Figures shouldn’t fly in the face of common sense

Since Alex became chief executive of our pub, the White Eagle, she has taken a keen interest in business. She’s been keeping an eye, not only on her hostelry, but also the family shoe repair and key cutting chain.

She gave me some stick last June when the Office for National Statistics (ONS) announced that retail sales in May were the best since records began.

“Your turnover was sluggish,” she gloated, knowing the White Eagle had done well. “This credit crunch doesn’t seem to affect other retailers, what’s happened to you?”

“Don’t believe statistics,” I pleaded. “They are produced by pen pushers, who never experience commercial reality.”

My comment was vindicated the very next day when John Lewis and MFI announced falling sales and, a few weeks later, when the same ONS revealed “the worst retail month since records began”.

If retail statistics are distorted, our inflation figures are pure fantasy. The Treasury rate is creeping towards five per cent, but Gordon Brown’s “hard-working families” know their cost of living is increasing much faster than that.

As Alex’s racehorse trainer said to explain his latest fee increase: “I know what Mr Brown says, but the price of racehorse nuts has increased by 20 per cent in 12 months.”

Government and the media must realise statistics are an art, not a science. Figures should never fly in the face of common sense.

It is not just the government that produces figures to be ashamed of: “UK holidays increase by 64 per cent”, said a tabloid headline in July. This was based on one campsite in Devon, where that week’s number of tents and caravans had increased from 50 to 82.

In June, a poll of 4,000 workers by YouThinkYourBossIsBad.co.uk revealed that Britain’s worst boss is likely to be called Ann or John.

Research based on small samples gets me nearly as annoyed as the weekly medical scare. In August we were told sleep loss increases the danger of diabetes. We were ordered to exercise for 55 minutes five times a week – but marathon runners are the most likely to need hip replacements. A ten-year study revealed a Japanese diet of three ounces of fish a day is the best protection against heart disease.

Unless you are a slim, boring bloke on a balanced diet of bananas, boiled fish and weak Ribena there is always something to worry about.

While talking statistics, I took the chance to give Alex some bad news. “White Eagle sales might be good, but our monthly management accounts tell a dismal story: wages are above budget; the septic tank cost an extra £100 to empty; and the latest stocktake shows a big drop in margin. Your profit is £23,000 below forecast.”

“But last month everything was fine,” said Alex. “Now it’s doom and gloom. Which figures do I trust?”

“Don’t worry, Alex,” I said. “Management accounts are peppered with provisions and adjustments. Just like all other statistics, they’re an art, not a science. The artists in this case are accountants who use all the pessimism and prudence their profession demands.”

“So, how do you control the company?” asked Alex, confused by my lack of concern. “Make no mistake, management accounts help,” I replied. “But for peace of mind, I visit some shops every week and see each day’s cash balance compared with the same day last year.”

“Back to inflation,” persisted Alex. “What is the real figure?”

“Depends on what’s in your shopping basket,” I replied. “Food and petrol have increased, but DVDs and pretty dresses from Primark cost less.”

“That’s age discrimination!” claimed Alex.

“Spot on,” I said. “Grey-haired inflation could be over ten per cent.”

“In that case…” said Alex, seizing her opportunity.

“Don’t ask,” I interrupted. “To avoid a seventies type disaster, we must all resist inflationary wage demands. That includes pressure from the chief executive of the White Eagle.”

Picture: source

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