House of Commons - Treasury

Select Committee on Treasury Tenth Report

1 Introduction

1. The Chancellor of the Exchequer announced to Parliament on 28 November 2005 that the Government intended to publish plans early in 2006 "to legislate to make the Office for National Statistics (ONS) independent of Government, making the governance and publication of official statistics the responsibility of a wholly separate body at arm's length from Government and fully independent of it".[1] This announcement followed recommendations from the Statistics Commission, the Royal Statistical Society (RSS), and the Treasury Committee.[2]

2. On 22 March 2006, HM Treasury published a consultation paper, Independence for Statistics, alongside the Budget, setting out its proposals to "build on earlier reforms, reinforcing the independence, integrity and quality of statistics produced in government".[3] The consultation process closed on 14 June 2006.[4]

3. The Treasury Committee has responsibility for scrutinising the ONS on behalf of the House of Commons. In July 2005, the Treasury Committee established a Sub-Committee, to examine the work of the minor departments accountable to the Treasury and other matters referred to it by the main Committee. The ONS is included among these minor departments. In April 2006, the Sub-Committee announced that it intended to undertake an inquiry into the Government's consultation paper on independence for statistics. In particular, the Sub-Committee intended to examine the Government's proposals for:

the ONS;
an independent governing board, the method of making appointments to it and provisions for its reporting and accountability to Parliament;
ensuring the quality and integrity of National Statistics; and
winding up the Statistics Commission.
The Sub-Committee also made clear its intention to consider related issues including:
the definition of National Statistics, and the status of other official statistics;
the apparently low levels of public trust in official statistics;
the role of statisticians working outside the ONS, in central government and the devolved administrations; and
any lessons to be learnt from other countries' legislative frameworks for independence for statistics.

4. The Sub-Committee received 12 written memoranda and took oral evidence from: Mr Simon Briscoe from the Financial Times, Ms Ruth Lea from the Centre for Policy Studies, Professor Alison Macfarlane from City University London, the RSS, the Statistics User Forum, the Chief Statistician of Canada, Dr Ivan Fellegi, the Statistics Commission, the Chief Statistician Scottish Executive, Mr Rob Wishart, Professor Denise Lievesley from the Information Centre for Health and Social Care, the National Statistician, Karen Dunnell, and ONS officials, Lord Claus Moser, and John Healey MP, Financial Secretary, HM Treasury. We are grateful to all those who gave evidence or otherwise assisted with our inquiry.

PREVIOUS WORK BY THE TREASURY COMMITTEE

5. The Treasury Committee has previously examined issues related to statistics, and reported to the House on National Statistics in 2001. In that report, the Committee called for legislation on statistics to "establish more clearly the specific responsibilities of ministers, the National Statistician, the Statistics Commission and others in relation to National Statistics" and to "guard against political interference and backsliding in the future".[5] The Committee concluded that it was "absolutely essential that the new arrangements for National Statistics should be enshrined in a Statistics Act" and said that, if the Statistics Commission concurred with its view in two years' time when it carried out its review of the Framework for National Statistics introduced in 2000, then it expected the Government to "bring forward legislation as a matter of priority".[6]

Statistics in the UK: some brief background

6. The collection of statistics has a long history in the UK: records relating to imports and exports can be traced back to the 17th century; the first population census took place in 1801; and the routine collection of statistics relating to births and deaths began in 1837. In 1941, the Central Statistical Office (CSO) was created within the Cabinet Office, primarily to ensure greater coherence in the collection and production of official statistics. A reorganisation of the statistics system in the 1960s led to the creation of two new offices to collect, on behalf of all government departments, statistics from businesses (the Business Statistics Office (BSO)) and information from individuals and households through censuses, surveys and registers (the Office for Population Censuses and Surveys (OPCS)). The reorganisation also established a Government Statistical Service (GSS) to improve the management of government statistics and to develop "a cadre of professional statisticians across government".[7]

7. In 1989, the Pickford Review of interdepartmental arrangements for the production of statistics recommended an enhanced central role for the CSO.[8] The recommendation was accepted and the CSO subsequently absorbed the functions of the BSO, parts of the Department of Trade and Industry's statistical divisions, and the Department of Employment's responsibilities for the Retail Prices Index and the Family Expenditure Survey. The CSO increased in size from 170 staff to over 1,000 staff and was transferred from the Cabinet Office to HM Treasury, before being granted executive agency status in 1991. Moves during the 1990s to improve the quality of statistical service to users led to the adoption of the Official Statistics Code of Practice in 1995.[9] In 1996, the CSO was merged with the OPCS to form the ONS, an executive agency of HM Treasury.[10] The Government launched a consultation exercise on the future of the UK's statistical system in 1998. Box 1 details the resulting non-statutory Framework for National Statistics, which was introduced in 2000.Box 1: The Framework for National Statistics

