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Damaging gaps in the UK’s jobs data may herald wider problems with the country’s statistics, a top lawmaker has warned, saying economic policymakers were “flying blind” because of the failures.
Dame Meg Hillier, Labour chair of the Treasury committee, said she and her fellow MPs had been “shocked” and “dumbfounded” by a letter last month from the UK’s top statistician saying it could be 2027 before a new labour force survey is ready.
She drew parallels with other government bodies, such as the Bank of England, as she warned of the damaging consequences of under-investment in systems.
“It has really hit me between the eyes [as] something that’s a big, big problem,” said Hillier in an interview with the Financial Times. “If there is a data gap here, what other data gaps might exist? What could the implications of that be for forecasts?”
A review by former US Federal Reserve chair Ben Bernanke last year slammed the BoE for “material under-investment” in its forecasting tools, with “makeshift fixes” resulting in “a complicated and unwieldy system”.
Hillier said the problem with the labour data of the Office for National Statistics was “not just a one-off issue”.
“If we’re having this with the labour market survey, there will be other areas that we probably need to look at,” she said. “Bernanke has picked up some of that at the Bank [of England].”
An internal review by the ONS last month found its failure to produce reliable jobs data was caused by systemic under-investment and issues with strategy and internal culture. Continued “instability” in data based on the old jobs survey will take time to improve, leaving policymakers and investors without a clear picture of the UK jobs market.
Top officials including Andrew Bailey, BoE governor, have warned that gaps in the UK jobs data are making it harder to set monetary policy. Bailey emphasised his frustration in his Mansion House speech in November, warning it was a “substantial 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 for the past year to boost the number of respondents to the survey — the main source of information on the state of the UK jobs market. A plunge in the response rate during the pandemic forced it first to suspend labour force survey-based data, then to badge it as “statistics in development”.
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 pretty dumbfounded by the letter saying, actually ‘we won’t sort this out until 2027’,” she said.
In his letter to the Treasury committee, Diamond said he could not set out a firm timetable for shifting to the “transformed”’ labour force survey (TLFS), although he added that his “ambition” was for 2026 rather than 2027.
Although MPs want to question Diamond, Hillier said “beating him up in public isn’t what we are about, so much as about how we get 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 the UK’s lacklustre growth, she said. “Policymakers are flying blind and this is causing real problems — we’ve got productivity challenges [and] we don’t understand what’s happening.”
There were wider questions over public bodies and their ability to modernise their systems given funding constraints, she said.
In his letter, Diamond, who is chief executive of the UK Statistics Authority, spoke of “flatlined core funding, ringfenced budgets, and substantial inflationary impacts” following the last Conservative government’s 2021 spending review.
“Operating within our budget in this context has led to difficult prioritisation decisions and the need to deliver efficiencies and cost savings across the organisation,” he wrote.
Hillier said: “You’ve seen this with other regulators and other bodies outside of the sector — being asked to do more, not given the money to do it.”
