Surprising resistance to simple fact checking

[ewx]

According to Theo Paphitis (who I’d never heard of before today):

“So, technically, those of us who have a job and are still in work, and not worried about losing our job, have actually been better off, so he [Lord Young] was technically correct.”

Christopher Hope adds:

“Many grassroots Tories will say Lord Young of Graffham, David Cameron’s enterprise adviser, has resigned for speaking the truth.”

What Lord Young said, according to the Telegraph:

“For the vast majority of people in the country today they have never had it so good ever since this recession — this so-called recession — started, because anybody, most people with a mortgage who were paying a lot of money each month, suddenly started paying very little each month. That could make three, four, five, six hundred pounds a month difference, free of tax.”

NSO reports that 39% of houses are mortgaged in England. That’s not a majority at all, let alone a vast one; the best you could say is perhaps “a substantial minority”. (And for those whose mortgage payments have gone down, the cost of other things has gone up, and in many cases their salary probably hasn’t; for at least some of them the balance may turn out to be negative.) So no, he wasn’t speaking the truth or even something ‘technically correct’; it was a load of nonsense and he and his supporters ought to know better.

(The Telegraph has a more detailed analysis.)

Comments

[geekette8.livejournal.com]

I don't get the "free of tax" thing either. Surely he realises MIRAS hasn't existed for years?

[hsenag.livejournal.com]

It's exactly because MIRAS doesn't exist that the reduction in mortgage payments affects after-tax income directly - if MIRAS did exist then it would reduce as mortgage interest did, reducing the net effect of the change to the individual.

[geekette8.livejournal.com]

So this is like a private landlord saying "Hey, I'm reducing your rent by £200 / month, now you're £200 a month better off, free of tax!"

Tax doesn't enter into it: you've already paid tax on the income and there's no tax relief on the payment, so why mention it?

[hsenag.livejournal.com]

Because if the contrast was with a salary rise of the same amount, that would be taxed.

[wellinghall.livejournal.com]

Thank you for this.

[gerald_duck]

What proportion of the population lives in that 39% of homes that are mortgaged?

And what proportion of the population is retired with an index-linked pension?

Also, this recession is layered on top of a general tendency for living standards to gradually improve, both because average living standards increase and because each individual tends to improve their living standards as they get older until they die and are replaced in the statistics by a school leaver. My own living standards have improved in the past two years despite the recession rather than because of it.

While what Lord Young said is immensely tactless and ignores the fact that many of the people who are worse off are much worse off compared with only marginal improvements for those who are better off, I'm still open to the possibility that he might, strictly speaking, have been correct.

[hsenag.livejournal.com]

Not all the 39% will have seen a drop, either. For example we haven't, due to a tactical error with a 5 year fixed rate in mid-07.

[rmc28]

We also signed on to a 5-year fix, in September 2008 (!). My main comfort is that lots of other people were surprised by the interest rate reductions. We were feeling risk-averse and the mortgage is our biggest cost: so I try to regard failing-to-save-mortgage-interest as the cost of being risk averse rather than some personal failing in predicting the future.

[hsenag.livejournal.com]

Yeah, the same reasoning applies to us too. It's just annoying :-)

[gerald_duck]

I've just read that Telegraph article. "There will be little doubt that the one million people who have lost their job at some time over the past three years will disagree with Lord Young's comments."

That is, if anything, an even more sweeping over-generalisation than Lord Young's statement. I lost my job two years ago. It took me two and a half minutes to find a new one, which has since raised my salary by over 20%.

Also, perhaps more importantly, I and many others amongst those million people understand that one's own experiences might well be at odds with a statistical trend.

[armb.livejournal.com]

See also http://blogs.channel4.com/factcheck/lord-young-claims-have-we-really-never-had-it-so-good/5043

(Also, perhaps relevent to the BBC link, http://order-order.com/2010/11/19/bbc-agenda-today/
"BBC : So you support his view?
GF : No, I think the previous generation had it better.
BBC : We're really looking for a right-winger who backs his line.
GF : Sorry.")

[ewx.livejournal.com]

I guess they stopped calling around when they got Paphitis l-)

[perdita-fysh.livejournal.com]

I continue to be better and better off under this government. Not only are they reducing our personal tax bill by about 500/year and the interest on my enormous mortgages is half of what it was a few years back (although that was the previous govt, not this one); now I find that when VAT goes up to 20% in the new year, I get to keep an extra 1% of what I invoice compared to now.

Sadly I think I must fall within a grouping that is generally populated by Friends of the Conservatives.

[hsenag.livejournal.com]

Can you explain how the VAT change works out like that for you?

[baljemmett.livejournal.com]

My guess would be the scheme HMRC operate for small businesses where, in exchange for not reclaiming any VAT paid, a lesser rate of VAT is collected on invoices -- however, since it's still charged at the prevailing rate, the business gets to pocket the difference as profit.

I think it was called the 'flat rate' scheme or something; they tried to sell me on it until I noticed it was be a net win for them as my most lucrative contract doesn't attract VAT!

[As someone else who fits Lord Young's description pretty neatly, I raised an eyebrow at the 'majority' but couldn't disagree with the rest. It made a change from some media commentators lecturing me on how awful I must be finding life as a small businessman and first-time buyer, though! Generalisations, as ever, suck.]

[hsenag.livejournal.com]

I see, thanks. That must work out as quite a good deal for some companies.

[imc.livejournal.com]

LOL, well put. Not quite as grumpy, though. :-)

(And he owns Ryman (the stationery chain), I believe.)

[fluffle.livejournal.com]

It really annoys me that a generation that went through free university education with grants, and house prices that were at least vaguely affordable, can try telling me - who has a husband with a substantial student loan still to pay off, and the two of us combined could just about get a reasonable mortgage (if we ever got a deposit together), and we're some of the luckier ones because I don't have student debt and we can see the possibility of getting a mortgage - so many people just can't see that they will ever manage it now - that 'I never had it so good' in a world of job uncertainty, increased competition for lower-paid jobs, and constant struggle just to bring the debt down.