benefits assessment regime that mean no claimant can feel secure about their immediate future – let alone their long-term hopes.

Susie’s call shows that all this bluster is bunkum.

Whatever happens in the July budget, DLA claimants are being migrated onto PIP, a benefit with much harsher – some would say unreasonable – conditions. For a start, it employs the same brutal ‘work capability assessment’ medical test (in fact a tick-box computer questionnaire designed to put people off-benefit if at all possible) as Employment and Support Allowance.

Not only that, but the claim process – originally estimated by the government to take around 2.5 weeks per claimant – has left thousands waiting more than a year for a decision.

The best way to end this deliberate infliction of suffering on those who are already suffering enough is to join together and present a united front.

Protests against DLA/PIP aren’t currently gaining national media attention – but the petition for the government to tell us how many people have died while claiming Employment and Support Allowance has.

Cameron’s false claim that the government will publish those figures has slowed the number of people signing it – exactly as he hoped it would.

So let’s all get behind it. Tell everyone you know that they have been misled by this stranger to the truth – and let’s get more signatures on the petition!

It can be found here, on the Change.org website. If you haven’t signed already, please do so.

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Are ratios the evasive politician’s new favourite tool?

You may be aware that This Writer made his writing debut in the national news media today (June 25), discussing the struggle to get the DWP to update its statistics on the number of people who have died while claiming incapacity benefits.

It was appropriate that this should happen today, because it is the second anniversary of the launch of my first Freedom of Information request on the subject – you know, the vexatious one.

The article that appeared was, in fact, the second piece I sent in to The Independent. The first was considered – rightly – to be a little too involved for the casual reader, so I pulled back a little and wrote a new version.

Here’s what I originally wrote:

IBelieve-IDS

If percentages are the evasive politician’s favourite tool, what does this make ratios?

Ministers love to use percentages if the numbers don’t add up too well – but the Department for Work and Pensions has introduced an entirely new level of evasion.

In response to my Freedom of Information request for an updated number of deaths among sickness-related benefit claimants, the DWP has said it wants to publish the details as ‘Age-Standardised Mortality Rates’ (ASMRs) – as a ratio compared with the population as a whole.

Apparently the DWP has been working on this for no less than two years – it was first mentioned in a refusal to honour a similar request in 2013.
At the time, we were told: “We can confirm that we do intend to publish further statistics on this topic and these will answer a majority of your questions. As the statistics are intended for future publication this information is exempt from disclosure.”

Not according to the Information Commissioner!

His guidance states that any details withheld by a public authority must either have a planned publication date or a deadline for publication. Alternatively, if an information-gathering exercise is under way or there are related matters, publication may be delayed.

None of those conditions apply. I have an email from the DWP, stating that the Department has most of the requested information and could publish it within cost limits.

When I appealed against the DWP, the Information Commissioner supported me. But the DWP is taking the matter to a tribunal because it insists on holding back the information – until it can be fudged in the form of ASMRs.

That is not what I wanted when I made my latest FoI request in May 2014 – nor is it wanted by more than 225,000 people who have signed a petition in support of my request.

We want to know how many people have died, to compare with what we were told in a DWP release from July 2012 stating that, between January and November 2011, 10,600 ESA claimants had lost their lives.

Work and Pensions secretary Iain Duncan Smith has labelled this demand “disgraceful”.

Challenged about his refusal to publish the figures by Labour MP Marie Rimmer on Monday, he said, “Opposition Members deliberately try to misrepresent what happens… I find it disgraceful that she is going round making such allegations.”

He added, “The Department does not collate numbers on people in that circumstance” – a lie. Labour’s Debbie Abrahams raised a point of order about it on Wednesday and the DWP has yet to respond.

It seems clear that any “disgraceful” behaviour is being carried out by Iain Duncan Smith and his department.

These are time-sensitive figures; they should be published regularly, so that policies may be modified – particularly if many people are dying. This means figures need to be published in a way that makes them easily comparable – which is exactly what Iain Duncan Smith is trying to avoid.

And how does the DWP justify its bid to fudge the figures? “Taken in isolation, the statistics… were likely to be misinterpreted. Specifically, incorrect conclusions were likely to be drawn as to causal links between assessment outcomes and mortality.”

Perhaps the DWP’s £49,000+ per year lawyer failed to notice that Freedom of Information requests are “motive-blind” – it does not matter why I or anyone else want the information, or why DWP representatives think we want it; all that matters is whether the DWP has it and can publish it within cost limits.

It does, and it can.

Let’s have it.

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Debt to GDP cut by a fifth in 2030 under Labour – Mainly Macro

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Don’t you love articles by economic experts that put George Osborne down hard? This one, by Professor Simon Wren-Lewis on Mainly Macro, manages a double by putting down “biased newspapers” as well. Here he is:

Paul Johnson of the IFS has written that under Labour “national debt [could be] around £170 billion higher (in today’s terms) by the end of the 2020s than would be achieved through a balanced budget.” That was all that certain newspapers needed to start talking about a borrowing bombshell under Labour.

