Lies, damned lies, and statistics

Labour has shown a consistent willingness to mislead and misinform the public

Towering columns

At The Critic, James Price believes Labour does not understand the scale or nature of Britain’s structural problems nor the solutions needed for recovery.

As someone who served as a special adviser in multiple government departments, I think the rot goes to the very heart of the structures of power in the UK. I tend to agree with another fan of the Downing Street garden, Dominic Cummings. His argument — with apologies for condensation — is thus: although the administrative state does contain some amazingly talented people, and does prevent dangerous ministers from doing dangerous things, it is designed to prevent problems from being fixed if those problems are important enough to come up to ministerial decision-making levels. It blocks the sorts of reforms to the delivery of services and modernisation of tech and practices (not to mention killings of sacred cows), that would actually enable problems to be solved.

As such, we are poorer, less safe, less organised and more vulnerable to the sorts of terrifying threats and changes that the 21st century will throw at us — all because of bureaucratic short-termism from the Treasury, a slavish devotion to process over outcomes, a tangle of judicial weeds, and an increase in DEI and other cultural nonsense imported from across the Atlantic. That’s why immigration hasn’t been dealt with, debt is piling up and growth has been non-existent since 2008. That’s why COVID was a fiasco until the state got out of the way and allowed people like Kate Bingham and Nadhim Zahawi to bring in private sector experience and skills, and why we can’t even have faith in our nuclear weapons deterrent. Instead, we have more QUANGOs, more regulation and more civil servants working, and yet the problems keep mounting up. 

This rot is indeed deep, and it has little to do with the sort of day-to-day scandals over which Westminster obsesses. Does Labour have a blueprint to sweep this away and replace it with a nimble, modern apparatus that is actually interested in fixing the problems that have made the state ungovernable, the economy unworkable, and the country increasingly unliveable? The short answer is no. But neither do the Tories, and nor, despite the name, does Reform. Tinkering with various policies will end in failure. Trying to fudge various appointments by squeezing partisans into the existing structure, as the Labour government have been caught doing in recent weeks, is also just rearranging the seating equipment on top of an extended metaphor involving blocks of ice and large ships.

At UnHerd, Henry Newman argues that Kier Starmer’s appointment of donors and supporters threatens the impartiality of the civil service.

In defence of these appointments, members of the new Government have resorted to shameless whataboutery, pointing to certain individuals elevated to the House of Lords by previous prime ministers, to a recent ambassadorial role allocated by another prime minister, and to endless other appointments to the boards of quangos and Non-Executive Director positions within Whitehall. There are doubtless interesting questions to be raised about the practice of previous administrations. But all those posts, while important, are substantively different from Civil Servants.

The last Labour Government legislated to put the political impartiality of the Civil Service on a statutory footing. Their Constitutional Reform and Governance Act 2010 also dictates that appointments to Whitehall must be by “fair and open” competition, or through an exception overseen by the Civil Service Commission. So the Civil Service is bound by entirely different rules. Ambassadorial jobs are distinct. The top quango jobs are regulated by a separate process but one which sets out that political activity should neither “affect any judgement of merit nor be a bar to appointment”. Departmental non-executives are now similarly regulated, thanks to a change made by Boris Johnson. And appointments to the peerage remain a Prime Ministerial prerogative. Those who dismiss these distinctions as sophistry are dismissing the value of Civil Service impartiality.

Civil Servants have to serve the Government of the day, whatever its political complexion. Crucially, they must also — and this is set out in the Civil Service Code — retain the ability to serve with equal commitment to a future government. That value has been traduced by recent appointments. For how could a future government have confidence in the advice of a Deputy Director in the Propriety and Constitution Group, whose previous job was working for Labour Together? How could a future Government trust the new Director General in the Department of Science, who also previously worked for Labour Together? That’s why these appointments are so injurious to political impartiality.

For The Telegraph, Nick Timothy exposes how Yvette Cooper is hiding the true cost of the government’s asylum changes from the taxpayer.

