The regular complaints from business organisations like the CBI and the British Chambers of Commerce about the weakness of the country's transport infrastructure are always peppered with estimates of the cost. This morning, when I received a missive from the BCC saying that the 'cost to business' was 'a staggering £17.55 bn per year' I decided to discover how this figure is calculated.
I discovered that it is based on a survey of 2,260 small businesses in which the respondents were asked to estimate the cost to their firm of congestion. Then those numbers are multiplied by the number of small and medium size enterprises (what about big ones?) given by government, to arrive at the global figure.
I am not denying that congestion is a cost to some businesses - indeed it may be a major one to some. But to aggregate up figures from a survey in which business people - who have a vested interest in exaggerating the cost - simply make an estimate of what congestion costs their business is a fatuous exercise at best and a very dishonest one at worst. It has absolutely no basis whatsoever, not even as an approximation.
This technique, though is effective. These figures are regularly reproduced in newspapers, frequently in headlines, without any analysis of how they are arrived at. They then get picked up by policymakers and become part of conventional wisdom.
In my youth, I was active in squatters' organisations and we used to get rung up by journalists keen on finding out how many squatters there were. We trotted out random numbers such as 40,000 in London, with little basis in fact - there were probably a few thousand at most - but these figures can now be found in learned tomes.
The BCC and other organisations pride themselves on being rather more respectable than the Advisory Service for Squatters. But in their use of statistics, they are not!
Lies and damn statistics
Friday, 2 November 2007
posted by Christian Wolmar at 05:45
4 Comments:
Yes, well said. When I worked for an MP we used to get these statements from orgs like the Fed of Small businesses etc - telling us the so called opinion of small businesses in our constituency. I just threw them away - they were worthless compared with anything that a small business person actually took the trouble to compose a proper message about (which is what deserved attention).
I read an article by (I think) Simon Hoggart who spoke of the Department of Imaginery Statistics as the place that generated all these figures based on virtually no evidence at all!
Dan
Regrettably the main point of the survey has been missed. The BCC survey is conducted annually to gauge the opinions of businesses across the country. This year the survey received 2,701 responses in total. Its main findings were that businesses are increasingly frustrated at the continuing failure of the UK’s transport infrastructure to meet the needs of the business community. It is stated that we have failed to represent the ‘big ones’ yet the BCC as a network of local chambers around the country prides itself on representing the voices and concerns of SMEs. Turning to the methods with which we equate the cost of congestion to business I disagree. We collate the figures of what businesses estimate the cost of congestion is to their business. This is after all an estimate but I believe a business is the best place to ask; after all, SMEs are acutely aware of how congestion affects their business in terms of lost man hours, lost business and failed deliveries. The national figure, which we derive from individual businesses, is based on the Government’s own SME figures as stated by the Department for Business, Enterprise and Regulatory Reforms’ Enterprise Directorate. The national figure is therefore an estimate of the problem congestion causes business.
Focussing on this figure the key message of this survey has unfortunately been lost which is that these findings are trying to highlight parlous state of the nation’s infrastructure. The business community requires high quality infrastructure in order to conduct its operations and to be able to compete, not just nationally but internationally. Good quality infrastructure has a direct relevance on the ability of an economy to generate growth. Without transport links companies cannot reach their customers or suppliers. Competition is limited meaning that access to competing suppliers is reduced which will mean that prices of goods will rise and therefore the wealth of the economy will decline. The survey sends a clear message to the Government that it must prioritise spending on transport and it is this message we had hoped would be taken from the survey.
I got a mailing yesterday from the Crossrail Team - all full of useful info and no problem with that. But in it, it claims that Crossrail will 'generate 30,000 jobs' - how is that worked out? Will it cause jobs to be lost? Are these construction jobs or jobs in the rest of the economy facilitated by Crossrail? It is more Department of Imaginery Statistics stuff!
They are probably the same bunch of creative accountants who originally worked out how much the 2012 Olympics will cost!