Examination of Witnesses (Questions 260-279)
JOHN HEALEY
MP
14 JUNE 2006
Q260 Mr Gauke: Would you be concerned
that the Treasury would be weakened if it lost control of statistics?
John Healey: I do not think the
Treasury would be weakened at all. The important question and
the central question is this. Are the statistics that are being
produced within and in some cases for, but not exclusively, government,
soundly based? Are they meeting the sorts of needs that we have
for that sort of data? That would be the most important factor.
Q261 Mr Newmark: How is the Government's
proposal that statisticians outside the statistics office remain
within the formal line management of their departments, and therefore
ministers, compatible with your stated intention of establishing
a statistical system that is genuinely independent of government?
John Healey: The first point in
looking at this question is that we have, and we have had for
a century or more, a highly devolved system of statistical production
in this country.
Q262 Mr Newmark: Yes, but that has
led to the current lack of confidence there is in statistics,
which is why we are having this debate.
John Healey: No, on the contrary.
There are some very important strengths in having a system where
you have an important cadre of professional statisticians based
in departments. In those circumstances, two things flow from that.
First of all, it means that the operation and other officials
in those departments have ready access and influence with those
statisticians in the way that they go about their work. That is
important. Secondly, from the statisticians' point of view it
means that they are closer to the data sources. In some cases
they are closer to the consumer. They are also closer to the policy
imperatives for which statistical systems need often to be devised
in order to be able to track.
Q263 Mr Newmark: Yes, but they are
also close to the ministers, and you cannot say that there is
not some sense of relationship to influence which actually develops.
John Healey: The appointment of
any civil servant is not, and never is, a matter for ministers;
but it is a matter for the department. In terms of their professional
role as statisticians, it is quite right that they have—particularly
the cadre of the professional statisticians' group within the
GSS—that professional accountability and a reporting line
directly to the Chief Statistician. They have that at the moment.
They would have that in the arrangements that we propose. In terms
of the standards to which they work, their professional integrity,
and operations and status, it is important that they maintain
that. What we have not proposed and do not propose to do—given
the historical way that we have set up our statistical production
in this country—is somehow to consolidate all statistical
work and all those working on statistics within government in
a single department, such as the ONS.
Q264 Mr Newmark: We have touched
on other issues relating to that at different points. Why is the
scope and definition of the Retail Price Index the responsibility
of the Chancellor?
John Healey: I am aware that this
is a matter that the Treasury Committee has looked at before.
It is a responsibility of the Chancellor, and it is a unique arrangement
within the range of statistics. Essentially, it is—
Q265 Mr Newmark: How do you justify
it? It seems to be the only thing he seems to be still controlling.
John Healey: It has traditionally
been the responsibility directly of the Chancellor, essentially
because of its unique place and its unique role. It is used for
policy, for legislative, for contractual purposes. It is used
for up-rating pensions and benefits. It is used for indexing tax
thresholds. It is used for calculating the level of the index—
Q266 Mr Newmark: Therefore, all the
more reason why there should be a greater level of independence
for it.
John Healey: Up to this point,
there has been a very strong view that—particularly with
its potential effect on gilts and the contractual responsibilities
government has in relation to some gilts issued, particularly
before 2001—the degree of government exposure from changes
to the RPI made it appropriate to leave the ultimate say on any
changes to the Chancellor. You may or may not be aware that there
have been four changes to the RPI since 1997. In each case those
have been formally agreed by the Chancellor, and they have very
heavily been drawn on the professional and statistical advice
of the Chief Statistician and others.
Q267 Mr Newmark: The Statistics Users
Forum basically says that this anomaly should end, and the Society
of Business Economists has said, "Continuing to make an exception
of the RPI is anomalous and should be rescinded". Other professional
bodies have made similar comments. Therefore, my question to you
is this. Will the Government now consider treating the RPI in
the same way as other key macro-economic statistics, by transferring
this responsibility to the National Statistician, or is the Chancellor
still intent on keeping a hold on this?
John Healey: I have explained
why the situation is as at present—
Q268 Mr Newmark: I heard your historical
explanation.
John Healey: Today is the end
of the consultation period. We have undertaken to look carefully
at the responses on any of the range of issues on which we have
consulted that come in as part of the consultation process. We
will do that and we will draw any conclusions for the future that
seem appropriate.
Q269 Mr Newmark: That is not answering
my question. My question is this. Is the Chancellor likely to
consider changing this anomaly?
John Healey: I have said that
today is the last day of the consultation that we have set out
here. We have undertaken to treat very seriously the views that
come in through that consultation. I have not read the responses
to the consultation yet. I have explained that there are over
40 of them. We will do that in the coming weeks, and we will make
any judgments that seem to us appropriate and right for the future,
and report those to this Committee and to others.
Q270 Peter Viggers: You have said
that the Government proposes that the funding of the independent
office should be outside the normal Spending Review. Who would
make a bid for funds, and how would the decision-making process
work—in a bit more detail, please?
John Healey: Our proposal is that
we would set the funding for the board and the ONS—the two
main component parts of the system—periodically. We would
set those, with increases according to a formula. We would do
that outwith the regular Spending Review cycle. We have also said
that, within that, where government places additional significant
statistical demands on the system, then we would fund those.
Q271 Peter Viggers: Bids are made
to the Chief Secretary of the Treasury normally, I believe, and
there are bilaterals between ministerial departments and the Chief
Secretary. Who would be the ministerial champion of the offices?
John Healey: In a sense, we have
taken ministers out of this. There will be the Chief Secretary,
and the Treasury ultimately will make decisions on funding, as
we have to do. I would imagine that the board will produce the
business plan, the business case, the proposals for the activity,
and therefore the funding required—drawing very heavily
on the Chief Statistician and her expertise there. That will be
negotiated and settled directly with the Treasury.
