Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questins 300-319)



  Q300  Chairman: I am trying to distinguish between the two here. She wants £25 million. She explained to us about the fourth page and how some of that might be recouped from other departments, but she also said she needed more money to improve migration statistics. How much more does she need for that?

  Angela Eagle: There is not a specific amount for that that has been identified in quite the same way, but certainly it is important to know that in the CSR settlement and in the settlement letter there is explicit reference to extra funding that has been given. I think it is around three million a year for improvements in migration statistics. She is now saying that she needs more to add sophistication to migration statistics and we are certainly looking to see what we can do about that.

  Q301  Chairman: You see perhaps why we are puzzled. We had the CSR settlement, a five year settlement, fixed for the longest period ever, announced in October and we had the national statistician coming to us at the end of January saying it is not enough. I quote her: "We have recognised we do not have quite enough money."

  Angela Eagle: On the fourth page, the original bid for the five year settlement which is outside the CSR period to reinforce independence, the view at that time because of work that had been done by ONS was that there was going to be a three page census. My understanding is that as a result of some of the piloting that was done it became clear that having a fourth page on the census would not reduce the propensity of people to respond to it. The assumption, when the bid was originally made, was that there was some kind of trade off between length of the census and response rates. The pilots which happened subsequent to the bids brought back the result that you could have a fourth page without having any serious diminution of response rates. Given that new information, I think people then started to look to see whether a fourth page was worthwhile. I think it is important to say that whether we have a three page census or a four page census I am confident we will have a robust and useful one, but at the moment I am looking with other colleagues in government to see whether we can fund the fourth page.

  Q302  Chairman: At the same evidence session, the chairman designate of the new Board, Sir Michael Scholar, told us that if there was not sufficient funding provided then the Board would have to consider restricting the type of statistics that ONS provide to government departments. Are you aware of that?

  Angela Eagle: I read his evidence. I was not aware he was going to say it before he did but I think that is probably the role of the new independent chair of the Board. I think it is important also to remember that the Statistics Board has had a very generous settlement in their five year settlement. They have £30 million to help pay for the process of moving to independence. They have £450 million for the census and they have the equivalent of £240 million a year for the next five years, which is much more generous than the other Chancellor's departments. They have to deliver some efficiency savings but they have had a real term flat settlement, rather than the minus five that everybody else has had. I think it has to be put in that setting.

  Q303  Chairman: There has been quite a lot of press coverage recently about the most recent population projections. The ONS in their estimates believe the population will increase by 4.4 million to 65 million by 2016. Should the public be concerned about that?

  Angela Eagle: I do not think they should necessarily. The economic arguments for migration are unanswerable to that extent. The figures to date show that migrants generate more money in the economy than they use in resources and benefits. I think we have to ensure that we have the right sort of migration to ensure that those ratios remain. There are issues about how to absorb the new people that everybody needs to be concerned about, but it certainly assists us in ensuring that we continue to have robust economic growth if we can have migrant workers in to do the work that would not be done if they were not coming in to assist us. In general, it is a good picture but I would not be complacent about the cultural issues that it causes or the practical issues.

  Q304  Chairman: The Institute of Public Policy Research used data from the United Nations to forecast that there would be 9.1 million migrants from abroad by 2030 compared to 5.4 million today. Has the government seen those figures?

  Angela Eagle: We have seen the IPPR research as indeed you have. The issue is that there is an ongoing response cross-departmentally to ensure that we get the work permit rules right, that we get managed migration right, that we minimise illegal immigration and that continues across all government departments. Certainly the Treasury is not the lead department for a lot of that practical work.

  Q305  Mr Brady: You said the economic arguments for migration are unanswerable and that may be the case, but can I turn you to the implications in terms of the planning of public expenditure because there I think the position is much less clear. I got the House of Commons Library to prepare some figures. I accept these are not necessarily entirely scientific but broadly speaking the 1998, 2000 and 2002 spending review periods were based on population estimates which turned out to be overestimates and, for the 2004 and 2007 periods the projections look like being fairly significant underestimates. If you look at the amount of money that needs to be spent to maintain public expenditure on a per capita basis, the effect of this is quite interesting because for the first three spending review periods it reduces the amount of money that needs to be spent below that which has been planned for and for the second two periods it results in quite a significant saving. Looking ahead to 2011 to 2012, the Library suggests that it is nearly £10 billion less being planned for than would be necessary to maintain spending on a per capita basis. That must be a concern for ministers.

