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Austerity, border queues and bank holidays (R4)
00:27:59
Are we witnessing a grand economic experiment playing out between Britain and the How...
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A
This is more or less the statistical spine of an otherwise floppy media. The programme now airs year round on the BBC World Service, but this is a full length episode from Radio 4. Hello and welcome to More or Less, the programme that takes a statistical scalpel to the festering wound of public debate. Now, despite the fact that they shunted us out of our old time slot, we are more or less are admirers of the world at one. But on Tuesday, while Martha Carney was luxuriating in her acres of extra airtime with the Conservative Party's co chairman, Said Avasi, this happened.
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B
You are, you know, because you're so keen on keeping interest rates low and cutting the debt that you're actually forgetting about growth and, you know, that's what's important. And we're seeing much higher levels of growth in the United States, for example, which hasn't cared so much about cutting its debt.
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A
Well, if you look at the figures from the us, they've actually cut debt deeper and they've cut it faster. So it's a myth to say that they haven't. Oh, hang on, I'm not sure that's right, is it? Let me just summon Stephanie Flanders, the BBC's economics editor, by beaming this huge pound symbol onto the underside of some low cloud. They can't say that, can they, Stephanie?
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B
Well, this is one of those exchanges that I hear often and it pains me every time I hear it because I'm afraid, afraid to say both the interviewer and the interviewee have made that classic mistake that everyone makes. Some of the best politicians, some of the best journalists make, which is the difference between the deficit and the debt. If we think about it very carefully, maybe we'll remember it. Finally, the debt is the accumulated amount of debt borrowings that you've had in your lifetime. So it may be the size of your mortgage, for example, is your debt, that's how much you owe. And then there's the borrowing you do on a day to day or a week to week or a year to year basis, that's the deficit. So how much the government has borrowed this year to meet the gap between its spending and its tax revenues is the deficit. And at the end of the year, in effect, that amount has been added to its stock of debt, which is always, almost always, a much, much bigger number. And there is no country that's cutting its debt at the moment. If you look at the figures, there's no the us, Britain, Germany even, they're not on course to lower their debt as a share of their economy for years.
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A
Well, we called Conservative Central Office and asked them to tell us what Baranas Vasi actually meant to say. Here's what they told us. I'm going to assume that Baroness Farsi meant to say the US was cutting its deficit harder and faster than the uk, but if that's the case, it's surprising news because there is this idea floating around that there's something to be learned from comparing the experience of the uk, which is popularly supposed to be raising taxes and cutting spending, versus the experience of the us, which is popularly supposed to be avoiding such austerity measures. Here's Anatol Koletsky of the Times.
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C
What's been going on, although it's been
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A
very uncomfortable for many people and economies,
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C
has been one of the most fascinating periods in history because there's been a sort of controlled experiment going on between America and Britain.
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A
And Anatole thinks the American stimulus is comfortably outperforming the British austerity. So if we return to the alternate universe in which Baroness Varsi actually said the US was cutting its deficit more than the uk, is that true? Time to activate the Stephanie Flanders emergency signal.
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B
Again, if you look at the overall deficit for the us, and that includes not just the federal deficit, but also everything that the states are doing, it's fallen from 13% of GDP in 2009 to 8.1% this year. That's what the International Monetary Fund is forecasting. So that's a fall of nearly 5% of GDP. Whereas if you look at the UK, our deficit hasn't fallen nearly as far. It's gone from 10.4% of GDP in 2009 to 8% of GDP this year. So that's a fall of about 2 percentage points of national income of GDP compared to close to 5. But interestingly, if you look at a different measure of the deficit, which we might think was a better guide to whether the government was really trying hard to cut its borrowing. If you look at the structural deficit, which is an estimate of what the deficit would look like once the economy's recovered, so you're getting away from all the sort of short term impact of a recession where you have higher unemployment benefits and your tax revenues have gone down, and just say, what's the long term hole in the budget that you've got to fill? Well, there the situation is reversed. And what that might tell you, maybe not. Something that Baroness Varsi wants to know is that the British have made more of an effort to cut their borrowing than America has. America's not got very far at all. But America overall has been able to borrow less because it's been growing faster.
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A
Stephanie Flanders so the most useful figures show that Britain and the Eurozone have been trying to cut faster than the Americans. The grand economic experiment is back on, sort of. We spoke to the economics editor of the Financial Times, Chris Giles.
