Scotland’s Tory leader has got her sums very wrong on the economy ~ claim that only 12% of Scottish households ‘make a net contribution’ is grossly misleading and inaccurate

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Ruth Davidson’s claim that only 12% of Scottish households ‘make a net contribution’ is grossly misleading and inaccurate

Stephen Boyd guardian.co.uk, Monday 8 October 2012 18.00 BST Comments (277)

It is not uncommon to find statistics of dubious quality presented to party political conferences. However, even by the less than rigorous standards that seem to apply at these events, Scottish Tory leader Ruth Davidson’s claim that only 12% of Scottish households “make a net contribution to the economy” is quite remarkable.

By way of supporting analysis, all Tory HQ have seen fit to publish is one brief Excel spreadsheet which desperately needs some narrative explanation. It is not an impressive document. 

Let’s start with the basics: all the information sources cited are out of date. The Office for National Statistics (ONS) figures from the Effects of Taxes and Benefits on Household Income publication are drawn from the 2009/10 release; strange because the 2010/11 data have been available since June this year. Similarly, data from the joint Scottish government/ONS publication, Public Sector Employment in Scotland is taken from the Q1 2012 publication and not the Q2 data published a month ago. This explains why the figures for public sector employment used in the calculation are wrong; currently 22.2% (23.5% if RBS and HBOS workers are included) of all Scottish workers are employed in the public sector, not 23.8%. 

Davidson’s calculation also references the ONS data on income for all households.

In doing so, she commits the Romney-esque error of failing to account for retired people.

This is either lazy or deliberately misleading because the ONS provides such a breakdown in the very document she cites.

The income of non-retired households is significantly higher than that for all households and would lead to very different findings. 

Hilariously, at a time when Davidson’s party is campaigning hard for an end to Scotland’s universal benefits such as free bus travel for OAPs, free prescriptions and free personal care, the calculation assumes that the distribution in Scotland of “household income, benefits and taxes is the same as that of UK households”.

It isn’t.

In Scotland, those in the upper income brackets are recipients of additional spend that is lost in her analysis. 

Also, the process by which Davidson’s colleagues have tortured the Government expenditure and revenue in Scotland (Gers) data to settle on average benefits and public spend per household figures is, to put it kindly, somewhat vague. I could go on. 

Of course all this is a helpful distraction from the economic and social devastation her Westminster colleagues are visiting on the Scottish and UK economies.

It also reflects an embarrassingly naive view about the nature of economic development in any advanced nation where public and private sectors must interact to generate sustainable growth. 

The facts of the matter are that Scotland’s public spending to GDP ratio is only slightly better or worse than that of the UK as a whole depending on whether or not a geographical share of oil revenues is included in the calculation.

Many of the most enduringly successful economies in the world manage to sustain public spending and public sector employment ratios at similar or higher levels. 

Davidson’s grand idea that removal of “government diktat” is necessary to unleash Scotland’s pent-up private sector potential is simply risible.

Labour and product markets are regulated on a UK-wide basis and the evidence is unequivocal; Scotland is a good place to do business. Which is why our banks were at the epicentre of the banking crisis. But that is another story.

The Guardian