  Angela Eagle: Yes, but that is only one part of the case. First of all, I think it is important also to remember that migration is good for the economy. It helps the size of the cake to grow. It also helps the tax take to grow so there are balancing positives as well as expenditure implications of migration. In fact, there are inflationary and growth implications if we cannot get the workforce that we need to do, for example, big projects which assist us to be a more effective, efficient economy. One thinks of Crossrail; one thinks of the building projects. We have to look at both sides of these arguments. It is a bit difficult for me to comment in detail when I have not seen the figures that you have from the House of Commons Library but the fiscal planning and the work that is done to prepare for budgets and public expenditure always use a range of migration statistics, so it is never a forecast that is exact down to a single person. There is always a range. With the last CSR there was a range. That was done, as you all know, before the revised mid-year estimate came in but actually figures show—I think you asked for some information about this and you have been sent it—that even with the revised mid-year population estimates, those ranges were all kept within. We know that planning for public expenditure and the numbers of people, the size of the economy, is not an exact science. What the Treasury tries to do is maintain a range of forecasts and predictions and get it as right as possible within that range. That was done in this instance.

  Q306  Mr Brady: Thank you. I am using these figures just to illustrate the point. I fully accept that you cannot comment on them in detail but, as a broad principle, accepting that inward migration does expand the size of the economy and therefore is likely to increase the revenue income for the Treasury, given that public expenditure is based on projections outward, if those projections are underestimates as they appear to be at the moment and have been over the last few years, is there not a sense of the Treasury having its cake and eating it? You will get a revenue increase but planned expenditure will not rise as quickly as it would be expected to, to take account of the increased demand for services.

  Angela Eagle: Forecasting is always a bit of an art as well as a science. If it looked like the forecasts were completely out in one particular area, we would have to look to see what the implications of that were. If something that was outwith the band of the forecast or the estimate happened, clearly we would have to look at the figures again. There are people in the Treasury who spend their lives looking at the figures as they come in on both sides of that equation, making suggestions about whether we should be making revisions. I am confident that we have systems in place to respond if there were suddenly to be a gap of that sort. We certainly have not seen it yet.

  Q307  Peter Viggers: We know that the statistics are wrong from a number of random snapshots. For example, Slough was the ninth fastest growing population in the country. Since then estimates show it has the second fastest declining population. That is one fact. There are more children receiving child benefit in Slough than there are children in Slough. We know from these random examples that the statistics are not accurate. What revisions are made within the Treasury? You referred to revisions and people studying statistics all the time. How do they make revisions from established facts?

  Angela Eagle: The ONS do this. The Treasury would not start second guessing the migration statistics or the allocation of those statistics that the ONS had come up with. Everybody recognises that we have a system where perhaps more people are coming in. Certainly more people, be they migrants or not, are moving round faster and people have different ways of commuting to work. Sometimes the usual address is not always capturing who is living in particular places and you illustrate the point with the Slough example. I believe that Karen was talking to you and has given evidence about how, as part of the task force on migration statistics, the ONS intend to try to make their estimates of the population, particularly its distribution, more accurate than we think it is at the moment. You will have heard, I hope, the Local Government Minister, John Healey, announce the setting up of a ministerial task force to guide the task force that is looking at migration statistics to see how we can try to improve the sophistication with which we deal with these statistics. It would not be for me as a Treasury Minister to tell the ONS how to gather their statistics but we are certainly very supportive of the extra work that is now being done to try to capture some of these other issues. You mentioned some of the examples in Slough. That is an issue of whether you can use existing administrative data that is held locally to try and augment the migration statistics that you collect at ports and in more conventional ways. ONS are taking a close look at how the statistics we have at the moment can be refined in order to take account of issues such as that. I know that the task force identified a series of different work streams that ONS is looking at to see how it can incorporate the extra information that we get from administrative statistics like GP registrations, school registrations, child benefit, to try and make a more sophisticated guess about what is happening in particular areas. That work, as you know, is ongoing.

  Q308  Peter Viggers: I thought I heard you say that you have people in the Treasury who pore over these numbers and make appropriate revisions.

  Angela Eagle: When they come in, we would make appropriate revisions to our plans. It is not for us to make revisions to the statistics. That is for the ONS. They are the statisticians. They are the experts. We have recognised for example that migration statistics need to be improved and that methodologies perhaps are not keeping up with the pace of change in this area and perhaps we could try to produce better statistics, which is why extra money was allocated in the settlement for the Statistics Board to do that and why there is now a migration statistics task force looking at how it can collect other information. That is for the ONS to do using their particular expertise. Once they give us the figures, what I was trying to say—I am sorry if I expressed myself badly—was that if the figures on our existing plans, in answer to Mr Brady's point, changed, then we would look at existing plans, but what we would not do is say, "You have your statistics completely wrong. Why not count it like this?" That is for the ONS to decide.

  Q309  Peter Viggers: I recognise that you respect the ONS figures. What I do not understand is how you make your revisions to your plans.