The Home Office admits that 63,053 illegal immigrants previously due to be deported will now have their asylum claims heard instead, and up to 70 per cent – 44,137 people – are predicted to be successful. But the department also admits that for those refused asylum “the scale and timing of removals is highly uncertain” and that “the Home Office may continue to support a number of” failed claimants.

These figures are just the beginning, because they apply only to a specific, recent cohort of migrants. With the Duty to Remove unlikely to be implemented by Labour, the Home Office admits its new policy “is expected to increase the number of asylum claims” which “consequently increases … costs.” Instead of facing deportation, hundreds of thousands more migrants will have their asylum claims considered, and one way or the other the vast majority will stay here for good…

…Unfortunately, the British state is reluctant to try to understand the fiscal costs and benefits of different profiles of migrant. While other European governments are putting more resources into researching the contributions and costs of migrants – by nationality, visa route and so on – we are doing the opposite. HMRC has discontinued data on income tax paid and tax credits and child benefit claimed by nationality. The Department for Work and Pensions has stopped publishing data on benefits claims by nationality. The Government does not publish the immigration status of prisoners.

For The Guardian, Sonia Sodha believes the law should tackle the sexual exploitation of women by punishing the men who pay for sex.

Women being killed is a feature, not a bug, of prostitution. You only have to read a sample of the appalling online reviews to see how men view these women as objects who exist to satisfy their sexual desires, however violent. In one study, a significant minority of men who buy sex openly said their payment entitled them to demand any act of their choosing; more will truly think that. The very notion of consent disintegrates in a situation where a man is paying for sex: how can a woman meaningfully consent with someone she knows could kill her in minutes if she says no or is perceived to make the wrong facial expression?…

…But Labour will need to confront the “sex work is work” mantra championed by the pimp lobby (who have rebranded them “sex workers”), who have a strong hold on parts of the left. It is easily bought into by men who pretend that prostitution is a transaction underpinned by equal power dynamics, and by privileged naïfs who swallow the “happy hooker” myth that plenty of women love offering sex for cash, but never stop to ask themselves if they would accept £20 for performing a blowjob.

The reality is that prostitution is overwhelmingly reserved for women without other choices: with drug and alcohol addiction, or histories of domestic and/or child sexual abuse. The average age of entry into prostitution is 15. And women are being trafficked into the UK from countries such as Romania and effectively held as sex slaves to be raped by several men a day paying for the privilege. One study found more than half of male sex buyers understand that most women in prostitution are lured, tricked or trafficked but exploit them anyway.

In the New Statesman, Brendan Simms makes the case for empowering Ukraine as a guarantor against Russian aggression in Europe.

Zelensky has reminded us that Russia is beatable. The tsars were defeated in Crimea in 1856 and in Manchuria in 1905; in the 1980s, the Soviet Union performed no better in Afghanistan than Britain had in the 19th century. Each of those defeats was followed by a turn for the better (albeit regrettably brief) in Russian domestic politics. The Crimean War forced the tsar to emancipate the peasants; defeat by Japan precipitated the first moves towards constitutional government; and the Afghan debacle helped bring down the communist dictatorship. We have an interest in seeing not only a Ukrainian victory but a Russian defeat.

Britain has some capacity to make this happen. Sadly, after making an exceptional contribution to the survival of Ukraine at the start of the war, we have fallen behind. On 17 August, Zelensky said the UK’s leading role in supporting Ukraine had “slowed down” and that “barriers”, such as the withholding of “long-range capabilities”, prevented Ukraine from further weakening Russian positions. Britain’s military contribution, which was once surpassed only by the US, has long been overtaken by Germany, but the “long-range capabilities” that Zelensky wants are a matter of permission: Britain has supplied Storm Shadow cruise missiles to Ukraine, but it is not allowed to use them to strike targets within Russia. Keir Starmer’s new government is not to blame for this state of affairs, but it will be responsible for a failure to correct course now.

