4 months, 2 weeks ago

BBC Question Time leaders special: Nicola Sturgeon fact checked

Nicola Sturgeon was challenged on tonight’s BBC Question Time about Scotland’s high budget deficit, after an audience member pointed out it would need to bring its deficit down to levels acceptable to the EU if it wanted to join. She argued that “that is a deficit that has been accrued under the Westminster system of government”.

Scotland’s net fiscal deficit is higher than that of the UK as a whole, as a proportion of the size of its economy. In 2018/19 it’s “deficit” was between 7 and 8.5% of its economy, depending on whether and how you count revenues from North Sea oil. By contrast, the overall UK budget deficit is expected to be about 2% of GDP in the same year.

It’s correct to say, as Ms Sturgeon goes on to, that “I don't control as first minister the macro economic policies of the United Kingdom.” In other words, the Scottish government can’t control things like interest rates.

The underlying argument here is that the deficit faced by an independent Scotland could be lower than it has as part of the UK, but independent experts have suggested this is unlikely to be the case.

As the Institute for Fiscal Studies has pointed out in the past, an independent Scotland would face pressures on its budget and would need to take action either by raising taxes or cutting public spending.

It also points out that the main policies to promote economic growth proposed during the last independence referendum were tax cuts and spending increases, which would increase Scotland’s budget deficit (in the near-term).

Scotland has some control over its own deficit at the moment, as it has powers to raise some taxes on its own. At the moment, around 29% of all the revenue collected in Scotland is devolved—which is much higher than it was before recent Acts of Parliament transferred additional powers to the Scottish government.

But another factor behind Scotland’s relatively big deficit is that government spending per person is higher in Scotland than the UK average. The Scottish government has previously put forward some reasons why, including its low population density and greater need for certain public services.

4 months, 2 weeks ago

BBC Question Time leaders special: Jo Swinson fact checked

Jo Swinson claimed that as a result of leaving the EU “we are going to be poorer, people are going to lose their jobs, there will be less money for our NHS.”

None of these statements is flatly incorrect, but they all need some clarification.

On the question of being poorer, it’s important to understand that expert forecasts don’t expect the UK to be poorer than we are now. Rather, they estimate that the UK economy would grow by less in a Brexit deal scenario, compared to a scenario where we remain in the EU.

Most forecasts from the government and expert think tanks expect UK GDP to grow by between 2% and 7% less in a scenario where we leave with a Brexit deal, compared to one where we remain in the EU. GDP is the value of everything produced in the UK economy.

These estimates are each looking at slightly different time periods (ten to fifteen years), and slightly different modelled Brexit scenarios—but they all broadly resemble Boris Johnson’s proposed deal.

It’s also important to remember that these are only modelled estimates, which means they contain quite a lot of uncertainty. For example, if a decision to remain in the EU was followed by intense political pressure to leave or have another referendum, this could create more economic uncertainty and affect GDP, meaning less of an economic benefit from remaining.

Whether Brexit means “less money for the NHS” really depends on how the government of the day chooses to manage its accounts. We’ve previously found that the Lib Dems’ estimate of a £50 billion “bonus” in additional money for the government to spend in a remain scenario is reasonable (although highly uncertain, for the reasons given above). 

But the Lib Dems don’t plan to spend most of that “bonus” on the NHS; it’s mostly going on education pledges, such as 20,000 extra teachers. So while remaining might mean more money that could potentially be spent on the NHS, it doesn’t necessarily mean that’s where the money will go. 

You could imagine a government spending more on the NHS in a Brexit scenario, than another government would spend in a remain scenario—if the government in the Brexit scenario is committed to more NHS spending overall. 

As for the questions of job losses, none of the recent forecasts of Boris Johnson’s Brexit deal we've seen have addressed the issue in detail. It seems likely that some companies would pull out of the UK—at least in part—in a Brexit scenario, leading to job losses, but we don’t have a clear picture of what would happen to the overall employment picture.

UK in a Changing Europe says that a Brexit deal with a “restrictive” migration policy would lead to 550,000 fewer people in the workforce than in a remain scenario—but this is due to reduced immigration, not job losses.

4 months, 2 weeks ago

Fewer than half of limited companies make less than £10,000 in profits

Following on from our earlier post about Nigel Farage's corporation tax numbers, we've heard back from the Brexit Party who've clarified that their policy is to waive corporation tax for the first £10,000 of pre-tax profits that companies earn.

Mr Farage is still wrong to claim that two-thirds of businesses make £10,000 or less in profits. In fact fewer than half of limited companies earn less than this.

We've looked at the details here.

4 months, 2 weeks ago

Manifest-Oh no she didn't!

We spotted a video shared by the Conservative press Twitter account yesterday that appeared to show Jess Phillips saying Labour would fail to deliver on its 2019 election manifesto promises.

The video was not from yesterday, but October, where Ms Phillips was talking about manifestos and political parties more generally. The Conservative press account incorrectly dated the video.

They deleted and fixed the date, but the new video and a similar video on the main Conservative party Twitter account still suggest Phillips is talking about the 2019 manifesto.

You can read more about this here.

4 months, 2 weeks ago

Nigel Farage gets tax numbers wrong

At the Brexit Party’s manifesto launch this morning, leader Nigel Farage pledged to remove corporation tax on business profits under £10,000. 

Corporation tax is a tax on limited businesses, and the main rate is set at 19% of profits.

Justifying the proposal, Mr Farage said in the Telegraph this morning that: “two-thirds of British businesses do not make a profit over £10,000 every year but are nonetheless subjected to corporation tax.” 

He made a similar claim in his speech this morning, that a million companies do not make a profit of over £10,000 a year. 

This is incorrect.

Mr Farage seems to have confused the number of limited businesses who have to pay up to £10,000 of corporation tax (one million in 2017/18) with the number of businesses which make profits of up to £10,000 (and therefore would only be liable to pay corporation tax up to £1,900, on the 19% rate). 

The Brexit Party correctly stated this statistic in their manifesto: “one million companies - some 66% of the total number - pay less than £10,000.”

It’s not clear that the party’s pledge is to stop all those companies paying corporation tax altogether, though. The party’s pledge seems to be that corporation tax would be waived for the first £10,000 of pre-tax profits, not the first £10,000 of tax owed.

We’ve asked the Brexit Party to clarify.