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Lord Oakeshott of Seagrove Bay: My Lords, I have only one claim to fame in the world of statistics. I imagine that it is unique in this Chamber. I was put in charge of a country's cost of living statistics at the age of 21—those of Kenya in 1968, eight weeks after my final exam in PPE in Oxford, luckily with a special paper in statistics. Among other things, I ran their motor vehicle statistics, and gratefully received from the Nairobi BMW distributor the only little bribe that I had in my two years in Kenya; what a sad contrast to the corruption there today. That bribe was a pair of scissors for my desk, which work as well today as they did 36 years ago. Thank goodness for that, I think, when my heart sinks at the daily pile of post that we have to open in this place. It is another triumph of German engineering reliability; they manufacture too well for their own good. Another reason for caution in interpreting statistics, however, is that those scissors will have featured only once in national accounts, while I have enjoyed their services for 36 years.
Statistics used to be a dry, technical subject. However, first economics, and now politics and other social sciences have become far more mathematical, with a welcome shift of emphasis from high-flown theorising or
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blue-sky thinking—to use the cliché du jour—to measurement and empirical testing. So statisticians have rather come out of the closet.
As we have heard already from the noble Lords, Lord Marlesford, Lord Northbrook, and others, decisions by the National Statistician in this country on how to classify the operations of Network Rail, for example, as we were hearing, and more topically on whether to treat road maintenance expenditure as capital or income, can have a critical impact on the ability of government to meet important and highly visible targets that they set themselves. When apparently statistical rulings take on great political significance, it is time for us to stand back and to ask whether our national statistical service is not only acting independently but is clearly seen to be acting independently. Sadly, that is not the case today.
As the independent Statistics Commission points out,
"trust in statistics is essential for effective administration and delivery of public services. Unless decision-makers trust the statistical evidence they will ignore it with a potential high economic cost. Unless the public trust the figures, they won't trust the decision-makers—they won't believe Ministers, for example, on the National Health Service".
Last week we heard that national statistics were to make substantial reclassification of road maintenance expenditure from income to capital account—which would, coincidentally of course, give the Chancellor a thick safety cushion against breaking the golden rule. We are told the decision was taken entirely by the National Statistician, but,
Who took the initiative for this inquiry, and why? Ask yourselves: how many small groups of statisticians are huddling together in corners of the Treasury, trying to work out where they can hold joint inquiries with national statistics to reclassify elements of capital expenditure as current spending?
I have today spoken to the chairman of the Statistics Commission, asking him to carry out a thorough inquiry into who initiated the possible reclassification of road expenditure—and why—looking carefully into the audit trail and the unusually opportune timing of the announcement. I found him most receptive to this request. With the greatest respect to the noble Lord, Lord Moser, I believe that he is being rather naive in underestimating the degree of political pressure on statisticians today. I do, however, warmly welcome the noble Lord's suggestion that national statistics should not be so closely linked to the Treasury.
There is a clear conflict of interest if the Chancellor of the Exchequer appoints the National Statistician—and reappoints him, as happened with Mr Len Cook, shortly after his classification of Network Rail as a non-public body, despite the effective government guarantee. Now, Mr Cook has had a rough ride from the press—unfairly so, perhaps, to some extent—and certainly all the rougher because his name is such a gift to headline writers. He might have got off more
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lightly—and this is a true story—if he had the name of the chief statistician of the Department of Education in the 1970s; Mr K G Forecast.
No other finance minister in Europe appoints the head of their national statistical service. I am sure that the noble Baroness, Lady Noakes, will develop what the noble Lord, Lord Northbrook, already said about Conservative plans for independence of the national statistical service. I think that is a useful piece of work; certainly, the proposals that they make would be a considerable improvement on the present situation. However, I doubt whether it is necessary to have quite so much organisational upheaval as they propose. Indeed, I rather agree with the independent Statistics Commission, which, in commenting on the Conservative proposals, said that they obviously had,
"some important parallels with the Commission's recommendations—notably a statutory body reporting to Parliament and a binding code of practice that all government departments and agencies would be obliged to respect".
They welcomed, as I would, the,
Yet there are significant, substantial changes there—particularly, under the Conservative plans, involving removing a large number of staff from the Civil Service. I would have thought one could achieve the same effect by going more down the line which the Statistics Commission itself produced in May of last year.
The Statistics Commission has, so far, done a robust, independent job in pressing for improvements in official statistics and cutting the scope for the Government to delay or spin official announcements. However, the key point is that the commission can only advise. It cannot decide. It must, in the view of these Benches, be reconstituted. It must be given the statutory power to appoint the National Statistician, to lay down the code of practice for national statistics and to ensure that we have a genuinely independent national statistical service—as the 1997 Labour general election manifesto promised. I commend to the House last year's excellent report of the Statistics Commission, Legislation to Build Trust in Statistics. Its title says it all: a proper, powerful statutory commission— accountable to Parliament—is long overdue to protect the independence and integrity of our national statistics.
Baroness Noakes: My Lords, my noble friend Lord Marlesford has selected an excellent topic for today's debate. Doubtless the inclusion of the words "official statistics" has frightened off all but the most hearty Members of your Lordships' House—but the small number of us here has been more than made up for by the quality of the debate.
I cannot claim any competence in statistics, unlike the noble Lord, Lord Oakeshott of Seagrove Bay. As many people know, my own background is in accountancy and while statistics might seem to be a near cousin of accountancy, being based on numbers, I can assure noble Lords that they are quite different. Interestingly, the way that accounts have developed—
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particularly in this country, with clearly defined bodies of rules and independent regulatory frameworks—means we have achieved a high degree of trust in financial statements, whether those of the public sector—of government departments and so on—or of private sector companies.
