Why mislead in politics? Because it works, obviously

George Monbiot is - again - outraged that there are private providers of children’s homes. With a “private equity” thrown in there just to prove the moral disgust that all should show to such a thing.

As we pointed out a couple of years back, the last time he mounted this moral hobby horse, the numbers are not as they are portrayed. There’s a - in our mind wholly deliberate - blurring of the difference between an operating profit, or Ebitda, and net profit. Conducted by simply not including any of the capital costs of having a home to put children in. Our opinion is that this is wholly politically motivated. The propounders know that such distinctions aren’t going to impinge upon the public consciousness so they can blather to heart’s content. Hey, they fooled Monbiot so the average Hampstead thinker is going to be easy meat.

The actual finding was that private homes are often cheaper than local authority, certainly no more expensive, and no one has been looking at net profits at all. The complaint about private prices was that they did seem higher than should be true in a competitive market - the solution to which is, of course, more suppliers and more competition. Further, if LA prices are higher than this not competitive enough private market then and therefore…..well, no, no one ever did get to that point.

All of which begs us to ask the next question, so, why do people mislead with numbers in this way? Or as our opinion is, why do people deliberately lie with numbers in this manner?

Because it works.

New regulations:

The CMA estimated operating profit margins for large providers (between 2016 and 2020) were 22.6% for children’s homes; 19.4% for Independent Fostering Agencies and 35.5% for Supported Accommodation. This compares to net profit levels of private non-financial corporations of 8.8% according to the latest ONS quarterly data on the profitability of UK companies.

This leads to:

This is why we are taking powers to cap the profits of providers in the future.

They are using that failure to distinguish between operating and net profits as justification for limiting profits.

Which neatly answers why do people mislead with numbers in politics? Because it works.

Now think on how much of the law and regulations that lie upon the collective shoulders are informed, created and enforced based upon such “misleadings”. No wonder the place is a mess, eh?

Tim Worstall