Fact fudging and future funding

Afternoon all,

Another classic week for Britain in the world. Making an unspeakable tragedy in the Middle East about ourselves takes some doing, but we have managed it. And we’ve exported Liz Truss to the US. Apparently “it was the deep state that won it for the lettuce”. And where better to make the case for defending democracy than the Conservative Political Action Conference a pro-insurrectionists jamboree in Maryland? This is what happens when we just have too many ex-Prime Ministers around at once people. Quantity ≠ quality. Which is why you only get five TOTCs reads each week!

Have a great weekend.

Torsten

Real records? The Spectator’s cover story this week is about two important things: the post-pandemic rise in labour market inactivity, and the mess of our tax/benefit systems which impose very high marginal tax rates on some people. The descriptions of both problems are fine. Less impressively, it argues the latter is causing the former without any evidence, or explanation of why those same high tax rates were consistent with record employment levels pre-pandemic. Oh and it repeats the magazine’s favourite new talking point: “The number on out-of-work benefits has risen to 5.6 million, higher than in any period of British history”. The only problem? That isn’t remotely true, as the magazine must know by now given how many times this has been pointed out. As Ben Baumberg Geiger’s substack details, more people were out of work on benefits in 2013 than today. That was also the case in the 1990s – despite the population being far smaller then. We do have a problem with fast rising numbers who are sick and on disability benefits, but fake facts don’t help us address that.

Dictionary distractions. Language matters a bit. But it’s not the ball game. Yet worrying numbers of people, disappointed that public opinion is not in line with their opinion, seem to think that if only they (or the media) used different words/framing, opposition to their point of view would melt away. You see this on the public finances (where some economists think the only reason the public aren’t chillaxed about government borrowing is the media occasionally using a household budget analogy to talk about the issue), but also in debates on migration and social security. This is good news for comms consultants making a fortune working with charities on their “framing”, but less use for social progress. A new paper makes the point, running two experiments which both show that changing the language you use to describe climate change (e.g. calling it a “climate crisis”) makes diddly squat difference to people’s willingness to take action to tackle it. Focus on the substance, not the sentence structures, people.

Futuristic funding. Resolution Foundation President David Willetts loves science – he’s always updating me on the latest satellite developments. I pretend to understand. What he doesn’t love is how government decides where to spend the cash it has to support research and innovation. In an independent review (blog summary) for the shiny new Department for Science, Innovation and Technology, he gently points out that using a business case and approvals process that was created for “buying services and building stuff” doesn’t make sense given the inherent uncertainty in funding research – leading to long, drawn out processes in which people pretend the future costs and benefits of research can be precisely quantified. His recommendations? Shorter business cases, covering whole programmes not individual investments, with less Treasury meddling. I’m hoping the Chancellor sorts this out before David takes to the streets. What do we want? Innovative business case appraisals for innovation funding. When do we want them? Now.

More mortgages. The Chancellor is set for some “getting home ownership up” Budget announcements. What impact have previous attempts had? New research ponders Help to Buy, the flagship such policy for Conservative-led governments post-2010, providing equity loans to first time buyers of new build properties. The headline findings? In Greater London, constraints on getting homes built meant that, rather than driving up construction, it pushed up the prices of new builds. But over on the English/Welsh border, where supply constraints aren’t as acute, it did nudge up construction rather than prices. No surprises then – this is exactly what economic theory told us would happen. Quick word of warning: I’ve seen a few people this week extrapolate from this research that the Chancellor’s rumoured plan to back 99 per cent mortgages via a government guarantee would have the exact same effect. This isn’t right – unless we were bonkers enough to only make it available for those buying new builds pour gold down developers’ throats. Surely, we’re not dumb enough to do that.

Divided Deutschland. This isn’t new, but it was new to me. You’ll all have seen those maps showing the deep divides on almost any measure between East and West Germany – AfD voting is the most common right now. Those have, in some cases, been used by researchers to try and evaluate the enduring impact of communism i.e. with the post-1949 split providing a natural experiment. But hold up! Argues a study which shows 1) East and West were already different before WW2, 2) the war itself had different effects (East Germany’s industrial stock was essentially dismantled), and 3) large and selective migration from East to West before 1961 also help to explain current gaps. This doesn’t mean we can’t like pretty maps (phew). We just need to be careful interpreting them.

Chart of the Week

This is a grim one, drawing on a paper we’re publishing on Monday. Back in the 1990s there was a clear, positive, age gradient to who had a mental health problem and who was most likely to be out of work due to ill health. But that world has changed. In the 1990s, those in their 40s to 60s were most likely to report poor mental health, while the older you were the more likely you were to be out of the labour market on health grounds. Today? The numbers of younger people with mental health problems has rocketed (to around 1-in-8 people in their late 20s/early 30s). And this in turn has changed who is economically inactive due to sickness – which is now u-shaped, with the young and old most likely to be in that position. This huge change is the result of social, health and economic changes coming together. And it’s a very bad result indeed.