£170 billion is a meaningless number, and the end of the 2020s is a meaningless date. First, we should put everything as shares of GDP. £170 billion is about 10% of GDP, and debt is currently around 80% of GDP. However it would be completely wrong to infer that under Labour debt to GDP would be 90% of GDP by 2030. If they achieved current balance by financial year 2017/18, then my Excel spreadsheet says that with nominal GDP growth of 4% a year, by 2030 debt to GDP would be around 65% of GDP. (A few points below 65% if investment remained at 1.5% of GDP, a few points above it became 2% of GDP.) If the Conservatives balanced the overall deficit each year debt to GDP would be about 47% of GDP by 2030.

So a £170 billion bombshell actually means debt to GDP would have been reduced from 80% of GDP to around 65% of GDP. So the correct headline should have been “debt to GDP cut by a fifth in 2030 under Labour’s plans”. That is debt, which is much more difficult to reduce than the deficit. To say this is a ‘different interpretation’ is too polite – newspaper reports got it completely wrong. Who should you blame for this: Paul Johnson, innumerate journalists, biased newspapers? I’ll leave that to you.

For the more interesting part, in which Professor Wren-Lewis discusses the speed at which the debt-to-GDP ratio really should be reduced – a matter that has been pressed onto most voters’ minds recently – along with that dig at George Osborne, visit Mainly Macro.

Note also that, although he admits that the Tories would have a lower debt-to-GDP ratio by 2030 under these conditions, Professor Wren-Lewis does not speculate on the amount of damage this would cause to the state infrastructure and the British way of life.

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From the DWP to the economy – the Coalition’s growing credibility chasm

All the wrong things for all the wrong reasons: The evidence shows no good reason for George Osborne's economic austerity policies - other than, possibly, an intention to rob this nation of everything possible before 2015.

All the wrong choices for all the wrong reasons: The evidence fails to support George Osborne’s economic austerity policies – the only likely explanation seems to be an intention to rob this nation of everything possible before 2015.

The more we learn of the Tory-led Coalition’s policies, the wider the gap grows between what it is doing and what it should be doing.

Look at the sham psychometric tests, exposed by fellow blogger Steve Walker in a series of articles on his Skwawkbox site. It is now firmly established that the DWP – aided by the Cabinet office ‘nudge unit’ – set out to pressgang put-upon benefit claimants into taking part in a crude piece of neuro-linguistic programming – no matter what answers you provided, the test always pushed out a ridiculously upbeat appraisal of your character and then tried to get you to act according to this verdict in your jobsearching activities. The theory is that this will make a jobseeker more confident and finding a job easier. The problem is that it’s quite utterly ludicrous.

If you haven’t already, you can read the Skwawkbox exposure of this particular caper on that site – there are plenty of links to it from this one. The reason it is mentioned here is that it provides a useful set of questions with which to analyse any government activity: First, is the theory behind this activity sound? Second, if that theory is being used to support a particular course of action, is that action justifiable?

So let’s turn once again to George Osborne’s reasons for pursuing economic austerity, as described in the letter Vox Political received from the UK Treasury last month.

Firstly, the letter warns against the perils of losing market confidence. By this, we can see that it means we should fear any downward revision of our credit rating by the credit agencies, as “a one percentage point increase in government bond yields would add around £8.1 billion to annual debt interest payments by 2017-18”.

What’s being said is that a drop in our credit rating would mean the people and organisations that have invested in UK government debt (by buying our bonds) might move their funds to others, meaning the government could be faced with an interest rate rise, leading to increased difficulty in borrowing.

But we know that this isn’t true. The UK’s credit rating was downgraded only a few months ago. Did interest rates rise? Was our ability to borrow hindered at all? No. There’s a reason for that.

As Professor Malcolm Sawyer notes in Fiscal Austerity: The ‘cure’ which makes the patient worse (Centre for Labour and Social Studies, May 2012), “It is well-known that a government can always service debt provided that it is denominated in its own currency. At the limit the UK government can ‘print the money’ in order to service the debt: this would not take form of literally ‘printing money’ but rather the Central Bank being a willing purchaser of government debt in exchange for money.” This is what is happening at the moment. Our debt is in UK pounds, and we can always service it. Our creditors know that, so they remain happy to continue financing it.

This means that the Treasury’s next point, that “any loss of investor confidence in the UK’s fiscal position would not only affect the UK, but also the global economy” is also meaningless. There won’t be a loss of investor confidence, so there won’t be an effect on the global economy.

We move on – to the Chancellor’s claim that fiscal austerity is required to prevent the slowing of economic growth that happens when the national debt hits 90 per cent of gross domestic product (or thereabouts).

You’ll recall that my letter to the Chancellor was prompted by the revelation that the academic paper on which he relied most often, by Reinhart and Rogoff, had been proved to be mistaken. The Treasury’s response pulled out a series of references to other academic works suggesting a fiscal cliff similar to the Reinhart-Rogoff model, off which we would drop if the national debt passed an arbitrary level around 85-90 per cent of GDP. These were published by the International Monetary Fund, which we know isn’t quite as keen on austerity as it used to be; the Organisation for Economic Co-operation and Development, which this blog marked out as “schizoid” only a few days ago; and others.

