Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 40-59)



  Q40 Susan Kramer: May I just come in with one question on this section. Last July, the Treasury found that it had mistook itself on the timing of the current economic cycle and adjusted the date identified as the beginning of the cycle, which by serendipity gave a bit more space under the Golden Rule. To what extent was your department involved in the assessment of the timing of the economic cycle?

  Ms Dunnell: We just produce the statistics that the Chancellor uses to make these kinds of decisions. Do you want to say anything more about that, Colin?

  Mr Mowl: The short answer is not at all. We provide the regular flow of statistics about the economy including GDP, which the Treasury uses in its assessment. We also provided some new, experimental estimates in the summer, of market sector output or business sector output which both the Bank and the Treasury have drawn upon, but we were not directly involved at all. So we had no role in the assessment of the cycle.

  Q41 Susan Kramer: You said earlier that you thought it was important, perhaps, for your office, in order to establish the independence of statistics, to go further along the path of interpretation rather than simply providing such data to departments who would then make that interpretation themselves. Is this an example of an area where the decision or, as it were, the determination of the economic cycle should be in the hands of your operation rather than in the hands of Treasury? Is that the kind of distinction you are talking about?

  Ms Dunnell: I think we would like to have more resources to set out different pictures of how we view the economy and society, and whether that included understandings of economic cycles, maybe. I do not know whether you have got a strong view about that one, Colin?

  Mr Mowl: I certainly have views, but I think it is largely a question of priorities. It may be helpful for you to know that we are assisting the National Audit Office in its assessment of the Treasury analysis and we have had meetings with them and we write papers for them; papers that explain how we put together the GDP figures which the Treasury use, why revisions occur and why the particular revisions the Treasury refer to in their paper occurred. We are assisting the National Audit Office, but it is the case that very few national statistics offices throughout the world undertake this sort of analysis. There is no reason inherently why we should not, but it is a question of priorities. At the moment we have got a major programme in terms of modernising the statistics that we produce, including the national accounts, so it is not our priority at the moment and I think there are probably sufficient experts in the UK to scrutinise the Treasury analysis in the form of organisations like the National Institute, the IFS, and so on. As I have mentioned, the National Audit Office is now also doing this assessment, so we have not deemed it to be a priority at the moment.

  Q42 Chairman: It brings us back to this ambiguity that you are both a regulator, a policewoman, of statistics and a provider of statistics. The NAO can decide what it wants to audit, but you are told by the Treasury which are the assumptions that they want you to audit. Would you not prefer to be in the position that you could decide which of these assumptions to audit?

  Ms Dunnell: I do not think that they tell us which assumptions to audit. We have—

  Q43 Chairman: They refer certain assumptions to you to audit, from the PBR and the Budget.

  Mr Mowl: No, they refer them to the NAO; they do not refer any to us.

  Q44 Chairman: They do not refer any to you?

  Mr Mowl: No, not at all. Our only involvement in this particular issue is that the National Audit Office contacted us to ask for our assistance and we are providing it. At no stage did we get asked by the Treasury to audit any of their assumptions, other than in this particular case. The NAO chooses for them to carry out their responsibility to audit the assumptions, they need to consult us. So, for example, there was another case where there were questions about the extent of spirits fraud in the country so we assisted the NAO in that context, but we are never asked directly by the Treasury to audit any Budget or pre-Budget Report assumptions.

  Chairman: Let us turn to the modernisation programme that you referred to. Mark Todd?

  Q45 Mr Todd: You appear to have run into some difficulties with the modernisation of the information systems that would support this programme. Could you expand a little on the fairly modest reference to it in your departmental report?

