Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 230-239)


14 JUNE 2006

  Q230 Chairman: Minister, can I welcome you back to the Sub-Committee. Would you formally identify yourself, please?

  John Healey: Good afternoon, Mr Fallon. My name is John Healey. I am Financial Secretary to the Treasury.

  Q231  Chairman: Thank you for assisting us. I believe that you have a short opening statement to make, is that right?

  John Healey: "A short opening statement" might be flattering the scribbles I have in front of me here, but there were two or three things that I wanted the chance to say first, if I may, and I thank you for the opportunity to do so. First of all, thanks for inviting me to give evidence to the Committee. Second, we in the Treasury very much welcome this Committee's inquiry and look forward to the recommendations that you might make following the inquiry. You have been running your inquiry alongside our own consultation on this document Independence for Statistics. Our consultation closes today. We have had over 40 responses to the consultation so far. We will publish all those responses, subject to the confidential acceptance that respondents have given us. If it would assist the Committee, Mr Fallon, I am happy to try to make those responses available earlier to the Committee, if it would help your inquiry as you come to consider your recommendations. I have something to say about the substance of what is proposed in two areas, very briefly if I may. In 2000 the set of reforms that we introduced at that stage brought probably the most far-reaching changes to the statistical system in the UK for 30 years. They were designed to create greater independence in the statistical system. What we now propose to do, following the Chancellor's announcement in November, is to take these reforms further and to entrench independence in the legislation. Our purpose is as follows. Despite the fact that the quality of UK statistics is widely regarded as up with the best in the world and despite the fact that there are few hard examples of abuse in the system, nevertheless there are widespread perceptions of political interference that undermine the degree of confidence that we would want to see in the statistical system. So we are now proposing to legislate for greater confidence; we are proposing to legislate for independence from ministers; and we are proposing to legislate for arrangements in which Parliament will play a much more direct part in holding the statistical service to account; to hold it to account for the quality, integrity and also the efficiency of the statistical system in future.

  Q232  Chairman: Can I just be clear about the process? Are you anticipating legislation in the next session, or will there be a draft bill? What is your plan at the moment?

  John Healey: The consultation closes today. We will publish, as I have said, all the responses we get. We will then look to respond to the consultation and we will also look to respond to the recommendations that this Committee makes. We are keen not to lose the momentum that has been created by the Chancellor's announcement last November and the consultation underway at the moment. We are therefore looking at the moment to legislate at the earliest possible opportunity.

  Q233  Chairman: Will that be by draft bill initially, or will you go straight to a standard kind of bill?

  John Healey: We have not settled that immediately, but I am keen to make sure that we can legislate without a loss of momentum; that we can do so at the earliest possible opportunity. I think that both the public debate that we have been able to encourage since the Chancellor's announcement and the outline of our proposals in the consultation document here give us a good basis to move to preparing the legislation, and then seeing it scrutinised through its process in Parliament.

  Q234  Chairman: You referred to the debate, Minister, but some of the debate has been quite critical. The Statistics Commission described a number of your proposals as "unclear or unsatisfactory". Simon Briscoe of the Financial Times described your proposals as "shambolic". The Chief Statistician of Canada told us that if the proposals do not go beyond the ONS he felt they would amount to no more than "tinkering". What do you say to the charge that you missed the opportunity to have a much more wide-ranging reform of statistics? That what you are doing is too limited?

  John Healey: Two broad responses to that, and then I am happy to deal with any details. First of all, we set out the principles and the broad plan of reform in the consultation document and, with respect to some of the details, clearly it is right for us to pin down in response to the consultation when we assess the responses that we get. Secondly, the debate that is going on now—I hope the Committee's inquiry can help play a part in this—will help to make it clearer to people exactly what we are proposing. Some of the comment—not all, but some—perhaps did not fully appreciate the detail of what is planned. There clearly will be people who take issue with some of what we are proposing, but it is difficult to find anybody who disagrees with the principle that we should now move to legislation. It is something which this Committee itself has recommended to us in the past. It is difficult to see anybody who disagrees with the intention to legislate to take ministers largely out of the process of accountability. It is difficult to find anybody who disagrees with the approach of, for the first time, having a formal process of assessment of the quality and integrity of national statistics, independently adjudged, under the stewardship as part of the duties of this new board, instead of simply having national statistics that are designated as such and which are supposed to conform to the current code of practice.

  Q235  Chairman: You describe that your aim is to get this more independent of ministers, but the document is rather coy about the exact status of the non-ministerial department which you are going to set up. It presumably still comes under some minister, in terms of funding and appointing members of the board, and so on; but you are not explicit that that will still be the Treasury—or will it in fact be the Cabinet Office? Under whose shadow will the non-ministerial department fall?

  John Healey: If I may say so, I think that you are mixing three things up there. First of all, the nature of a non-ministerial department—which is what we are proposing for the new Statistical Office. Secondly, the questions around funding, to which clearly there is some serious consideration to be given, and we have proposals in that field to try to maximise independence. Thirdly, the residual role that inevitably there must be within government in relation to statistics, and whether that should remain as it is now with the Treasury, or whether there are arguments for placing it elsewhere. So I think that there are three separable elements to that. If you would like me to deal with them, I can.