Obviously I haven’t had time to look up eight academic works to support any opposing theory I may wish to create – and I think I would be foolish to try. I don’t have any grounding in economics beyond what I’ve been able to pick up by following the national and international debates.

But, then, according to Dean Baker of the Center (yes, it’s American) for Economic and Policy Research: “As a general rule economists are not very good at economics.”

He writes: “Most economists are unable to conceptualize anything that someone with more standing in the profession did not already write about. This is the only reason that the Reinhart-Rogoff 90 per cent debt-to-GDP threshold was ever taken seriously to begin with.”

That prodded my curiosity to check some of the papers listed by the Treasury in support of its stance, and the three that I checked (The Real Effects of Debt, Public Debt and Growth, and How Costly Are Debt Crises?) all listed the Reinhart-Rogoff paper in their supporting references. So Mr Baker is right.

“Debt is an arbitrary number,” he continues. “The value of long-term debt fluctuates with the interest rate… The value of our debt will plummet if interest rates rise… This means that we could buy back long-term debt issued today at interest rates of less than 2.0 percent for discounts of 30-40 percent. This would sharply reduce our debt-to-GDP ratio at zero cost.

“Bonds carry a face value, meaning the amount that will be paid off when they reach maturity. This is what gets entered in our debt figure. However bonds also carry a market price, which fluctuates inversely with interest rates. The longer the term of the bond, the more its price will vary with interest rates.

“If interest rates rise, as just about everyone expects over the next three-to-five years, then the market price of the bonds we have issued in the current low interest rate environment will fall sharply. Since we count our debt at the face value of the bonds, not their market price, we could take advantage of the drop in bond prices to buy up… bonds at sharp discounts to their face value.

“The question is why would we do this, we would still pay the same interest? The answer is that the policy would make no sense for exactly this reason.

“However, if we accept the Reinhart-Rogoff 90 per cent curse, then reducing our debt in this way could make a great deal of sense. Suppose we can buy back debt with a face value of 60 per cent of GDP at two-thirds its face value, or 40 per cent of GDP. In our debt accounting we would have reduced our debt-to-GDP ratio by 20 percentage points. If this gets us below the 90 per cent threshold then suddenly we can have normal growth again.

“Yes, this is really stupid, but if you believed the Reinhart-Rogoff 90 per cent debt cliff, then you believe that we can sharply raise growth rates by buying back long-term bonds at a discount. It’s logic folks, it’s not a debatable point — think it through until you understand it.”

I found Mr Baker’s piece after asking Jonathan Portes of the National Institute for Economic and Social Research (NIESR) for his opinion on the Treasury letter. He described it as “Predictable and largely irrelevant”.

So despite my lack of economic education, we have a working theory that suggests the Treasury has built its economic castle on the sand; that its justification for austerity is unsound. What about the austerity measures themselves? Are they justifiable on any level at all?

Evidence suggests not.

Let’s go back to our other friend in this matter, Prof Malcolm Sawyer. “Fiscal austerity and cuts in public expenditure do not work – there is a limited, if any, effect on reducing the budget deficit, and any return to prosperity is severely undermined.” We can see that this is true, using the government’s own figures. It managed to cut the deficit from £150 billion to £120 billion in 2011-12, mostly by axing large projects that invested in the UK economy. How much did it cut from the deficit in 2012-13? Less than £1 billion. The benefit cuts that created much of the fuel for this blog have not helped to cut the deficit at all.

“The reduction of the budget deficit can only come from a revival of private demand which is harmed by an austerity programme,” Prof Sawyer continues. Again, we can see that this is true. Austerity measures such as benefit cuts and the axing of infrastructure investment projects means there is less money available to the people who are most likely to spend it – the working- and middle-classes, and those who are unemployed. People with less money have to spend just about everything they receive in order to cover their costs. That money passes into circulation and the economy grows, through the fiscal multiplier effect. An attempt to explain this effect appeared on this blog within the last few days. The point is that demand increases when the people who earn the least have more to spend.

Therefore we see that Prof Sawyer’s next statement, “Deficit reduction requires investment programmes and reduction of inequality to stimulate demand”, is already proved.

So the answer is to reduce the unemployment rate by creating more jobs and closing the jobs deficit, as highlighted in this blog only a few days ago; to raise incomes by significantly increasing the minimum wage and adopting the proposed ‘living wage’, as promoted in this blog frequently; and investment in infrastructure projects.

What has Osborne done, along with his economically-illiterate chums?

He has created high unemployment.

He has depressed wages.

He has cut infrastructure projects.

He has, therefore, sucked all the demand out of the economy. What effect has this had?

Economic growth has, in the single word of Shadow Chancellor Ed Balls, “flatlined”, borrowing has remained high and the national debt is continuing to rise.

In other words, this part-time Chancellor’s strategy – a plan on which we have all been asked to judge the entire Coalition government, let’s not forget – has failed. Hopelessly.

I return you to Prof Sawyer, one last time [bolding mine]: “The austerity programme is economically irrational, socially irresponsible, and lacks credibility that it can reduce the budget deficit and secure any return to prosperity. The time has come to rebuild through investment and through a major assault on inequality.”