Tom Rees, Bloomberg's UK economics reporter, shares insights on the major issues plaguing the Office for National Statistics. The labor force survey's problems may not be resolved until 2027, with deep-rooted cultural issues causing junior staff to hesitate in raising concerns. Rees discusses waning survey response rates and the impact of financial constraints on data accuracy. The discussion highlights how these challenges hinder critical economic decision-making for the Bank of England, raising alarms about future forecasting and labor market tracking.
The Office for National Statistics is grappling with a toxic culture that hinders junior staff from raising critical issues, compromising data integrity.
Reliance on outdated survey methods has delayed the modernization of labor market statistics, jeopardizing economic forecasting for the Bank of England.
Deep dives
Mismanagement and Cultural Issues at the ONS
The Office for National Statistics (ONS) has been facing significant mismanagement, highlighted by a culture of fear among junior staff. Employees felt pressured to present favorable data instead of addressing the troubling decline in response rates for labor statistics. As a result, the credibility of unemployment figures has been compromised, raising concerns for economic policymaking, particularly for the Bank of England. This toxic environment suggests deep-seated cultural issues that have persisted for nearly a decade, preventing necessary improvements from being implemented.
Challenges with Data Modernization
The ONS struggles with modernization, relying heavily on outdated household surveys instead of embracing readily available administrative data like tax returns and National Insurance records. This failure to adapt has hindered the agency's ability to provide accurate labor market statistics, which are crucial for economic decision-making. The transition to a more efficient online approach has been slow, contributing to a stagnation in reliable data collection. This reluctance to innovate has exacerbated the difficulties faced by the ONS, as its methods remain antiquated in a rapidly changing environment.
Long-term Impact on Economic Forecasting
The ongoing issues at the ONS could delay the release of accurate labor market data until as late as 2027, raising alarms about economic forecasting. The Bank of England relies on these figures to set interest rates and assess market conditions, making the lack of reliable data a pressing concern. Current attempts to improve the data collection process, like shortening surveys and hiring more personnel, may take years to yield accurate results. Consequently, the delay jeopardizes the Bank of England's ability to respond effectively to economic fluctuations, underscoring a serious crisis in statistical oversight.
This week the Office For National Statistics has said problems with its labour force survey may not be solved until 2027. The figures are crucial for Bank of England policymakers making interest rate decisions. But sources tell Bloomberg the ONS is facing deep rooted cultural issues with junior staffers reluctant to raise issues with bosses. We speak to Bloomberg's UK economics reporter Tom Rees about his exclusive. Hosted by Yuan Potts and Lizzy Burden.