  Q236  Chairman: No, I just found the document a little coy. You gave other examples in the document of existing non-ministerial departments and you referred, for example, to Ofsted or the OFT. All of us in the House understand that for Ofsted—its budget, the appointments to Ofsted—it is all handled through the Department for Education. With OFT, there is the responsibility to the DTI. However, you are not explicit as to whether the overarching responsibility will still be with the Treasury or whether it might be the Cabinet Office, for example. Why are you coy on that?

  John Healey: I do not believe that we are being coy.

  Q237  Chairman: Which is it then?

  John Healey: Let me be clear then. First of all, a non-ministerial department does not account to ministers. At the moment, the Office for National Statistics accounts for its function, its delivery and its performance to me, as the minister responsible. I then account for its operations to Parliament. A non-ministerial department—we are proposing to replace my role as minister with the board—would report and be accountable to the board, and the board would account for the discharge of its duties to Parliament directly, taking ministers entirely out of the process. On funding, there are concerns about the funding arrangements for any non-ministerial department that is responsible for statistics. What we propose to do is to take this new basis for the ONS—the statistical service—out of the normal Spending Review process. We propose to put it on a special funding arrangement, based on period review and with increases according to a set formula. In other words, it has a certainty and independence of funding, which is atypical within the process of government—as, Mr Fallon, you will in particular be aware—and takes it out of the normal Spending Review round. In relation to the question of any residual responsibilities and where they sit within government, our view—but we are waiting to see what other views come up in the consultation—is that it is probably appropriate for the Treasury to retain that interest. That is for several reasons really. First of all, if you look at the nature of the national statistics that the ONS is responsible for—responsible for about 250 national statistics—around about 150 of those are economic. The statistics that tend to be economic tend to be produced more regularly compared to, say, population surveys. They tend to be more important; they tend to carry greater impact and command more attention. The second thing is that if one is concerned about the role—and this is clearly one of the purposes of statistics, to help the public and others hold the Government to account for what we promise to do—then the Treasury, probably of any department, has the most strongly developed audit function. We have a direct interest in performance against public service agreements; we have a direct interest in departments delivering value for money and, within the Treasury, we also have the experience of dealing with statistical issues. Without being hard and fast about it, therefore, it seems to me sensible to leave with the Treasury whatever residual responsibilities need to be with ministers. As I say, however, we will examine the views that come in through the consultation.

  Q238  Peter Viggers: I was very pleased when I heard that independence was to be given to statistics. My heart has been sinking ever since, when I realise that the Treasury will be tightening its grip. Can I conflate several comments that have been made, minister? One is the proposal that there should be an operational professional body dealing with the oversight of all statistics and maintaining high professional standards. That is the first issue. The second issue is that there should be a body which is clearly independent and can provide oversight to the whole system. Are you seeking to divide those two? Do you really think that the second of those bodies will look as if it is independent?

  John Healey: I think that it will not just look as if it is independent; it will be independent. Because I am very concerned by your opening remark, can I ask you to explain how you believe these proposals mean that the Treasury is tightening its grip? If that is the case, it is certainly completely counter to what is intended and I would like to understand that, because I do not believe that in any detail of the proposals there is an aspect of the Treasury tightening its grip on the statistical system.

  Q239  Peter Viggers: I spent the last week preparing evidence for the Committee on Standards in Public Life relating to the Speaker's Committee on the Electoral Commission, and there is a truly independent body. I do not see any comparable level of independence in this so-called non-ministerial department which is being proposed.

  John Healey: That is helpful. This is not based on the Electoral Commission model; this is not based on the model of the National Audit Office. There were those who argued we should be looking at independence based on the National Audit Office model, directly accountable to Parliament. That is not a model we have accepted, really for the following reasons. It is quite important for us as parliamentarians to be clear about the principles here. The first reason is this. Parliament's proper role is obviously to hold government to account for what it does. As part of that role, it is quite right that the NAO is set up and serves and reports directly to Parliament, because what it does is to help Parliament ensure that the money it has voted to the Government is being used properly and there is good value for money. So it has a very particular role in supporting Parliament's proper scrutiny and accountability function in relation to the executive. If you look at the question of national statistics, the purpose, the value, the users of national statistics, go very much wider than Parliament. In those circumstances, the production of statistics is to a large extent an executive function, serving and producing a pubic good. In those circumstances, the NAO model—of a body of Parliament reporting directly and only to Parliament—in our view is simply not appropriate. That is why we have not gone down that sort of route. In terms of what we do propose and why I believe that this will be independent, we are looking to legislate in a significantly comprehensive way for the roles and responsibilities of this independent board and of the Chief Statistician within the new system. We are looking to legislate for some of the important parts of the modus operandi of the board: so the number and composition of the board; the right to establish and delegate work to committees; the core relationships of the board in relation to the Chief Statistician and to the Office for National Statistics. We are proposing to legislate for the requirement of the board to produce a code of practice; to develop and maintain that; to consult in doing so; and to use that to assess, for the first time, the national statistics for their quality and integrity. Finally, we are looking to legislate to create a duty for the board to advise government on serious concerns about the operation of the system and the wider coverage of the system. To that extent, therefore, although there is a particular focus on national statistics and the integrity and the quality of national statistics, this board will also have a statutorily based responsibility for all statistics—which was one of the points that you put to me.

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