The government urgently needs to do two things. First, to increase defence expenditure, probably to about 3 per cent of GDP (back to where it was in 1994). This would fund the additional conventional and nuclear capabilities necessary to maintain strategic deterrence against Russia. This will take time. Secondly, we must supply the Ukrainians with the capability to force Russia to withdraw from their country, or at least to maintain the momentum of the Kursk operation. Some of this can be done immediately, such as lifting restrictions on the use of the British-supplied Storm Shadows.

At Compact, Justin Vassallo considers how Kamala Harris is attempting to build a majority by winning over both blue-collar voters and suburban moderates.

As the convention and her nomination speech demonstrated, Harris is going to emphasize three messages: that the Democratic coalition is once again a welcoming big tent, despite its past indulgence of “woke” pieties (something that “Scranton Joe” of all people failed to strongly convey); that Democrats are the party of live-and-let-live pluralism, unlike the “weird” right; and that a Harris administration is going to foster an “opportunity economy” that empowers workers and broadens entry to the middle class.

This isn’t to say that overt appeals to identity politics are going to be curtailed across the board—far from it. But unless she recalibrates her strategy in the event of a lousy debate or similar change of fortune, Harris is going to embrace a kind of fusionist politics that may be described as pro-growth populism. A Harris administration would presumably rein in “corporate greed” on a case-by-case basis and pursue expanded household tax credits, as promised by the Democratic platform, but accommodate business investment insofar as supply-side policy and Lina Khan-style fair competition make it easier to ramp up production and lower costs for key staples and services. To date, the agenda is essentially Bidenomics 2.0, yet Harris has a chance to succeed with swing voters where Biden faltered: on the basis of a streamlined “kitchen-table” pitch…

…After this week’s show of force, some liberal pundits might expect the last remaining “persuadable” moderates and independents to set aside their doubts about Harris’s vision and mettle. Democratic unity, however, isn’t the same thing as a robust turnout operation in the counties that matter most. There is also the risk that an 11th-hour big-tent campaign ends up with an unfocused and diluted economic message. Harris is trying to reinvent herself as a broad-minded populist who can win over blue-collar workers burned by both parties. But maintaining airtight unity in a party that increasingly represents upscale voters means she will be under pressure to pacify comfortable professionals and elite donors wary of deeper economic reforms.

Wonky thinking

The Information Technology & Innovation Foundation has published a briefing by Hodan Omaar on China’s strategic investments in AI. High levels of state-directed capital and foreign private investment is helping China to close the gap with the United States. While China’s progress cannot be impeded by Western states, a national AI strategy is needed to expand the US lead over China.

In the past two years, China has seen a rapid increase in large-scale AI models from leading industry and academic labs. Companies must seek government approval before introducing AI chatbots built on LLMs into the market, and as of March 2024, China’s Cyberspace Administration had approved at least 117 generative AI products.16 According to data provider IT Juzi, at least 262 start-ups are competing to bring out generative AI products in China.

China’s large-scale AI models fall into two broad categories. In the first category are general-purpose AI platforms used across various sectors, including both closed-source and open-source models. In the second category are industry-specific models tailored to vertical sectors, such as finance, biopharmaceuticals, and remote sensing. An example in the latter group is MathGPT from the TAL Education Group, a smart-learning solutions provider in China. The model is trained on extensive data on mathematics learning and can power different EdTech applications by providing dialogue-based problem-solving.

While China has many companies developing powerful AI models, U.S. models currently outperform them. One expert pointed to performance of U.S. and Chinese models on a comprehensive Chinese LLM benchmark called SuperCLUE. SuperCLUE was developed by a team of researchers, from both Chinese and international labs, to assess model capabilities on Chinese-language understanding, including semantic understanding and extraction, generating code, logic and reasoning, calculations, roleplaying, and safety. From the latest results in 2024, three findings emerge:

1. The gap between the leading models from U.S. industry leaders and those developed by China’s foremost tech giants and start-ups is quickly closing. Figure 2 shows the overall scores for U.S. and Chinese models on the SuperCLUE benchmark in April 2024 and June 2024. In April, the top three models were all different generations of OpenAI’s GPT model series, while the fourth model was Claude, which was developed by U.S.-based start-up Anthropic. Then came several Chinese LLMs. The gap between the best Chinese model (Baichuan’s Baichuan3) and best U.S. model (OpenAI’s GPT-4 Turbo) in April was considered significant, but it was smaller than it was last year. However, just two months later in June, Chinese companies had risen up the leaderboard and dethroned several U.S. models from their top spots. OpenAI’s GPT-4 still leads the pack, but Alibaba’s LLM series Qwen 1.5 ties for second with Claude while Chinese AI start-up DeepSeek newly enters the leaderboard and ties for third with Chinese start-up Zhipu AI’s GLM-4 model and Chinese AI company SenseTime’s Sensechat model.

2. The makeup of players developing China’s top models are a mix of start-ups and tech giants. Models from large tech giants include Baidu’s Erniebot, Alibaba’s Tongyi Qianwen, and Tencent’s Hunyuan, while models from the start-up scene are being led by Zhipu AI, Baichuan AI, Moonshot AI, and MiniMax.

3. China’s open-source LLM ecosystem is gaining significant traction. Alibaba’s LLM series Qwen 1.5 showed impressive capabilities across various sizes, but particularly its largest model with 72 billion parameters. Some iterations of China’s open-source models also beat their U.S. counterpart’s, such as Zhipu AI’s ChatGLM3 and Baichuan’s Baichuan2, which outperformed Google’s Gemma and Meta’s Llama 2 series. Additionally, Hugging Face, which evaluates open-source models, ranks several iterations of Chinese AI start-up 01.AI’s open-source model (called the Yi series) highly for common sense reasoning, math, coding, and reading ability.

A new paper, Government Debt in Mature Economies. Safe or Risky?, by Roberto Gomez-Cram, Howard Kung, and Hanno Lustig examines the trade-offs policymakers face between protecting bondholders and taxpayers during major fiscal shocks. Looking at the United States during the pandemic, the authors cover the implications of subsidising bondholders through large scale asset purchases.

Central banks and governments need to ensure that bond markets function smoothly. Before the arrival of COVID, the U.S. had not witnessed large responses to fiscal shocks in Treasury markets in the past decades, including during the GFC. Based on extrapolation from recent U.S. experience, one might have expected Treasury yields to be insensitive to fiscal news when bond markets function well.

The U.S. Treasury market’s actual response to COVID was markedly different from its response during the GFC and more in line with the predictions of standard valuation models. Throughout COVID, U.S. Treasurys were marked down along with the sovereign bonds issued by the governments of other advanced economies, such as France, Germany, and the U.K. We provide direct high-frequency evidence that these U.S. Treasury yield increases were concentrated on days with significant fiscal news, the footprint of the risky debt regime. In a large class of standard asset pricing models, the valuation of the government’s IOUs is marked down when the economy is hit by unfunded spending increases.

In March of 2020, foreign investors did not flee to the safety of U.S. Treasurys. Instead, they sold long-dated U.S. Treasurys in a flight from maturity. The convenience yield on long-dated Treasurys declined throughout the COVID period. During COVID, U.S. Treasurys were not trading as the world’s safe asset of choice, but rather, Treasurys were trading much like the sovereign bonds issued by other mature economies. Towards the end of the sample, AAA corporates are priced as close substitutes for long-dated Treasurys.

In response to COVID, U.S. Treasury investors seem to have shifted to the risky debt model when pricing Treasurys. Policymakers, including central banks, should internalize this shift when assessing whether bond markets are functioning properly. In the risky debt regime, valuations will respond to government spending shocks, which may involve large yield changes in bond markets. In this environment, largescale asset purchases by central banks in response to a large government spending increase have undesirable public finance implications.

These purchases, which provide temporary price support, destroy value for taxpayers but subsidize bondholders. These purchases may also distort the incentives of governments and impair the price discovery in government bond markets. It is not inconceivable that governments in some mature economies have overestimated their true fiscal capacity as a result of these large-scale asset purchases.