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D
It's a great experiment, but actually finding the answer is very, very difficult, because what you have to do is you have to split out the effect on the economy of the austerity versus the effect of everything else that hits these economies, and that's not easy. And one of the things that we know about the Eurozone and the UK compared with the US is that the productivity performance of these two economies has been really very different over the crisis and over the subsequent period. So that in the Eurozone, what we know is that the output for each worker hasn't been rising, in fact has been falling. And so we wouldn't necessarily expect these economies to be growing quickly in a normal time. If you saw that, you would say, well, these economies have got some big problems and they shouldn't be able to grow very fast. And that would be the explanation between the differences.
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A
And actually, it's not like there's no austerity plan for the US As Chris
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D
Giles says, when you then look into the medium term, the US is still going to have a large deficit, which at some point they'll need to rectify. And as we look forward, the Eurozone gets back to balance, and it aims to be roughly at balance by about 2012, by this year, whereas the US is going to still have a deficit of 4% of the size of its economy in 2012 and gets quite close to balance by 2014. So they have their big austerity drive in 2013 and 2014, while the eurozone's already going through it. And so it might just be. We don't really know that. We're just seeing the difference in growth rates happening at different times.
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CHRIS Giles Economics Editor of the Financial Times and there's a final problem here. We have to grant Anatol Koletsky some poetic license. And all economists are poets at heart, after all, when he described the different austerity policies as a controlled experiment. The truth is that in macroeconomic policy there can be no controlled experiments. Almost all economists would agree that austerity is likely to have different effects in different situations. Austerity will damage an economy less if the economy has a floating exchange rate, an independent central bank, and if it's a small open economy with lots of foreign trade, austerity will do more damage to larger economies because they can export less of the pain to foreigners. If only we could run controlled experiments in macroeconomics, we might understand it all a bit better. Now, what are you planning to do this bank holiday Monday? Paint the bathroom, Listen to old podcasts of more or less, or destroy the economy? The Centre for Economics and Business Research, a consultancy, revealed in April that each bank holiday cost the country 2.3 billion pounds. In fairness to the CEBR, it described its findings as rough and ready. But still, the news that cancelling all eight regular bank holidays in England and Wales would boost gross domestic product by 1.3% prompted a flurry of headlines. Could it possibly be true? Well, we asked the CEBR to send us their working out and they sent us this.
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E
Hmm.
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A
Well, I suppose you could take a very rough bash at this problem by saying that UK gross domestic product is approximately 1500 billion pounds and there are very roughly 300 working days a year. So GDP per day is about £5 billion. If you have a bank holiday and you assume that about half of that output is lost forever and the other half pops up in other forms, such as improved tourism and retail, or it pops up on other days, then bingo. A bank holiday costs the country half of £5 billion. That's £2.5 billion, which is very similar to the figure the CEBR produced. I should call myself an economic consulting firm, put out a press release and watch the media coverage roll in, shouldn't I? I spoke to Professor Colin Talbot of the University of Manchester.
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E
To be fair to them, in the detail of the research, they highly qualify the figures that they give. But on the other hand, they clearly put it out at a time to get maximum publicity for claiming that each bank holiday costs us 2.3 billion. They don't actually, in the statement or any of the associated notes, give us real detail of how they calculated that.
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A
If you were trying to calculate such a figure, is it possible, is it reasonable to do it, or is it just kind of guesswork?
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E
It is. Well, not guesswork, but, I mean, you can get it within a sort of ballpark, I suppose. And to be fair to them, they've made a bit of an effort to do that. So, for example, they say that the sectors that lose from having a bank holiday are offices, factories and construction, which account for about 47% of the economy. Now, even that figure, I think, is highly questionable, because offices these days are highly professionalised workplaces and a lot of people who have a day off for a bank holiday, either work at home on that day or display some of the work that they would have done on that day and do it another day. I know. Certainly I do. So it's really difficult to estimate the real amount of lack of economic activity that take place on a particular bank holiday.
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A
I suppose one of the reasons why this has become a bit of a hot potato is this question of whether we are or are not in recession. And we've just been slightly positive, slightly negative, slightly positive, slightly negative. We've been teetering in and out of this area where it can be claimed that we're in recession. And so the government has tried to claim various distortions in the data, that the royal wedding, for example, has made GDP lower than it otherwise would have been. I guess this is a real issue. I mean, these things do distort the GDP numbers slightly.
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E
They do. And it's quite possible that, say, having an extra bank holiday could very slightly reduce GDP by 0.1% or 0.2%, and that could technically tip us into being in a double dip recession. But that's to ignore the big picture. The big picture is that we're a good 2% below the growth rate the Government was forecasting. No amount of abolishing bank holidays, the odd bank holiday is going to get us up to that sort of level.
