Monday, 20 January 2014

Kindergarten logic

The Scottish Government recently issued an economic analysis related to its White Paper pledge to double free nursery hours in the event of independence.

It said a 6% increase in the female workforce (up to the Swedish level of 78%) would yield £700m in extra tax revenues, conveniently the same figure put on the cost of the policy.

Casual readers might have taken away two things from this.

That the planned boost to childcare would increase female participation in the workforce by 6%, and that this would make the policy self-financing.

Wrong on both counts, it turns out.

For although the analysis went into considerable detail about the benefits of a 6% rise, it never actually demonstrated that the SNP's specific policy would deliver such a 6% rise.

It simply jumped in and started doing the maths on an aspirational increase.

The paper did contain a disclaimer about this, but it was buried in a footnote.

Here's a longer version of the story in today's Herald

Tom Gordon

ALEX Salmond’s promise of a “transformational change” in childcare after independence faces new questions over its affordability, after the government admitted its “unique implications” had not been tested through economic modelling.

Ministers claim the flagship policy of doubling free nursery hours will allow thousands more women to enter work, raising extra tax revenue and boosting the economy in a “virtuous circle”.

Last week, ministers issued an economic analysis which modelled the impact of a six-point rise in female participation in the workforce, from 71.9% to the Swedish level of 77.9%.

It said this would generate £700m in extra taxes - the same cost as the childcare policy.
Launching the analysis on BBC Scotland’s Sunday Politics, Alex Salmond said: “What this really important paper points out is that in the context of an independent Scotland the proceeds of a 6% rise in female participation rates in the labour market would come to the Scottish exchequer and these proceeds would be very substantial - some £700m.”
However it has now emerged that a footnote in the paper contained a disclaimer admitting the SNP’s specific childcare policy had not been modelled, only the impact of a theoretical rise of 6% in the female workforce.
There was no proof given that the SNP’s policy would actually deliver the hoped for 6% rise.
Er, we never actually modelled the impact of the White Paper's keynote policy
The paper said: “Note the analysis illustrates the impact of a boost in female participation rates rather than a specific policy.
“The specific proposal will have its own unique implications for the economy and budgetary impacts. These are not simulated here.”
The government last night conceded those “unique implications”, which include the impact on the labour market, had not been modelled.
The opposition said the policy was unravelling.
Labour education spokesperson Kezia Dugdale said: “The SNP’s claim that we can only improve childcare once Scotland is independent is completely falling part. We all know mums and dads need help juggling family life with work commitments and the SNP have been caught misleading them to win referendum votes.”
Liz Smith of the Scottish Conservatives added: “The SNP has to realise that if it is promising attractive policies like this, it has to show how it will be possible.”
Spot the disclaimer
The promise to boost free nursery care was the cornerstone of the White Paper on independence.
It said provision for three and four year olds would rise from 600 hours a year to 1140 by 2020, followed by all children over one receiving the same hours by 2024.
Ministers costed the first phase at £700m, but have yet to put a price on the second, although the Scottish Parliament’s impartial information centre has estimated it at £1.2bn a year.
The White Paper may have left an impression that the policy would be self-financing.
It said of new women entering the workforce: “With independence the benefits of their work – in economic growth and tax revenues – will stay in Scotland, contributing to meeting the cost of this childcare provision.”
Ministers also said that if 100,000 more women entered the workforce as a result of better childcare, it would neatly raise £700m.
However the government now says extra taxes will make an unquantified “crucial contribution”, but are not guaranteed to cover the full cost.
Jo Armstrong, honorary professor of public policy at Glasgow University’s Adam Smith Business School, said if the policy was not self-funding it implied money would have to be diverted from other services to pay for it.
“It’s clearly an aspirational proposal.
“If this was a bill before parliament it would need a lot more analysis to show that the financing was indeed there to support it.”
A spokesman for education secretary Michael Russell said: “Labour and the Tories seem to believe that expanding free childcare won’t help women back into work. That is frankly bizarre.
“There are reams of research – not least from the OECD - that confirms what every mother already knows: the cost of childcare is a massive barrier to women returning to work.
“We know from recent labour market experience that the scale of change we want to see is deliverable. In the last year we have seen a rise in the number of women in work of over 3%.”


  1. Perhaps Tom Gordon would like to explain exactly what is wrong with "aspiration". Is this not how all policies start? Without the ambition to effect change, nothing would ever get done.

    The question, surely, is whether an aspiration is realistic. As ever, while bemoaning the fact that the Scottish Government does not provide chapter and verse on something that cannot, in fact, be known, the anti-independence campaign is subject to no such strictures. They are allowed to rubbish the positive ideas advanced by the SNP without ever being challenged on the basis of their criticisms.

    British labour and their Tory allies appear to be asserting that the increase in female workforce participation ensuing from better childcare provision would be zero. Or, at least, they fail to say what they reckon it would be. Nor do they actually explain what is unrealistic about the Scottish Government's figure of 6%. Their argument seems to be no more substantial than to claim that because it's from the SNP it must be wrong. Which may be good enough for those who harbour the bitter resentment of the SNP which infests British Labour in particular. But it's not an argument that's going to impress anybody whose capacity for rational thought is not impaired by mindless hatred.

    Of course, the British parties in Scotland pay lip service to the idea of improved childcare. How could they do otherwise given that it is such a popular policy. But they offer no proposals of their own. All they do is insist that the Scottish Government could implement its proposals now. But they are completely unable to say how this would be funded. How come they're never challenged on that little oversight?

  2. Peter, presumably they pay lip service by providing more childcare than the SNP propose now? And of course, Labour is promising more than than that if elected in 2015?

    1. The British parties in Scotland are not in power. How could they be providing anything?