  Ms Dunnell: Yes. This programme, for which we received funds in the spending review of 2002, was a very ambitious programme and something not ever attempted on quite such a scale by any other national statistics office and we realised very early on, at the end of the planning year, and we acknowledged it in the Annual Report that our targets would be delayed, so that is the situation we are in. However, as you know, the main investment was for last financial year and the current financial year so, after just one and a half years of the key investment years, we have achieved quite a lot. I accept that it is not as far along as was originally envisaged, but we spent a lot of last year proving to ourselves that the whole concept of a single database, all connected with the different bits of software that we use for collection, for sampling, for processing and for outputs and so on, all works. We are now developing the prototype and by March 2006 we will be ready to start implementing them on our two key systems, which are the national accounts and our labour force survey. We have also, of course, as part of that, identified all the tools and software that we need to do this. We have also commissioned, got set up and are currently beginning to fill up our new modern data centre in Cardiff Bay and we have already transformed our telecommunications infrastructure and our Web hosting, which is very important. We have also gone some way on the corporate services front, getting the first stages of our human resources and finance systems in place. Unfortunately, quite a lot of this is very internal and it is quite difficult to explain, but we are only 18 months into the two years of the initial investment and we have gone a long way with it. It is not very visible to the public at the moment, unfortunately.

  Q46 Mr Todd: I am not so worried about that. What I took from what you said was that you had set aside a budget for this particular programme, you had got a substantial way into it and found that it was not as readily achievable as you had thought. You have now spent most of that budget and you are wondering how to fund the rest of the programme. That is how I vaguely took it, but—

  Ms Dunnell: I can explain that more clearly. On statistical modernisation and technological modernisation, which go hand in hand, so that our data centre and telecommunications are all part of it, we originally received £72 million, which was all to be spent, basically, by March, ie in two years. To date, this year we will have spent only £56 million of the £72 million, because when we realised we could not achieve it in two years and we had somehow to achieve our relocation and our efficiency targets that were unplanned at the time, we decided to slow it down and incrementalise it, so we have a plan now for the next two years which will end up, we estimate at the moment, costing £88 million instead of £72 million. That is the situation within the plan.

  Q47 Mr Todd: Have you been allocated the resources to complete, or are you bidding for it?

  Ms Dunnell: In the 2004 spending review we acknowledged that we needed to carry on investing in our modernisation programme through that period and we have allocated the money in our budget to cover that, yes. In our 2004 spending review we highlighted all the things we needed to do, including finishing the modernisation programme; the spending review just gave us the extra money to cover all the things we were asked to do and did not specify how much we were to spend on each one.

  Q48 Mr Todd: The incremental approach that you are now taking is driven within a strategic view of what you require now because you have remodelled what you are designing, presumably, based on your experience to date.

  Ms Dunnell: Very much. The original vision was to have everything we do in one database, everything we do using just the 10 basic sets of statistical software. Because everything changes around us, the sequencing of it just has not made a lot of sense; it has not made a lot of sense to invest in putting surveys into this system when we are going to modernise those surveys anyway and turn them into something else.

  Q49 Mr Todd: You have moved it on to the next thing I was going to ask, now, which is you have got a lot of legacy stuff which is still going to have to keep running while you are carrying out your changed programme. I would imagine, and I think you have said it yourself somewhere, that these legacy systems are fragile to some extent and carry risks. How are you going to make sure that the continuation of these older systems work effectively in parallel, with the modernisation of the information systems that you will rely on to produce the new sets of data?

  Ms Dunnell: Basically, the re-working of the programme was done on the basis of which parts of the programme we should do in what order to maximise the benefits. Since the major part of the benefit is to reduce risk, and lots of the risk comes from the fragility of the systems, we are doing the most risky first, so that helps to reduce it. Also, we are having to use our resources very carefully and we are having to do some upgrading of some of our legacy systems while we are also doing modernisation.

  Q50 Mr Todd: That is costed into your £88 million?

  Ms Dunnell: Yes, that will be ongoing until we have managed to—

  Q51 Mr Todd: Because that is effectively some cost, you are putting money into systems you are going to throw away very shortly.

  Ms Dunnell: Yes, but it is—

  Q52 Mr Todd: I am not arguing that you have got to do it, but—

  Ms Dunnell: It is fairly minimal because, obviously, we are under lots of pressure from resources. Hilary, do you want to come in on this?

