Open Editor's Digest for free
Roula Khalaf, Editor of the FT, selects her favorite stories for this weekly newsletter.
Devastating gaps in UK jobs data could herald wider problems with the country's statistics, a top lawmaker has warned, saying economic policymakers were “blindsided” by the failure.
Dame Meg Hillier, chair of the finance committee, said she and MPs were “shocked” and “appalled”. letter last month from the UK's top statistician saying it could be 2027 before a new Labor survey is ready.
He drew parallels with other government bodies, such as the Bank of England, as he warned of the dire consequences of underinvestment in the system.
“It really hit me between the eyes (as) 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 there be? What impact would that have on the forecast?
A study by former US Federal Reserve chairman Ben Bernanke last year hit the BOE for “low material investment” in its forecasting equipment, and “makeshift maintenance” leading to a “complicated and unmanageable system”.
Hillier said the problem is with employee data Office for National Statistics “It was not just one issue”.
“If we do this with a labor market survey, there are going to be other areas that we may need to look at,” he said. “Bernanke took some of that from the Bank (of England).”
An internal review of the ONS last month found its failure to produce reliable jobs data was to blame low investment program and strategic issues and internal culture. The continued “unsettled” data based on the old job survey will take time to improve, leaving policy makers and investors without a clear picture of the UK job market.
Senior officials including Andrew Bailey, governor of the BoE, have warned that gaps in UK jobs data make it difficult to set monetary policy. Bailey highlighted his concerns in his Mansion House speech in November, warning that “it's a big problem – and not just monetary policy – when we don't know how many people are participating in the economy”.
The ONS worked last year to increase the number of respondents to the survey – the main source of information on the state of the UK labor market. A enter the answer rate during the epidemic forced it to first withdraw the data based on the survey of workers, then to label it as “statistics in development”.
Hillier said the Treasury committee was likely to call Sir Ian Diamond, the national statistician who oversees the ONS, to discuss this situation. “We were very shocked by the letter saying, in fact, 'we won't fix this until 2027',” he said.
In his letter to the Treasury committee, Diamond said he could not set a firm timetable for the transition to a “transformed” labor force survey (TLFS), although he added that his “desire” was for 2026 rather than 2027.
Although the MPs want to question Diamond, Hillier said that “beating him in public is not what we are talking about, so we are 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 the UK's poor growth, he said. “Policymakers don't see it and this causes real problems – we have a productivity challenge (and) we don't understand what's going on.”
There were broader questions about public bodies and their ability to modernize their systems given funding constraints, he said.
In his letter, Diamond, who is the chief executive of the UK's Statistics Authority, spoke of “core funding, a hedged budget, and a significant inflationary impact” following the Conservative government's final spending review for 2021.
“Working on a budget in this context has led to difficult key decisions and the need to provide efficiencies and cost savings across the organization,” he wrote.
Hillier said: “You've seen this with other regulators and other organizations outside the sector – being asked to do more, not being given the money to do it.”