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A
Colin Talbot, professor at Manchester Business School. You're listening to More or Less with me, Tim Harford, in association with the Open University. Now, visitors to this green and pleasant land from outside the European Economic Area aren't supposed to spend more than 45 minutes waiting in the queue for immigration. But over the past couple of weeks, it seems that some of them have been waiting for longer than that. Much longer, if some reports are to be believed. Ordinarily, this apparently would be fine, but this is an Olympic year and consequently the British establishment has decided to care about what foreigners think of us. The Immigration Minister, Damian Green, told Parliament on Monday that the situation wasn't quite as bad as it was being painted. Our information shows that queuing times bore no resemblance to some of the more wild suggestions. Border Force data shows the longest queuing time for Immigration control was one and
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a half hours on Friday night at
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Terminal 5 for non EU nationals. Times for UK and EU nationals was significantly lower.
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D
That is untrue. We have accurate, detailed information that shows
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that people queued for up to 2
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C
hours and 31 minutes.
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That was Willie Walsh, the chief executive of International Airlines Group, the company which owns British Airways, on the Today programme. So what's going on here? Richard Knight, more or less his very own Cardinal Richelieu has emerged from his palace to investigate. What have you found, Rich?
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C
Well, let me tell you what happened on Tuesday. After I heard the Willie Walsh Damien Green bust up. I called Heathrow's owner, Baa, whose data Walsh was quoting, and I asked them to let me see it. And I got.
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A
So they wouldn't give it to you?
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C
Well, they said they'd think about it.
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A
I see, and you called the Home Office too?
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C
Yes, they said Green's numbers come from the Board of Agency and they pointed me to its latest data, which is published on the Board of Agency's website. I spent a long time looking at it.
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A
Yeah, quite a long time, I have to say.
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C
Well, I did waste a day of my life that I'll never get back. But it eventually dawned on me that this data was absolutely no help whatsoever. Mainly because it's not about the period we're talking about, it's about the period September to December last year and the
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arguments about what's happening now, or at least what happened in April.
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C
But there was one useful thing in this otherwise pointless data. It explained how those numbers are collected.
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Oh, do tell, do tell.
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C
The border Agency identifies one individual every hour as that person joins the back of the immigration queue and they time how long it takes that person to emerge from the process.
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Okay. And the latest of those figures, which are from the end of last year, say that 98% of their sample clears immigration within the target time, which is 45 minutes for people outside the European Economic area.
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B
Yeah.
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C
And 25 minutes for people inside the European Economic Area. I think it has to be said that a 25 minute wait is still, to me, a pretty long wait. But that's the modest target they've set themselves. And last year, at least most of the time, they met it.
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A
Okay, but there's an interesting statistical problem here. Let's say in a five hour period, you've got 50,000 people coming through immigration and let's say it's 5,000 an hour for four of those hours. And then in the last hour there's a big rush and 30,000 people come through. And at that point, Richard, you've got a problem, haven't you?
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C
Well, you've got a problem if those 5,000 people are flowing through nicely every hour. But then you get this massive bunch of 30,000 people who totally overwhelm the system and queue for ages. The Board of Agency would say, the way they do it, that one person in five in this scenario, suffered delays because they sampled one person each hour. But in fact, three out of those five people did.
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A
Yeah, 30,000 out of 50,000. And the border Agency would have a better, less biased sample if they took, say, one person every 10,000 rather than one person an hour. So I suppose we shouldn't be too impressed by claims that 98% of people have beaten this modest target, because that's 98% of a sample that's chosen in a way that might systematically underestimate the problem, right?
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C
I think that's right. But the method is probably fair enough when it comes to picking up examples of people who've queued for a really long time.
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A
And that brings us back to this question of whether the worst queues were one and a half hours long, as Damien Greene, the Immigration Minister, says, or two and a half hours long, as Willie Walsh says. And at this point, well, I'm inclined to believe Mr. Green's, because at least we know how his figures are calculated, even if the Home Office hasn't really given us any of the data for the period he's talking about.
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C
Well, that's what I was thinking on Wednesday, but then on Thursday there was a very exciting development.
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A
There certainly was. BAA released the data. Thanks. Which I'm sure to your sterling efforts and the persuasive powers of more or less.
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C
Maybe it wasn't actually all that exciting, if I'm honest, because what they put out was pretty thin. It does at least deal with April. So that's one up on the Home Office. And it established that the way BAA measured the queues is actually very similar to the way the Border Agency does it, only they count one individual every 15 minutes instead of one every hour.
