Dear Sir Robert,
I am writing to you regarding the use of statistics in recent communications from HM Treasury regarding personal taxes.
On 6 January, HM Treasury issued communications stating someone on an average earnings would be £450 better off as a result of government tax cuts. This communication presented only a partial account of government policy, failing to include the impact of related tax policies that increase the amount of tax paid by someone on average earnings.
The Institute for Fiscal Studies, writing about the changes, said that “2024 will see both the NICs rate cut and a tax increase via the planned freeze in income tax and NICs thresholds and allowances in April. Put the two together and this is, overall, actually a tax increase.” The combined effect of government tax policy this parliament means that, according to the Resolution Foundation, an average household will be £1,200 worse off by 2028/29.
On the same day, HM Treasury also issued communications stating that the average effective tax rate as a percentage of gross earnings in 2022 was lower in the UK than other G7 countries. This was sourced from OECD data, but failed to provide sourcing information that clarified it referred to only single workers with children. When looking at other family types, such as one-earner married couples, the same OECD data shows that the UK has a higher effective tax rate than other G7 countries including Canada and the USA.
These communications were issued on a range of social media platforms including X, Facebook, and Instagram.
HM Treasury is a producer of official statistics and therefore must comply with the code of practice for statistics.
The code of practice is quite clear that producers of official statistics, such as HM Treasury, must demonstrate coherence, not simply publishing a set of numbers, but explaining how they relate to other data on the topic to improve understanding. By misleading and presenting a partial account of the effect of Government tax policy, these communications did not demonstrate coherence.
The code also states that the nature of data sources should be explained and any bias, uncertainty, and possible distortive effects in the source data should be identified and the impact of this clearly reported. The communications that use OECD data do not provide enough information on what the data show, and why these data from that source were used rather than others.
On this basis, I would like to ask whether you will investigate HM Treasury’s use of statistics as set out above, and provide guidance on whether they are misleading or breach the code of practice for statistics.
Yours sincerely,
James Murray MP
Shadow Financial Secretary to the Treasury & Member of Parliament for Ealing North
Labour and Cooperative Party