Unlock Editor’s Digest for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Harmful gaps in UK employment data could herald wider problems with the country’s statistics, a senior lawmaker has warned, saying economic policymakers are being “blindsided” by the failure.
Dame Meg Hillier, Labour’s chair of the finance committee, said she and her fellow MPs were “shocked” and “stunned”. letter last month from Britain’s top statistician who said it could be 2027 before the new Labor Force Survey is ready.
She drew parallels with other government bodies, such as the Bank of England, while warning of the harmful consequences of underinvestment 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 gaps might there be? What implications could this have for forecasts?”
Review of former US Federal Reserve Chairman Ben Bernanke last year lashed out at the BoE for “materially underinvesting” in its forecasting tools, with “fixes” resulting in a “complicated and unwieldy system”.
Hillier said the problem is with labor data State Office of Statistics it wasn’t just a one-time problem.
“If we have this with labor market research, there will be other areas that we probably need to look at,” she said. “Bernanke picked up some of that at the Bank [of England].”
An internal review of the ONS last month found that its failure to produce reliable jobs data was caused systematic underinvestment and problems with strategy and internal culture. The continued “volatility” of data based on the old jobs survey will take time to recover, leaving policymakers and investors without a clear picture of the UK labor market.
Top officials, including Andrew Bailey, the BoE governor, have warned that gaps in UK employment data are making it harder to set monetary policy. Bailey underlined his frustration in his Mansion House speech in November, warning that it was “a significant problem – and not just for monetary policy – when we don’t know how many people are participating in the economy”.
Over the past year, the ONS has been working to increase the number of respondents to the survey — the main source of information on the state of the British labor market. AND dive into the answer The rate during the pandemic prompted it to first suspend data based on the Labor Force Survey and then label it as a “developing statistic.”
Hillier said the Treasury panel was likely to invite Sir Ian Diamond, the national statistician who oversees the ONS, to discuss the situation. “We were quite stunned by the letter saying ‘we’re not going to fix this by 2027,'” she said.
In his letter to the Finance Committee, Diamond said he could not set a firm timetable for the transition to the “transformed” Labor Force Survey (TLFS), although he added that his “ambition” was for 2026, not 2027.
Although lawmakers want to question Diamond, Hillier said “the goal is not to beat him up in public, it’s about finding a solution to this now — because this is going to be a big problem.”
The difficulties made it difficult to assess issues such as weak UK growth, she said. “Policymakers are flying blind and that’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’s Statistics Authority, spoke of “flat core funding, tight budgets and significant inflationary effects” following the Conservative government’s latest spending review in 2021.
“Working within our budget in this context led to difficult decisions about priorities and the need to achieve efficiencies and cost savings across the organization,” he wrote.
Hillier said: “You’ve seen this with other regulators and other bodies outside the sector – they’re being asked to do more and not giving money to do it.”