  Ms Douglas: We are doing it only where it is essential in order to keep the system going and you are driving towards, I think, this is a considerable challenge in managing the resources around all of this and yes, that is true, it is. The fact that it has taken longer than was originally expected to deliver on modernisation does mean that we are having to drive out our efficiencies earlier within the business to support the completion of the programme.

  Q53 Mr Todd: Which wise consultants did you use to advise you on the original approach to this? Or maybe you did it all yourselves?

  Ms Dunnell: The modernisation programme? We have used a range of consultants. We used a New Zealand expert on statistical organisations, but we have used a range of more technical consultants to help us build what we call the "architecture", the whole idea of it.

  Q54 Mr Todd: Clearly they, you think, got it wrong to some extent because you found once you started to get into the harder tasks, it did not quite deliver what you were hoping.

  Ms Dunnell: I do not think that anything has been proved wrong with the general idea and vision of the modernisation programme. The huge extent of it, and we had to develop that idea into a very carefully planned programme that has to be looked at, regularly, by the OGC and so on. The vision is rather different from constructing a very detailed, well planned programme.

  Ms Douglas: I think perhaps, if I may just add to that, the programme was started off at a time when the immediate delivery of efficiency savings was not such a strong pressure, and I think it seemed a reasonable thing to do at the time to attempt the "big bang" approach, if you like, but the big bang with 400 to 500 live application systems that were inherited from the previous organisations—

  Q55 Mr Todd: That is why I asked you who advised you to do this, because nowadays not many people recommend big bangs in information systems, do they? Normally, for very good reasons.

  Ms Douglas: It was thought at the time, working with the various different companies that ONS consulted, that this could be done, and considerable progress was made with getting the right infrastructure in place, but as the financial pressures came in and it became more and more important to bring the early benefits in, we said, "Let's stop. Let's look at this again. Let's re-scope it. Let's learn from the experience and let's chunk it so that we are delivering the benefits programme by programme".

  Q56 Mr Todd: Big bangs in information systems carry much the same risks as big bangs in most other things in life. They are very hard to achieve and carry massive risks and require extraordinarily high quality management, which not that many people have. May I ask you a bit, if I may, Chairman, about publications and output? You have suggested that maybe you can thin down your publication portfolio because some of the production of it is not absolutely necessary. Have you had any reactions to that idea?

  Ms Dunnell: Our publication portfolio is constantly under review and the main thing we are doing at the moment of course is to try to move as much as we possibly can on to the Web, which is much better from many people's points of view because it is freely available, it is instantly accessible, and so on. What we are trying to do is to rationalise the things that we publish, so, for example, we have a plan to join together our labour market regular publications with our economic trends publications, so that we are just having one quarterly journal looking at the whole of Colin's side of the business, for example, and some of our other publications we are cutting down considerably because we were repeating things. Social trends, for example, cover an awful lot of things which we feel we do not need to cover again, separately, when we have published an individual survey.

  Q57 Mr Todd: Reaction from your consumers?

  Ms Dunnell: Initially, when you withdraw anything—this is one of our problems with statistics—when you suggest taking anything away we always get Outraged from Woking on our backs, as it were, but with very careful explanation of where the information will be available and where else they might find reporting on that particular subject, we usually manage it, but it does require a lot of communication.

  Q58 Mr Todd: So how many Outraged of Wokings have you had? Are they persisting in being outraged in Woking?

  Ms Dunnell: Outraged of Woking has not been too bad lately, but certainly in the past when we have withdrawn things, like the General Household Survey report as a book, we have had a lot of negative feedback, but on the other hand we have then introduced more focused publications, like our one on ethnicity and our one on gender, and they find that there is much more in there because there are things from lots of other surveys.

  Q59 Chairman: May I just ask a question on the registrar role that you have. Do you yet have final figures for the actual proportion of registration certificates that were delivered on time in 2004-05? You had a target for this.

  Ms Dunnell: I do not know whether we have that as up to date as that, but I will pass over to Dennis now, if I may.

  Mr Roberts: I am not sure that I have got the actual numbers in front of me; I thought we had put it in the report. But the difficulty we have had—

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