Khan is 'playing politics with the data, playing politics with London taxpayers' money'

Published Jan 11, 2018

UKIP Treasury Spokesman Jonathan Arnott MEP has reacted to the 'laughably disingenuous' approach taken by Sadiq Khan to the so-called Brexit impact assessment published today by Cambridge Econometrics.

The report, a thinly-veiled attempt by the Mayor to use London taxpayers' money to influence broader UK politics, rather than London - which is what their budget is supposed to pay for - does not prove anything that Sadiq Khan claims it to prove.

Mr. Arnott said, "The headline figures are cherrypicked by a Remainer Mayor and a Remainer media from a report which doesn't really show what it's being claimed to show. There's always a huge danger in reports which extrapolate as far as 2030 - nobody has a crystal ball. But in this case, when you actually analyse the report and the assumptions underpinning it, it seems that our Cassandras are using the very opposite of rose-tinted spectacles."

Peter Whittle AM, the UKIP Leader in the London Assembly said, "With a crisis in violent crime in London, Sadiq Khan produces this? An anti-Brexit ‘report’ to keep Project Fear going. This was the man who also claimed half a million London jobs depended on us being in the EU.

"Unbelievable ineptitude".

David Kurten AM added, "Sadiq Khan should stop Remoaning and get on with his job of running the buses and keeping London safe – a job at which he is failing badly given the frightening increase in knife crime and acid attacks over the last year.

"The report he has commissioned and released today makes all kinds of assumptions to cook up some Brexit bashing conclusions which are impossible to predict, such as that there will be no changes in exchange rates or any further quantitative easing until 2030. It also has the audacity to claim that the productivity of British workers is lower than that of migrants. Speaking of the hospitality sector his report states:

“If the sector is forced to try to fill the shortfall of EU labour with domestic UK workers, there is a risk that businesses could see a rise in costs if British workers demand higher wages.”

Arnott continued, "Sadiq Khan is very confused with conflicting economic positions. He wants to implement a London Living Wage wherever he can which will raise wages and costs to businesses artificially, but he doesn't want British workers to enjoy natural free market wage increases from Brexit and a return to balanced migration.

"British workers have been squeezed for years by cheap foreign labour. It is high time we left the EU quickly and cleanly so that hard working British people can earn a decent living without the wage compression from mass immigration. Leaving the EU and ending rapid, mass immigration will also ease the huge pressure on housing, hospitals and primary school places which have built up over the Blair/Brown/Cameron/May years."

1. The report itself warns against sweeping and misleading headlines - but that hasn't stopped Sadiq Khan and the media from generating a sweeping and misleading headline. [p12]

The literature on Brexit often tends to focus on headline outcomes, e.g. an X% fall in GDP by 2030. While this is of interest, it is not the primary focus of this study’s literature review, which is to inform on setting the range of assumptions underpinning the analysis.

2. Under different assumptions, the total size of the UK population will be different. So if you're going to claim that the economy will be smaller with a smaller population, you need to account for this and consider a per capita measure. Even if their doom and gloom were true, the actual impact upon the average person would be less than a quarter of what the headline actually implies. If these negative assumptions were true (and they are not), the negative impacts would in fact leave the average person between £6.38 and £15.62 per year worse off. [p41]

3. Many of the assumptions used by the model are copied and pasted from assumptions [p5] made in previous studies which have already been proven by real data to be unreliable. These models predicted that the UK would have fallen into recession in the event of a vote to leave during the negotiation period; this has not happened in practice. Using unreliable source material will result in unreliable results.

4. The report uses pejorative language throughout - phrases like "extreme" [p5 for example] being applied to different outcomes does not foster confidence in objectivity.

5. The reliance upon existing literature for creating assumptions is a problem. Most of the existing literature generally fails to take into account any positives caused by, for example:

a) Economic growth caused by policy changes only possible because of Brexit

b) The potential to develop trade deals with non-European Union countries

c) Claims for growth in certain sectors - such as fisheries - are likely to be hugely underestimated by these models in the event of a 'no deal' scenario

d) The potential for a post-Brexit Where some of the existing literature makes a half-hearted attempt to calculate some of the above, a model choosing an aggregate of these will by definition only take them partially into account. The report itself admits this [p44]: "For many of the results analysed, the spread of results (as noted by NIESR) are usually due to how the models deal with the additional effects on productivity caused by changes to FDI, openness to trade, degree of regulation, innovation, and other factors that are not directly captured by the main model structure. This leaves open a wide area of interpretation (and off-model techniques), which then feed through to the GDP outcomes." It is clear that such lack of modelling will skew results overall only in one direction.

6. The report finds that the impact on London is likely to be less than elsewhere :

"This study finds that the implications of Brexit are likely to be less for London and the South East than for other parts of the UK and for the UK as a whole." [p49]

Arnott continued, "It seems to me that Sadiq Khan is hoping that Londoners don't notice that one of the main conclusions of the report runs completely contrary to the London exceptionalism that he is trying to promote. He is playing politics with the data, and playing politics with London taxpayers' money."

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