ADDED OCT 9, 2010, at POLITICAL DYNAMITE.

When people start throwing around figures in the billions I’d be the first to admit I switch off.

If you said to me ‘so and so’ costs £12 billion, while ‘this and that’ costs $340 million – by mixing up the denominations and the units you can completely throw people off the scent. I’m certainly not thinking, that’s a comparison between £12,000,000,000 and approx £214,000,000.

Or for even easier digestion: £12 billion compared to approx £0.2 billion.

I’m going to borrow an analogy from the superb More Or Less series on BBC Radio 4 to help explain this better.

When we know that one million seconds is about 11.5 days, but a billion seconds is 32 years, we begin to get some big numbers into proportion and make sense of what’s said about them.*

So to help understand what’s currently happening in politics, reinforced by many media outlets, I thought I’d make some very quick graphs to represent the figures being bandied around at the moment.

Explaining it like that makes it sounds like a feeble idea, but bear with me as I think the results are interesting.

I know to be mathematically proper these unrelated data should be represented in bar charts, but that makes it much harder to compare the two figures. In all the below pie charts the blue represents the cost of UK benefit fraud per year, widely cited as £1.1 billion.

Chart 1

As you can see from the above chart, the two figures here are almost the same. The £1.1 billion, as we know is the cost of annual benefit fraud in the UK. The £1.2 billion in red, on the left, represents the tax-free dividend “Sir” Philip Green gave to his wife in 2005 as a present from the Arcadia Group, which he registered in her name.

The money was paid for by a loan taken out by Arcadia, thus slashing their corporation tax as interest charges on the loan were offset against company profits. Allegedly the same year, staff at Arcadia were told that members of its final salary pension scheme must increase contributions by half, and work five years longer to qualify for the payout they had originally been promised.

Chart 2

Next up we have Chart 2 above. Again £1.1bn total cost of benefit fraud in the UK. This time the other figure, in red, is the total cost of tax evasion and avoidance each year in the UK, approx. £14bn (From the BBC). Richard Murphy of Tax Research UK actually places the estimate of avoidance and planning at around £25bn.

Slightly strange you might think that so much money, time and resources is ploughed into catching the relatively petty amounts of money stolen in benefit fraud by more than 56,000 people last year, rather than cracking down on the astronomical sums being slipped past the taxman by the wealthy few.

I aspire to a fair and just society and make no secret of it, so I’m by no means an advocate of benefit fraud, but surely the volume of outrage in media and politics can’t be based on these figures.

Government also handles these two groups rather differently.

Group A, the benefit fraudsters costing the country the blue slice of the pie above, are threatened with the slogan “It’s not if we catch you, it’s when“.

On the other hand you have the smaller and more elite Group B including “Sir” Philip Green.

In fact, that’s the “Sir” Philip Green who David Cameron has appointed to help government with an efficiency drive. Estimates of Green’s personal tax avoidance is placed at around £300 million, which seems to me like a good place to start.

But of course it doesn’t work like that.

In an odd turn of events, even Tory rag the Daily Mail thinks David Cameron may have misjudged how much of a shafting the British public will put up with from the rich.

Chart 3

Of course I have no axe to grind specifically against Sir Philip Green avoiding more tax in one year than the entire cost of UK benefit fraud over the same period, so here are some other hopefully interesting comparisons.

The above ‘Chart 3′ is a comparison of our £1.1bn cost of benefit fraud (again in blue) set against the annual UK defence budget, in red. Of course it’s easy to argue that you wouldn’t want to budget for benefit fraud in the same way that some people would argue defence should be budgeted for. But that’s an entirely different argument!

What is interesting however is the total cost of Trident, represented below in red, compared to benefit fraud, again in blue.

Chart 4

Yep, replacing the Trident weapons system will cost us taxpayers £76 billion.

Obviously I have added my own commentary to these numbers, but I hope you’ve got as much from being able to visually compare these figures as I have.

The next time a politician starts throwing billions around, I’m going to start plotting them in graphs again so I can actually get some kind of perspective on it. £1 billion and £1million may sound similar when bandied around by those that have it, or make decisions about it, but when they’re making decisions about the country’s billions or millions, I hope this will encourage you to try to get some perspective on it.