The Framework for National Statistics, along with its associated Code of Practice and accompanying Protocols, provides the foundation for the current statistical set-up in the UK. The key reforms introduced as part of the Framework were:

·  the creation of the post of National Statistician as the Government's chief statistical adviser. Under the Framework, the post holder is granted operational independence from Ministers, and is both the professional Head of National Statistics and the Director of the ONS. The National Statistician has responsibility for the professional statistical quality of all outputs comprising National Statistics, and for ensuring that all outputs are produced in accordance with the standards set out in the National Statistics Code of Practice … The National Statistician is appointed by, and is accountable to, the Chancellor of the Exchequer (as Minister for National Statistics) for the performance of National Statistics and, with departmental Heads of Profession for Statistics, for the discharge of annual work programmes approved by Ministers;

·  the creation of an independent Statistics Commission, to advise on quality assurance and integrity—including in areas of widespread concern—and priority setting for National Statistics. Independent of both Ministers and producers of National Statistics, the Commission has its own budget and is able to determine its own activities […]; and

·  the introduction of the concept of 'National Statistics', aimed at providing an accurate, up-to-date, comprehensive and meaningful description of the UK economy and society, underpinned by professional standards as set out in a new Code of Practice. The Code—which draws on the United Nations' Fundamental Principles for Official Statistics—is a guide for all public sector statistical work, and applies not only to outputs from the ONS, but also to all those National Statistics produced elsewhere. Ministers are responsible for deciding the scope of National Statistics within their departments, and for ensuring that departmental Heads of Profession for statistics have the authority to maintain and demonstrate the integrity of such statistics in accordance with the Code. The National Statistician is responsible for the maintenance of the Code and its interpretation.

Source: HM Treasury, Independence for statistics: A consultation document, March 2006, para 2.8

8. The UK has a decentralised statistical system, meaning that a large proportion of official statistics are produced in government departments and agencies other than the ONS. Professor Denise Lievesley told us that, internationally, there was no such thing as "a totally decentralised system or a totally centralised system", but that there was a "continuum".[11] Statistical systems are largely centralised in Australia, Canada, Ireland, the Netherlands, New Zealand and Norway, while systems in France, Germany, Italy, Sweden and the United States are relatively decentralised.[12]

9. According to the Government, decentralisation "maximises the benefits to be gained from keeping statisticians close to policy work in departments, and maintaining professional statistical expertise across government".[13] Each Government department or agency that produces National Statistics, or uses official statistics widely, has a Head of Profession for Statistics.[14] Heads of Profession are responsible for the professional integrity of the National Statistics produced by their department and are appointed by the Permanent Secretary of the department. Heads of Profession have a dual accountability: to their departmental ministers for the relevant parts of the approved work plans for National Statistics; and to the National Statistician for the professional statistical quality of the National Statistics their departments produce.[15]

10. In its March 2006 consultation paper, the Government observes that "there is no single 'best practice' model for statistical governance internationally. Statistical systems—as with institutional structures more generally—tend to reflect individual country circumstances, and historical and cultural developments".[16] Despite this, internationally recognised statistical standards do exist. In 1994 the United Nations adopted a set of principles intended to guide the production and dissemination of statistics in its member countries and, more recently, the European Union established a voluntary code of practice designed to protect "the professional independence of statistical authorities from other policy, regulatory or administrative departments and bodies".[17] More than 90% of the 112 respondent countries to a United Nations report in March 2004 reported having a general statistics law providing the authority and rules under which the national statistical office operated.[18]

The Government's proposals

11. The Government's consultation paper details the Government's aims for statistics:

Quality needs to be assured. Official statistics must be sufficiently accurate and reliable for the purposes for which they are required … the production and presentation of official statistics needs to be free from political interference, and to be seen as such, so that the objectivity and impartiality of statistics is assured.[19]

12. The consultation paper describes the introduction of the Framework for National Statistics in 2000 as "the most far-reaching reform of statistics in over 30 years".[20] Box 2 sets out the Government's current proposals for further reform.Box 2: The Government's proposals for legislation

Having revised the Framework after five years of operation, we now intend to take these reforms much further by:

·  entrenching independence in legislation;

·  introducing direct reporting and accountability to Parliament, rather than through Ministers;

·  placing a statutory responsibility on a new independent governing board to assess and approve all National Statistics against the code of practice, also backed by statute;

·  making key appointments to the board through open and fair competition; and

·  removing the statistics office from Ministerial control, by establishing it as a Non-Ministerial Department, with special arrangements outside the normal Spending Review process.

