Unlock Editor’s Roundup for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Damaging gaps in UK jobs data could herald wider problems with the country’s statistics, a senior lawmaker has warned, saying economic policymakers were “flying blind” over the failures.
Dame Meg Hillier, the Labor chair of the Treasury committee, said she and her fellow MPs were “shocked” and “stunned” by a letter last month from the UK’s chief statistician saying it could be 2027 ahead that a new labor force survey is ready.
It drew parallels with other government bodies, such as the Bank of England, as it warned of the damaging consequences of under-investment in systems.
“It really hit me between the eyes (as) something that is a big, big problem,” Hillier said in an interview with the Financial Times. “If there is a data gap here, what other data gaps might exist? What might the implications of this be for forecasts?”
A review by former US Federal Reserve chairman Ben Bernanke last year criticized the BoE for “materially underinvesting” in its forecasting tools, with “improvised adjustments” resulting in “a complicated and ineffective system”.
Hillier said the problem with the Office for National Statistics’ employment data “wasn’t just a one-off”.
“If we have this with the labor market survey, there will be other areas that we probably need to look at,” she said. “Bernanke has taken some of them to the Bank (of England).
An internal review by the ONS last month found that its failure to produce reliable jobs data was caused by systemic under-investment and problems with internal strategy and culture. The continued “volatility” in data based on the old jobs survey will take time to improve, leaving policymakers and investors without a clear picture of the UK labor market.
Senior officials, including Andrew Bailey, governor of the BoE, have warned that gaps in UK jobs data are making it harder to set monetary policy. Bailey highlighted his frustration in his Mansion House speech in November, warning that it was a “fundamental problem – and not just for monetary policy – when we don’t know how many people are participating in the economy”.
The ONS has been working over the past year to increase the number of respondents to the survey – the main source of information on the state of the UK labor market. A drop in response rates during the pandemic forced it to first suspend data based on the labor force survey, then mark it as “developing statistics.”
Hillier said the Treasury committee was likely to call in Sir Ian Diamond, the national statistician who oversees the ONS, to discuss the situation. “We were quite confused by the letter saying, in effect, ‘we’re not going to resolve this until 2027,'” she said.
In his letter to the Treasury committee, Diamond said he could not put a firm timeline on the move to the “transformed” labor force survey (TLFS), although he added that his “ambition” was for 2026 and not for 2027.
Although MPs want to question Diamond, Hillier said “beating him up in public is not what we’re talking about, so much as how we find a solution to this now – because this is going to be a big problem”.
The difficulties were making it harder to assess issues such as weak UK growth, she said. “Policymakers are blind and it’s causing real problems – we have productivity challenges (and) we don’t understand what’s going on.”
There were wider questions about public bodies and their ability to modernize their systems given funding constraints, she said.
In his letter, Diamond, who is chief executive of the UK Statistics Authority, spoke of “flattened core funding, tight budgets and significant inflationary impacts” following the last Conservative government’s 2021 spending review .
“Operating within our budget in this context has led to difficult prioritization decisions and the need to deliver efficiencies and cost savings across the organization,” he wrote.
Hillier said: “You’ve seen this with other regulators and other bodies outside the sector – asking them to do more, not being given the money to do it.”
