The credibility of UK financial information has been thrown into doubt after senior officers on the Workplace for Finances Duty (OBR) and the Financial institution of England raised severe issues in regards to the reliability of statistics produced by the Workplace for Nationwide Statistics (ONS).
Chatting with MPs on the Treasury choose committee, Richard Hughes, chairman of the OBR, warned that “trying to get a clear read” on the UK economic system from present ONS information is “very difficult”. His feedback observe a pointy decline in response charges to the ONS’s labour drive survey, which has compromised the standard of knowledge on employment and wage developments.
The state of affairs has now triggered a proper authorities investigation into the “performance and culture” of the ONS. The overview, commissioned by the Cupboard Workplace and the UK Statistics Authority (UKSA), will likely be led by Sir Robert Devereux, a former high civil servant, and is anticipated to conclude this summer season.
The ONS’s labour drive survey — a key device utilized by the Financial institution of England and the OBR to tell financial and financial coverage — has seen its response charge fall from round 50 per cent a decade in the past to only 12.7 per cent in 2023. Though it has since improved marginally, the information stays underneath important scrutiny. The ONS has delayed the rollout of a brand new “transformed labour force survey” till 2027, regardless of spending £40 million on its growth.
Professor David Miles, a fellow OBR committee member, in contrast the present strategy to “trying to generate economic data with a tool which isn’t working as well as it did in the past”.
Past labour information, confidence in different key metrics — together with GDP, commerce, and inflation — has additionally weakened. The ONS has just lately delayed publication of a number of vital statistics as a consequence of high quality issues, whereas the Institute for Fiscal Research (IFS) has criticised a latest £2.2 trillion revision in family wealth estimates as “fundamentally flawed”.
Financial institution of England governor Andrew Bailey has described the shortcomings within the ONS’s information as a “substantial problem” for rate of interest setting.
Sir Robert Chote, chair of the UKSA, mentioned the overview into the ONS is a chance to make sure the statistics company is supplied to satisfy rising expectations. “This is a chance to help ensure the ONS can deliver of its best in what is a challenging external environment.”
Issues have been echoed by Dame Meg Hillier MP, chair of the Treasury choose committee, who just lately wrote to UK chief statistician Sir Ian Diamond to precise alarm in regards to the impression of unreliable labour market information on coverage selections.
The accuracy of ONS information underpins every part from rate of interest actions to authorities tax and spending selections. Forecasts produced by the OBR are closely reliant on these figures to find out fiscal headroom — the margin chancellors corresponding to Rachel Reeves have to satisfy borrowing guidelines.
Hughes additionally advised MPs that the OBR didn’t think about President Trump’s proposed 25 per cent automotive tariffs in its spring financial forecast, citing their quickly shifting nature. Had they been included, the chancellor’s £9.9 billion fiscal buffer might have been considerably eroded.
The OBR did, nonetheless, mannequin potential outcomes of the tariffs in different situations — together with one the place retaliatory commerce measures scale back UK GDP by 1 per cent.
Whereas challenges with information assortment are affecting different developed economies, specialists warn that the UK’s points have gotten notably acute. The response charge for the Dwelling Prices and Meals Survey has dropped from 60 per cent to only 22 per cent over 20 years, whereas the DWP’s Household Sources Survey now receives solely 25 per cent participation.
With the integrity of key information underneath the microscope, the end result of the Devereux overview — and the federal government’s willingness to behave on its findings — could have far-reaching implications for enterprise confidence, policymaking, and the UK’s financial resilience.