At the same time, the Government intends to retain the current decentralised system of statistical production, which benefits from maintaining professional statistical expertise across government, and keeping statisticians close to policy work in departments, and close to other essential data suppliers and customers.

Source: HM Treasury, Independence for statistics: A consultation document, March 2006, p1

Public confidence in statistics in the UK

13. Throughout our inquiry we have sought to consider the impact of the proposed policy changes on public confidence in official statistics. Recent figures from the ONS show that, while 37% of adults in Great Britain agree that official statistics are generally accurate, just 17% believe that they are produced without political interference and only 14% say the Government uses official figures honestly.[21] Lord Moser told us that the public did not distrust figures, so much as "the people who use the figures and the institutions".[22] He said that the UK was the "only country in which there [was] a major trust problem":

[The problem] does not exist in Canada, Australia or Sweden. It is a feature of the fact that our public distrust politicians, distrust authority, and do not like figures. We have a national problem.[23]

14. In 2005, the Statistics Commission initiated research into attitudes towards official statistics among individuals from academia, the media, Parliament, government, public services, the business community and the voluntary sector. The Commission concluded that public confidence in official statistics might be improved if the distance between statisticians and politicians were to be increased:

There is a strong feeling [among respondents to the Commission] that action needs to be taken to increase trust in, and the credibility of, official statistics. For many, the key to achieving this lies with securing independence for the statistical service. It is felt that, of late, the production of statistics has become politicised and when set against a backdrop of distrust in the Government generally, then a comprehensive restructuring of the statistical service is necessary. It is widely believed that by increasing the distance between Government and the statistical service, there will be less of an inclination to view its output with suspicion.[24]

15. The Minister told us that the Government recognised that there were "widespread perceptions of political interference that undermine the degree of confidence that we would want to see in the statistical system", and that it was therefore proposing to:

legislate for greater confidence … legislate for independence from ministers and … legislate for arrangements in which Parliament will play a much more direct part in holding the statistical service to account.[25]

Our conclusions

16. The Treasury Committee has previously called for the introduction of a Statistics Act and a clearer delineation of the responsibilities of ministers, the National Statistician, the Statistics Commission and others in relation to National Statistics in order to guard against political interference in the production and dissemination of official statistics. We therefore welcome the Government's recognition that greater independence in the statistical system is required, and commend it on publishing its recent consultation paper as a means of continuing the reform process which it started in 1998.

17. We also welcome the Minister's acknowledgement of the importance of addressing the existing low levels of public confidence in statistics. Regardless of the detail of the Government's final proposals, we consider it essential that the Government ensures that its proposals secure both sufficient independence and sufficient perceived independence in the statistical system. It is crucial that the Government carefully considers the way in which it communicates the independence of statistics to the public, with the aim of ensuring that public trust in official statistics is significantly improved.

1 HC Deb, 28 November 2005, col 78W Back

2 Statistics Commission, Legislation to build trust in statistics, May 2004; Royal Statistical Society, A Vision for National Statistics, September 2002; Treasury Select Committee, Second Report of Session 2000-01, National Statistics, HC 137 Back

3 HM Treasury, Independence for statistics: A consultation document, March 2006, Foreword by the Financial Secretary to the Treasury, p 1 Back

4 The responses to the Government's consultation process are available on the Treasury's website, at: www.hm-treasury.gov.uk/budget/budget_06/other_documents/bud_bud06_odstatistics_responses.cfm. Back

5 Treasury Select Committee, Second Report of Session 2000-01, National Statistics, HC 137, para 19 Back

6 Ibid. Back

7 Independence for statistics: A consultation document, paras 2.2-2.3; HM Treasury, Statistics: A Matter of Trust, Cm 3882, February 1998, Annex A Back

8 S Pickford, J Cunningham, J Lynch, R Radice, G White, Government Economic Statistics: A Scrutiny Report, 1989 Back

9 Central Statistical Office, Official Statistics Code of Practice, 1995 Back