When we come to statistics, while we can find a body of rules—we have UK rules, European rules and international rules; there is no shortage of rules—what we do not have is a properly independent regulatory framework for statistics in the UK. It will be known that my party is the party of deregulation; we would not lightly look to a regulatory solution to a problem. That is true whether we are talking about the public or the private sector. Yet we are firmly of the view that the integrity of our national statistics requires something to make it more accountable and transparent. That is why we have proposed our framework for statistical accountability, which I shall return to in due course.
I should like to rehearse some of the problems that have arisen with our national statistics. At heart, there is a justifiable concern that statistics in this country have become intertwined with politics, and that is damaging. My first example is pensions—an issue already referred to by my noble friend Lord Brooke. A couple of years ago, the ONS suddenly reduced the amount of pension funds by over £100 million without explanation. When challenged by my honourable friend David Willetts, they withdrew the statistics for three months. When they re-released their statistics, they showed that in 2001 this country was saving £86 billion a year—around 9 per cent of GDP—which was simply not credible. The figures were reviewed again and came down to £43 billion—virtually halved. Since then, they have been reduced even further.
That is bad enough. However, even though the ONS warned, when putting out its £43 billion figure, that there were 30 more areas that needed work, the Government selectively used the statistics in their pensions Green Paper to state—not once but three times—that pension contributions had risen by 40 per cent between 1997 and 2001. That was part of the "Pensions crisis? What crisis?" stance that the Government were taking then and, to some extent, continue to take. They were so desperate to get some statistics to back the "no crisis" story that they wilfully ignored the known problems with the statistics. So the case of the missing pension contributions was in part an issue of how good the statistics were but really, and importantly, that was also in part an issue of playing politics with numbers. Neither aspect reflects well on the robustness of statistics in the UK.
My second example of where statistics and politics fall over each other is health productivity. Here we see some of the problems that arise when responsibility for statistics is dispersed—some held in the ONS and some in the Department of Health. The Government have poured money into the NHS since 1998 and it is of course a matter of great public importance to know whether that money has been well spent. The Department of Health used to publish a cost-weighted activity index in its annual departmental report, which showed a splendid story throughout all the years that Conservative governments had care and custody of the NHS.
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However, from 1998 onwards, it started to show that NHS efficiency was negative. By 2002 the annual loss of efficiency was around 8 per cent each year. It was no surprise, therefore, to find that the Government stopped publishing the figures in the Department of Health's annual report.
The ONS figures for public sector output and productivity told the same story—that money going into the public sector generally was evaporating without producing anything. Nowhere was this more true than in health and education. We know that the Prime Minister called a meeting in 2003 and urged that,
The head of the ONS was at that meeting. It was no surprise that a review of public sector productivity, led by Sir Tony Atkinson, was then announced. He has now reported, and even his analysis has yet to produce any different view of productivity. The NHS still shows up as a place where productivity goes backwards.
The Department of Health's response to statistics about NHS performance has been unhelpful throughout, or at least since the department's figures started to paint the truth in a way that Ministers found unpalatable. My noble friend Lord Brooke has already referred to that. For example, getting answers to questions about health efficiency has been near impossible. I have been experiencing the same difficulties as my noble friend Lady Byford in trying to get reliable statistics about an area in which we have a policy interest. For example, rather than giving answers, the Government constantly claim that the statistics do not show quality improvements. They conveniently forget that neither do they show the 5,000 deaths each year from MRSA, or the impact of the failure to meet cancer targets.
The most recent example of problems with our national statistics has already been raised by several noble Lords. It is the decision, apparently taken by the ONS but not yet promulgated officially, to reclassify expenditure on the repair of roads from current expenditure to capital expenditure. We shall need a full debate on the substance of that in due course. I will just say now that the timing of the decision and its content are, to put it mildly, politically convenient for the Chancellor, to whom the ONS reports. It will join the decisions, already referred to by my noble friend Lord Northbrook, to put foundation hospitals on the public sector balance sheet, but keep Network Rail off the public sector balance sheet, as matters that have more than a whiff of political intervention about them.
It is against this background that my party has proposed a genuinely independent statistics service. The pivotal element of our proposals is a national statistics office headed by a national statistician who would be accountable directly to Parliament and not to Ministers. The national statistician and his staff would prepare the national accounts and other reports on the economic and social condition of the country, but would not itself carry out data collection and publication across Whitehall. The national statistician would prepare a statutory code of practice applying across Whitehall, and he and his staff would have a power to audit compliance with
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that, which is absent from the current arrangements. Government departments would no longer have a free hand to collect and publish what they want; it would all have to be approved by the independent national statistics office and the national statistician. The fundamental model is that of the Comptroller and Auditor General and the National Audit Office. The national statistician would be accountable to Parliament and would thus be independent from Government both in fact and in appearance.
As has already been pointed out today by several noble Lords, the key issue is trust—not just trust in the numbers that are bandied about, but trust in government. Trust is a rare commodity in public life at present, and we know that trust has been damaged in the past eight years. The Government's own creation, the Statistics Commission—a non-statutory quango—has helped to get some of the issues in the open, but it too believes that a more robust statutory framework is necessary, and the Royal Statistics Society agrees. That is in essence what we have proposed, and we have already published a draft Bill to show how it can be done.
I hope that the Minister will not be in denial this evening. I hope also that he will not simply defend the status quo or point to some magic such as the Atkinson review to solve all the problems. I invite him to join in an all-party consensus and to commit the Government to putting our statistics service on to a proper independent footing with statutory powers and proper independence from Government, so that we can have a new start in untangling numbers and politics.
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