  Angela Eagle: You would have to ask me a more specific point so that we could have a meaningful discussion. On the migration statistics, I thought the point that was being made by you was that the allocation to particular areas was not as accurate as it should be. Everybody has recognised that and that obviously has implications for how local government spending is decided and disbursed by the CLG. It has implications for NHS funding, distribution and all of those things. It is for those departments to distribute according to a particular formula and it is for the Statistics Board and the ONS to try to make their own estimates of migration and population statistics in areas more accurate. We can respond and we have responded by setting up the migration task force to do that, to try to make our measurement of migration statistics more sophisticated, but it is for the ONS to decide what is statistically relevant there, not for me. I cannot go to Karen Dunnell and say, "I demand that you add GP registrations." I can suggest it and they can look to see whether that is a reasonable thing to do. That is the work that is going on now.

  Q310  Peter Viggers: Talking about migration, you have come back in response to questions by saying that migration appears to have considerable benefits but if the numbers are wrong, if for example immigrants raise aggregate supply more than they raise aggregate demand, one would expect inflationary pressures to ease for a period of time. I am not saying that migration is good or bad but if it is not accurate the monetary projections could be wrong.

  Angela Eagle: Clearly. If migrants come in, they can ease inflationary pressures by ensuring that we do not have cost push inflation in the labour market because they are filling posts that could otherwise not have been filled. These things operate in all sorts of directions and obviously it is important that we have as accurate a measurement of what is going on in as timely a fashion as we can. That is what the extra work in this area is meant to help us produce.

  Q311  Mr Todd: One of the ways in which we may improve the accuracy of the census on which statistics can be based is to have a reliable address register as a means to identify people living in particular homes. That was identified as a requirement many years ago, certainly in time for the 2001 Census and it has been considered for some time since then. No progress appears to have been made. Who bears responsibility for that?

  Angela Eagle: I do not think there is an easy answer to that. As you know, there are three different sources of address registers. We have never had a national address register. It was decided several years ago that we should work to see whether we could find a project that would give us a national address register. In the end, that was—

  Q312  Mr Todd: All those sources lie within public sector control.

  Angela Eagle: They do. There are some issues about intellectual property rights and ownership to do with the Ordnance Survey. That is my understanding. Also, I think it was decided in 2005-06 that the work being done to develop the national identity register would provide us with a national address register route in due course and therefore the other parallel work, it was decided, was a substitution. The parallel work was discontinued partially, I suspect, because some of these issues of intellectual property and failure to agree on how to move forward on those was a pretty intractable problem.

  Q313  Mr Todd: To be honest, to have one unified address register would obviously be very important for this particular initiative but for many others as well. Why was it not given sufficient weight within government? I appreciate the point you are making about intellectual property but again the intellectual property all lies within the public sector. It is not an issue of some third party engagement in this.

  Angela Eagle: The Ordnance Survey has its own trading fund status and its intellectual property rights issues. It would say that most of the electoral registers and the gazetteers are compiled using information that is their intellectual property. There were some pretty thorny issues. That is my understanding. The decision was taken that the best way of proceeding with this would be the work that was ongoing to create the national identity card scheme and the address register that would follow could be piggy backed on that, rather than this. That was the decision that was taken and announced in Parliament, my understanding is, in about 2006, a bit before my time in this Department.

  Q314  Mr Todd: Anyone who took the view that the establishment of the national identity register would resolve this problem over time would only have taken that view with a very long periscope attached to it, because that is certainly not going to produce any solution before the census and probably not before the next one, in my personal view.

  Angela Eagle: It is one of those examples of something that is pretty frustrating in that we have not made progress. I would not underestimate the difficulty of the issues surrounding it.

  Q315  Mr Todd: I remember the biblical story of the Gordian knot. That was resolved in due course, was it not?

  Angela Eagle: We can all hope.

  Q316  Mr Todd: The ONS are now saying that they will prepare a register for themselves, which indeed they will have to do if they are going to collect the data.

  Angela Eagle: My understanding is that they are using the existing three basic registers and then they are going to use their enumerators to try to hit the harder to reach areas.

  Q317  Mr Todd: Has that been costed into their programme?

  Angela Eagle: That is my understanding.

  Q318  Mr Todd: It has been costed?

  Angela Eagle: That is my understanding. I do not know the detail of what they have put in their procurement but that is the plan that they have in place and I am assuming they have costed it.

  Q319  Mr Todd: Bearing in mind they are going to use the three different sources of the data which have clearly caused us this apparently insoluble problem, has some instruction been given out to those three agencies or local government collectively and the Post Office and the Ordnance Survey that they should cooperate in this process?

  Angela Eagle: Clearly the census is a legal requirement and we want to get the best coverage that we can in the circumstances. A great deal of work will be going into the planning for getting this right, especially after some of the issues that emerged in the 2001 Census. I am pretty confident that they have a good, robust plan for dealing with this.

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