Book of the week

This week we recommend The Boy From Baghdad: My Journey from Waziriyah to Westminster by Nadhim Zahawi. Fleeing from Saddam Hussein’s Iraq, Zahawi arrived in the UK at the age of 12 and found success as well as challenges in a new country. From founding YouGov to rolling out vaccines, Zahawi reflects on how his career has been shaped by his personal experiences.

If there were an aristocracy in Iraq, the Zahawis historically would have been part of it. My great-great-grandfather — Mohammed Fedhi Zahawi — was the grand mufti of Baghdad. His son, my great uncle Jamil Sidqi al-Zahawi, was both an unapologetic atheist and one of the most well-known poets in the Middle East. My father’s father became governor of the Central Bank of Iraq and for many years his signature was on the Iraqi dinar. In the 1960s he became minister for trade and acting minister for oil, and presided over the creation of OPEC, which was signed and sealed in Baghdad in 1962.

My own parents were not quite on my grandfather’s level, though we’d still have been regarded as middle or upper middle class. Like many women in her sphere, my mum had a job. In Waziriyah, she was the famous lady dentist. In the mornings she worked for the state and in the evenings at her own private surgery. My dad had his own construction company, though as time went on I realised he was an entrepreneur who just happened to be invested in construction. He knew how to live life well and how to enjoy it.

He was a prime target. The choices were leave or die. They left Shabaan and drove straight to the travel agent, where they bought a first-class, round-the-world plane ticket for £1,000. It was far more than he needed but the only safe way to get cash out of the country unnoticed. Once Dad was in England he could get a refund on the unused leg of the journey. Mum gave him the diamond and sapphire necklace he’d bought her and told him to sell it if push came to shove…

…In the years since, I’ve met many people whose stories didn’t end the way ours did that day. Families whose fathers were tortured. Wives who were raped. Children who were murdered. Our neighbour whose uncle no longer talks on account of the fact the party cut out his tongue. I knew we weren’t just watching my father leave for England that day. We were waiting to see whether he’d escape under the wire or whether he’d be taken away to be kicked like a dog or shot in prison, his body returned to us with a bill for the bullets used to kill him. It was a gamble but one he had no choice but to take.

With two children and a full-time job already, my mother became responsible for liquidating my father’s company and its assets in a fire sale, and managing the backlash in the wake of his departure. The moment he chose to leave, Dad branded himself a criminal, never mind that the charges were bogus. When people think the head of your household is a traitor, they very quickly turn against you in an environment that thrives on fear and manipulation.

My father was fortunate in that his work meant he’d always had a UK re-entry visa, so London was the natural place for him to go. Summer in the UK was quite common practice for the affluent Iraqis we mixed with. We’d often spent school holidays there, typically at the Hilton on Park Lane — London’s first hotel skyscraper and still very new at the time. If my parents weren’t drinking whisky and soda highballs and Bloody Marys in its basement tiki bar, they were dinner dancing on the rooftop — my dad in his suit from Simpsons of Piccadilly and Mum in her floor-length evening gown from Harrods. This time, however, he’d be starting from scratch. While Mum collapsed our old life, Dad rented a small flat on the Gloucester Road, took out his Rolodex and put down the roots of a new one. Eight months later, it was time for the rest of us to join him.

Quick links

Free speech law dropped by ministers following pressure from vice-chancellors worried about losing funding from China.

Polling showed that 51% of people disapprove of the new Labour government.

Illegal crossings into the EU have fallen by 36% in the first seven months of 2024, but exits towards the UK increased by 22%.

Canada is reducing the number of temporary foreign workers on low wages.

New guidance will encourage teachers to challenge “whiteness” in schools.

German imports of UK goods have flatlined since 2010 while UK imports from Germany peaked in 2017.

Environmental rules will be overhauled for the oil and gas industry as the government continues its net zero transition plans.

Ofsted marked down a primary school for being “too white”.

Angela Rayner has been urged to increase seasonal visas for the construction sector.