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A
Which might explain why they're saying the worst wait was two and a half hours, rather than Damien Green, who says it's one and a half hours. Damian Green's people just happened not to be in the hall when the guy with the longest wait ahead of him joined the queue.
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C
There is another interesting thing here, which is that when Damian Green says the worst queue was one and a half hours at Heathrow's Terminal 5, we don't actually know what time period he's talking about worst. When was it that day, that week, ever? He doesn't actually say, I'll spare you the crickets, but I've asked for clarification a whole bunch of times and I've had none. Baa, on the other hand, have given us a very clear briefing. They say their people found one individual on the 17th of April who waited 2 hours 35 minutes to get through immigration at Terminal 5. That's the person we assume Willie Walsh was thinking of. But they also say that on the 30th of April, some hapless fellow waited three hours in the immigration queue at Terminal 4.
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A
Three hours is not good. Now, when Damien Green made his one and a half hour claim in Parliament, he said he was quoting internal management information. And that's significant, isn't it?
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C
This is actually a fairly contentious area and I think he chose his words very carefully. There's an argument going on between the government and the UK Statistics Authority, which is the statistics watchdog. The difference of opinion is about what is an official statistic.
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These are subject to a whole load of rules, right?
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C
Yeah. And what's just management data which are not. After we called their attention to the episode, the UK Statistics Authority did send us this statement.
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A
The UK Statistics Authority has published criteria setting out when it would propose. That's quite dry.
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C
Well, what do you expect? It's a statement from the UK Statistics Authority.
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Do we have to hear the whole thing?
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C
It's important.
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Maybe we could beef it up a bit.
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F
The Statistics Authority has published criteria setting out when it would propose to Ministers that a particular set of data produced by government bodies could be handled in future as official statistics, in line with the Code of Practice for official statistics. These are A whether the data are used publicly by the organization in support of major decisions, decisions on policy, resource allocation or other topics of public interest, or B whether the data attract public controversy when published. And the authority takes the view that public debate would be better informed if the figures were in future handled as official statistics. The Authority will consider this particular case involving data produced by the UK Border Agency on waiting times at the UK border in more detail.
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D
Excellent.
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The statistical top guns are on the case now, Rich, just please summarise all those numbers for us, because there were a lot of them.
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C
Ok. So although BAA have released pretty limited data, it seems that queues in April in Heathrow were very bad, that the UK Border Agency missed its targets in Terminals 1, 3 and 4 and badly missed them in Terminal 5. These are targets that we don't think are all that tough anyway. And there have definitely been instances of people waiting for two and a half or even three hours from the moment they join the immigration queue. We've also figured out that the way all this data is collected by both BAA and the Board of Agency could be better.
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Thank you, Rich. Now, stats lovers everywhere also Love, Hans Rosling, the professor of International health at the Karolinska Institute in Sweden and founder of the Gapminder foundation which promotes, as he puts it, a fact based understanding of the world through statistics. When Hans is on the stage, statistics truly come alive and tell their own story. I recently spoke to Hans at the Schol World Forum in Oxford. If you want to understand the world you're living in and the world your children and grandchildren will live in, listen to this.
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G
We can no longer have two boxes in our head. One labeled Western world, the other labelled developing world world. And the very fact that unicef, this wonderful United nations organization which I like so much, stupidly still labeled South Korea developing countries and unforgivingly labeled Singapore a developing country. Singapore has the lowest child mortality in the world and they are still a developing country. And Qatar, which is the richest country, which has given us Al Jazeera era, they are also developing. This has to go, this has to leave. And we have to realize that countries are on a line from, in one end Singapore and Norway, and in the other end Congo and Afghanistan. And in that distance between Singapore and Norway being the most affluent and healthiest countries in the world and Congo and Afghanistan being the poorest and most deceased, most people live in the middle. That's where Brazil is, that's where Turkey is, that's where Indonesia is, that's where China is, that is where half India is. The other half of India is very poor, but moving also. So it's the whole way in which we sort it.
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A
I think a lot of people have realized that places such as China, India and other major countries are developing very quickly. But many people feel a sense of hopelessness about Africa. But you see it differently.
