26 Jun 2013

‘Grossly’ misleading claims on investment?

I do not make this charge lightly. But an hour after the spending review, I think we may have seen the most egregious statistical chicanery (* see update below; it’s not) I have witnessed in a Treasury fiscal event in 13 years of covering economics for newspapers and TV.

I was quite shocked to hear the chancellor claim that investment spending would be £50bn. This would be fiscal stimulus territory. I got some return tweets about PSGI: “Public Sector Gross Investment”. Then the chancellor talked of £300bn of investment. That too sounded quite high. Again it was gross investment.

The traditional standard measure of government investment spending is “net investment” which accounts for depreciation on the government’s giant stock of capital. It is the way government investment has been measured for decades.

So it was a bit cheeky, a little cute, for the chancellor to switch measures for his speech. This is clearly part of an effort to communicate a narrative of “investing in growth” as we go “from rescue to recovery”. The real numbers would have to wait until the fiscal documentation was published.

Alas it was nowhere to be seen. The only reference to net investment was as a footnote to a table about the impact of the Royal Mail pension. Nothing. Nada. Gone. Erased. PSGI is now the only measure, and it has the happy side effect of sounding bigger.

However you can compare PSGI announced today to PSGI in March in the OBR’s table. Miraculously those numbers are idenitical to the number’s published today. Actually that’s not quite right: this year PSGI is £100m less than forecast by OBR in March. So, officially, capital investment by government has been CUT. That’s not the impression you would get from the chancellor’s speech.

I deduce that it’s £155bn over the next six years rather than the £300bn figure used in Parliament. I’m not sure that even Gordon Brown would have tried this one. In fact, in similar circumstances, he did not.

The OBR and the Statistics Commission might have something to say about this.


In 2010, the spending review also focused on gross investment, I should have said. The net investment numbers are in budgets and autumn statements. The general point still applies. Investment is not going up, as you would have thought from listening to the speech.  So perhaps a little less egregious and a bit more cute.

* For the avoidance of doubt, the answer to my question about whether we have seen the most egregious statistical chicanery in my career is no.  There were worse instances in the past. I’ll leave my gut reaction above unchanged.


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