Q272 Peter Viggers: If the people
talking to the Chief Secretary are not happy, who do they appeal
to?
John Healey: I would hope that
we would get to a situation where we would arrive at a settlement
that allowed the new board and the statistical service to undertake
the duties that we wanted them to undertake. However, just to
be clear, this will not be a blank cheque for them; there will
be the same sorts of imperatives on value for money and efficiency
that you, as a Parliamentary Committee, would expect us to insist
on.
Q273 Peter Viggers: The Royal Statistical
Society urged that there should be some kind of parliamentary
input. Have you worked out how that might be made?
John Healey: The short and honest
answer is no. However, if proposals of that nature are put to
us, either through the consultation process or through this Committee,
then we would consider that. I have made it clear that in many
ways the consultation document is an invitation to Parliament
to work out how it wants perhaps to adjust and reform its own
scrutiny processes, in order to exercise what will be a much more
important and direct part in making sure that this new system
meets the sorts of levels of efficiency, integrity and quality
that we require of it.
Q274 Mr Love: In case I am the only
one who has not said it before, I certainly welcome the document,
the consultation, and I am very pleased to hear that you will
listen carefully to what this Committee has to say on the matter.
Following up on the previous questions, may I press you a little
bit? As I understand it, when the Government requires additional
statistical information it will provide that through the budget
for this organisation; but when the organisation or the board
itself want to develop the statistics that they provide, they
will need to find that within existing allocations. Have you given
consideration to what scope that will leave them to develop their
own programme and, effectively, their independence?
John Healey: The short answer
is no. I think that is a matter down the track, but it has to
be right in principle that government accepts that, where we are
putting significant new statistical responsibilities or burdens
on the board and the ONS, we should be prepared to fund those.
Equally, however, it is right that we cannot simply say, "Listen,
anything that you come up with we will somehow underwrite the
costs of". Therefore, where the board itself comes up with
new statistical outputs or arrangements, then it is right to look
to them to find the funding for that activity within the budgets
that have already been agreed.
Q275 Mr Love: There has been quite
a lot of comment about what happens if they produce information
that is, shall we say, somewhat critical, in particular of government
initiatives or programmes. What guarantees are we giving that
you will not use the opportunity to reduce budgets in order to
curb this sort of independence of the organisation?
John Healey: It is hard to see,
given that there has to be a process of public money being allocated
to this body, for there not to be some periodic process where
those allocations are made. We are taking this process out of
the normal Spending Review process. That gives it a degree of
special treatment. I would expect that process to be pretty open
and transparent. I would expect Parliament—and Mr Viggers
has indicated this—to take an active interest in that process.
In the end, the guarantee of operational and policy independence
will be set out in the legislation that we propose to introduce
in order to set up the board and the new system.
Q276 Mr Love: There has been quite
a lot of concern expressed about the Census. There have been many
comments made that, because of the unique spending pattern of
the Census which occurs round about April, and which of course
is very focused and concentrated—and there is other spending
both prior to and afterwards in terms of research and development—it
has been suggested that to do it in the way you are suggesting
would inhibit the proper development of the Census. How do you
respond to that?
John Healey: I would clearly be
concerned if it was going to inhibit the preparation and delivery
of the Census. I have not seen evidence that it will. I have heard
people making those observations. Our difficulty is this. The
cost of the 2001 Census was over £200 million. The current
budget of the Office for National Statistics is £175 million.
The spend for the Census is not only extremely large in terms
of the ONS's spend; it is also very lumpy. It tends to come not
in April, as you suggest, Mr Love, but particularly close to the
run-up to any Census period in quite a concentrated timescale.
In those circumstances, it is not very easy to see how you build
that in sensibly, into what I think people would generally recognise
as a sensible desire to see a degree of predictability and certainty
in the funding for this system and the statistical office. That
is why we are proposing to take it out of that Spending Review
process and make it subject to its own periodic review, with a
reliable formula that can set the year-to-year budgets within
it.
Q277 Mr Love: We will be looking
carefully at the formula that you come up with.
John Healey: You would not be
the only ones!
Q278 Mr Love: Could I ask one final
question, related to the ONS being included in the comprehensive
Spending Review and the announcement that the Chancellor made
about the efficiency savings? As I understand it, there are significant
efficiency savings being asked in relation to the Efficiency Review,
and of course the Relocation Review of Sir Michael Lyons is also
appropriate here. Are the proposals to go independent impacting
on those negotiations or are those negotiations having an impact
on your discussions about independence?
John Healey: There are several
things there. First of all, the Office for National Statistics
is a part of the current Spending Review period. It had its settlement
as part of the SR 2004. As part of its settlement, like every
other department and agency, essentially it has signed up to certain
deliverable efficiencies and indeed some relocations, as you say.
The proposals that we are now making for the funding of the new
system, depending on the timing of the legislation—if we
can move to legislate as soon as possible—what we would
be looking for and I would be looking for is a financial settlement
for the Office for National Statistics in the new system that
we could settle according to the plan that we have set, outwith
the next Spending Review period. In relation to whether independence
is affecting the relocation plans, the relocation targets or the
efficiencies, in broad terms, no, it is not at the moment. The
ONS has a responsibility to deliver the efficiencies and the relocation
targets that it has signed up for, because that is a part of the
overall settlement in the SR 2004.
Q279 Mr Love: Can I be clear that,
when it becomes independent, through the next Spending Review
it will not be subject to any efficiency or relocation targets,
as it has been in this particular review?
John Healey: I have been very
clear earlier on that, despite looking to put in place a special
and separate arrangement for funding, we would still expect—and
I think that this Committee and Parliament would expect—that
we make sure there is a discipline on the sorts of efficiencies
that we expect of departments and public agencies.
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