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G
No, it's not that I see it differently. It is differently. It has been put very nicely lately. Someone said we have to look upon Africa as we do with Asia. No one say I will not invest, nor would I like to go to holiday to Malaysia because there's such a war in Afghanistan. We have come to judge each country in Asia on their own merits. And in Africa, you know, something bad happens in one country and you generalize it to the whole of the continent, basically it's racism. I actually looked at Mali, the tragic coup d' etat which was a major backlash in Africa. Mali has 50 years life expectancy and have 6 children per woman. Ghana has 67 years life expectancy and 4 children per woman. This means that Ghana is halfway between Britain and Mali and we should be very humble in the European Union this year. And next year, because we are projected to have an economic growth of 0.3%, whereas the entire sub Saharan Africa is projected to have 5% economic growth. And mind you, that is not from oil, that is from a diverse economic development now. And there are 17 countries in Africa which are above 5% economic growth. And I'm, as a public health professor, I'm not so impressed by economic growth, but when I see that the economy grow and the child mortality drop at the same time, then something is truly happening. That's not happening in Gabon, for instance, but that's happening in Tanzania.
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Hans Rosling, who has an excellent website where data move and swirl to tell their story. Gapminder.org we recently received an email from Julia Atkins.
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B
I belong to a wonderful choir rock chorus in Milton Keynes. I discovered one evening that three new ladies had come along from Olney, 10 miles away. They all sat next to each other. They had never met before. But most extraordinary was that they all lived in the same road. That's quite a combination of coincidences, I think you'll agree.
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A
It's not for me to agree or disagree, Julia, it's for the numbers to tell us. So I asked Dr. Katie Chico from the Open University's Maths and Statistics Department to calculate exactly how much of a coincidence it was.
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H
The first thing you should do is make clear the question that you're going to answer. So the question that I went about answering was, what are the chances that the three new members at this particular rehearsal would live on the same street around this area? You've got a rock choir and rock choruses about 10 miles away from each other. So I took a 10 mile radius around this particular choir as being a reasonable catchment area for it. Now we know what its catchment area is, I needed to find out how many streets there are in that catchment area. We want to find out whether they're on the same street or not. Just how many streets could they have
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come from and how many are there?
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H
About 5,600. If we then said these women were turning up independently from any of those streets, you'd be looking at a probability of about 1 in 31 million that you would get three of them living on the same street turning up randomly.
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A
Pretty unlikely.
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H
Absolutely.
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A
That's sort of lottery win kind of probabilities, isn't it?
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H
It's way less likely than winning the lottery. It's 1 in 14 million to win the lottery.
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A
So if you look at it that way, it was indeed an extraordinary coincidence. But Katie discovered that the choir in question had been advertising in Olney a lot. So much so, she says it's reasonable to assume that all new members that night would have come from Olney. After that, you're no longer looking at every street in a 10 mile radius. You're looking at every street in Olney. Immediately. The coincidence looks far less impressive and Katie whittled down the number of streets in her calculation even further by taking into account the kinds of people who joined the choir and there you might expect there to be some clustering by demographic group.
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H
116 streets I narrowed down to. I mean, I think actually we'd be looking at a much, much more clustered number of streets and they were fairly conservative estimates.
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A
Well, don't keep us in suspense. What number did you get to?
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H
Why don't we let the choir tell us?
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A
Given all the data we've got and assumptions we have made, these chances is all this Blue Cook Curry will sing for you today.
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B
It's about 10,000 times more likely than an OR. It's not betting on that. I would like to take. It's a world it's about.
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A
There you have it. A one in thirty and a half thousand chance. About the same odds. You'll be injured in the loo this year. Thanks to Katie Chico, our listener Julia Adkins, and of course to the members of the Rock Chorus, which is led by Lauren Field. I might just add a note of caution. In fact, if I don't add a note of caution, there's a hundred percent chance that we'll be getting angry emails to more or lessbc.co.uk and point out that the Milton Keynes Rock Chorus isn't the only social group in the country. Every day, up and down the land, there are people getting together to play football or bridge in book clubs or gardening societies. At any of these events, three people could turn up for the first time and discover they lived on the same street. And in those circumstances, they might well be tempted to get in touch with More or Less. It's a bit like winning the lottery. It would be very surprising if it happened to you, but not at all surprising that it happens to someone. And that's all we've got time for this week. Do keep your ideas and comments coming in via more or lessbc.co.uk. our podcast is available at BBC.co.uk more or less. Or if you're not interested in all that fancy Internet stuff, just tune in next week. Until then, goodbye.
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G
More or Less.
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B
He's presented by Tim Harford, the Financial Times undercover economist producer is Richard Knight. The editor is Richard Badham.
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F
More or Less is made in association
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A
with the Open University.