Problems with Britain’s economic data could be widespread, lawmakers warn

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Damaging gaps in the UK’s employment data could be a harbinger of bigger problems with the country’s statistics, a senior lawmaker has warned, saying economic policymakers are “flying blind” because of the errors.

Dame Meg Hillier, Labor chair of the finance committee, said she and her colleagues in the House of Representatives were “shocked” and “stunned”. a letter Last month, Britain’s top statistician said it could take 2027 for a new labor force survey to be completed.

She drew parallels with other government agencies such as the Bank of England as she warned of the damaging consequences of underinvestment in systems.

“It really blew me away because it is 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 exist? What impact might this have on forecasts?”

A review of former US Federal Reserve Chairman Ben Bernanke from last year criticized the BoE for “significant underinvestment” in its forecasting tools, with “makeshift fixes” resulting in “a complicated and unwieldy system.”

Hillier said the problem with the work data of the Office for National Statistics was “not an isolated case”.

“If we do this with the labor market survey, we probably need to look at other areas as well,” she said. “Bernanke picked up some of that at the Bank (of England).”

An internal review of the ONS last month found this was due to its failure to produce reliable employment data systemic underinvestment and problems with strategy and internal culture. The ongoing “instability” of data based on the old labor market survey will take time to improve, leaving policymakers and investors without a clear picture of the UK labor market.

Senior officials, including BoE Governor Andrew Bailey, have warned that gaps in Britain’s jobs data are making it difficult to set monetary policy. Bailey highlighted his frustration in his Mansion House speech in November, warning that it is a “significant problem – and not just for monetary policy – if we don’t know how many people are involved in the economy”.

The ONS has been working for a year to increase the number of respondents to the survey – the main source of information on the state of the UK labor market. A dive into the answer During the pandemic, the country was forced to first suspend data based on labor force surveys and then label them as “statistics in development.”

Hillier said the finance committee was likely to call in Sir Ian Diamond, the national statistician who oversees the ONS Discuss the situation. “We were pretty taken aback when the letter said we wouldn’t actually sort this out until 2027,” she said.

In his letter to the finance committee, Diamond said he could not set a firm timeline for moving to the “transformed” labor force survey (TLFS), but added that his “ambition” was for 2026 rather than 2027.

Although MPs want to question Diamond, Hillier said: “Our concern is not about bashing him publicly, but rather about how we find a solution to this now – because this is going to be a big problem.”

The difficulties made it harder to assess issues such as Britain’s weak growth, she said. “Policymakers are flying blind and that’s causing real problems – we have productivity problems (and) we don’t understand what’s happening.”

There are broader questions about public entities and their ability to modernize their systems given funding constraints, she said.

In his letter, Diamond, chief executive of the UK Statistics Authority, spoke of “flat core funding, limited budgets and significant inflationary impacts” following the Conservative government’s latest 2021 spending review.

“Maintaining our budget in this context has led to difficult prioritization decisions 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’ve been asked to do more but they haven’t been given the money to do it.”