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Response rates to the survey supporting UK GDP estimates and inflation rates have fallen in line with the decline in employment surveys, prompting the Office for National Statistics to take urgent measures to ensure the quality of its figures.
The statistics agency said it put more interviewers in the field earlier this year to increase responses to its survey on the cost of accommodation and food, in an effort to eliminate data problems of the type caused by the fall of the labor force survey (LFS). ).
Problems with LFS they have left policymakers unable to measure the true state of the labor market – and the ONS says this important input into decisions about interest rates cannot be fixed. until 2027.
The cost of living and food survey, which collects information about household spending patterns and living expenses, is an important input to economic measures.
The ONS uses it, along with other data sources, to compile GDP estimates and measure the basket of goods and services that underpin consumer price indices, particularly the retail price index. The latest GDP estimates will be published on Monday morning.
This research is also a comprehensive source of information for researchers and policy makers who want to understand how the cost of living crisis has affected households at different income levels, and the impact of changes in taxes and benefits on living standards.
But, as with the LFS, the response rate to the cost of living and food tests has declined over time, from 60 percent at the turn of the millennium to 40 percent in 2019.
It fell sharply when the Covid-19 shutdown disrupted face-to-face interviews and hit a new record low of 22 percent in the financial year to 2023.
The number of responses from “collaborating” households in 2022-23 was only 4,061, a sharp drop from the sample of more than 5,000 that supported the results five years ago.
Adam Corlett, an economist at the Resolution Foundation think-tank, said the results based on 2022-2023 data, published in August, showed a decline in real-term spending that seemed “impossible” compared to national account data over the period the same. .
Meanwhile, researchers are still waiting for the microdata that was due to be made available by the ONS in September, but has been delayed until next year due to staff shortages.
“The whole world has changed in February 2022 – and we don't have the data to see how it has affected households,” said Peter Levell, an economist at the Institute for Fiscal Studies, adding that new electronic data sources are not taking place. A comprehensive view provided by the survey.
The ONS said it had started increasing the sample size of the survey in April, increasing the number of interviews carried out from around 900 in the first quarter of 2024 to up to 1,240 in the third quarter. It also checks results against a range of other data.
“Where the cost of living and food assessment affects the estimate of household spending, its results are mixed with other sources, such as business research and trade data, to create a solid picture of the way household spending is,” said the agency, adding that it will be. start looking at results against card spend data as early as 2025.
Level said the way the ONS uses the LCF and other sources to build national accounts was “opaque” and the lag in publishing the data was “exacerbating the issue” because policymakers use the figures to assess the impact of tax changes on households.
The LCF feeds directly into the annual rate of RPI. This no longer has the status of official statistics, but is used to calculate some index-linked bond payments and student loan payments and to set annual rail and telephone bill inflation.
The survey has always had a lower response rate than others the ONS conducts, as it is unusually complex. Respondents, including adults and children, are asked to fill in a diary over a two-week period detailing how they spend money.
The Office for Statistics, which controls the quality of UK statistics, has expressed “significant” concerns about the quality of the LCF in 2022 and urged the ONS to “invest time and resources” in fixing it.
It said in its assessment that a sample of 5,000 was too small for some users to reach “useful and robust conclusions”. Data volatility creates a “risk of damage to the reputation” of the ONS because it can mean that real errors are not identified, the director added, “with a big impact on the price indicators that use LCF data for their measurements”.
The ONS took action at the time to address the urgent problems, and the regulator said this provided sufficient assurance of the quality of the data. However, progress on the ONS's “digital” diary system has been slow — a new automatic receipt scanning tool will only be rolled out by the end of next year.
Funding constraints have also delayed a long-term plan to integrate the LCF with other surveys and create a single, coordinated source of income, expenditure and wealth data.