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Lord Best: My Lords, on behalf of the social policy organisations that use statistics for their research and analysisbodies such as the Joseph Rowntree Foundation, in which I declare an interest as directorI thank the noble Lord, Lord Moser, for initiating the debate. While at university I rather grudgingly read the seminal statistics textbooks written by the noble Lord; however, today it is a great pleasure to follow his lead in the debate.
My organisation relies on the Office for National Statistics and admires the excellent work it does. We belong to the Statistics Users' Forum, alongside eminent bodies such as the Royal Statistical Society and the research councils. In our case the researchers whom we support in numerous universities and research institutions are mining the national statistics for insights which can help social policy formulation and policy change. For this work, which is often in politically sensitive areas, it is vital that official statistics are independent of government and are seen to be so. From the perspective of users of official statistics, we welcome the proposals to ensure that they are independent of government and to give oversight of the system to Parliament. Perhaps I could raise four questions that concern us relating to the content of the Treasury's consultation document.
First, the lack of coherent statistics for the different countries of the UK is a major problem for users. Statistics are often produced on different bases, making it impossible either to make comparisons between countries or to aggregate figures to create statistics for the whole of the UK. At the Joseph Rowntree Foundation, we publish with the New Policy Institute an annual monitor of poverty and social exclusion statistics using nearly 30 statistics-based indicators. Surprisingly, it is not possible to make adequate comparisons between countries in the
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UK on their progress in tackling several elements of poverty and deprivation, including some measures of educational attainment.
We are also publishing a new annual monitor of housing statistics edited by Professor Steve Wilcox of the University of York. Again, I have discovered that incompatibility in the bases for official statistics makes a UK-wide aggregation of the figures impossible. Of course, the devolved Administrations have legal powers over statistical matters in their countries, which means that Westminster has limited legislative opportunity to intervene. That argues the case for the new central organisation taking a special responsibility for ensuring coherence between countries and holding the system together. Are any steps contemplated for enhancing the opportunities for comparison through achieving greater compatibility of the statistical evidence? That could help us all to understand what works in social policy and practice.
Secondly, we feel that facilitating user access to statistics needs to be an explicit objective of the new body. To that end, we want to see user input into the new body's planning processes so that user needs can be identified, evaluated and met. The consultation document suggests that the proposed board brings a perspective on user needs, but that is rather vague. Proper structures and funding will need to be in place to ensure that happens. Could places be reserved on the board specifically for user representation?
Thirdly, we would like to see the proposed body having oversight of all official statistics, some of which, including many on the health side, are produced outside departments and are not classified as national statistics. The new body presents the opportunity for oversight of a more comprehensive range of official statistics, which would bring more statistics within the quality control and code of conduct of which the proposed new body will have oversight. Could the scope of the proposed body be widened in this way?
Finally, from the user perspective, access to information is sometimes not allowed on somewhat zealous grounds of confidentiality. The Joseph Rowntree Foundation is very interested in the social issues that affect neighbourhoods, which are relatively small geographical areas. That kind of analysis is difficult if administrative data are not released at a sufficiently local level. The confidentiality of individuals is important, but this line can be taken too far. We would wish to ensure that the new body is empowered to enable increased access to such local data. Will the Minister look at the role of the new body in that regard, to ensure that the somewhat draconian guidelines currently in place can be reconsidered?
With those four questions, I conclude, with appreciation for the Government's efforts to ensure the independence of official statistics, which is the essential prerequisite for so much social policy analysis, and with thanks to the noble Lord, Lord Moser, for initiating this debate and for all that he has done to enable social policy-making to be based on sound statistical evidence.
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Lord Northbrook: My Lords, like other speakers, I am grateful to the noble Lord, Lord Moser, for initiating this debate. I claim no special interest in this subject, except as a director of a fund management company. I see the way that economic statistics move the markets. So, from that viewpoint, their accuracy, as far as that is possible to achieve, is vital.
Yet statistics, not least of all, official statistics, matter. They are a necessary input into vital policy decisions by Governments, companies and individuals. To take just one example, the Bank of England's Monetary Policy Committee, when making its interest rate decisions, relies heavily on a battery of survey evidence and official dataeven though those data are inevitably lagging indicators.
Unfortunately, public confidence and trust in official data have deteriorated in recent years, at the same time that users of statistics have become more demanding. The much-respected head of the Nuffield Trust, Sir Denis Pereira Gray, said at a recent seminar at the Cass Business School that the crisis of confidence in national statistics is getting worse. As the Financial Secretary to the Treasury, John Healey, stated at the same seminar, there is a need to build and reinforce public trust in the statistical system, which will take a long time.
Suspicions remain, as other speakers have mentioned, that there is ministerial interference in the classification and presentation of official statistics, and the Treasury, as I will demonstrate, is a prime culprit in that exercise. The first example was the altering of the goalposts in determining the golden rule. Its refusal to classify Network Rail's liabilities of some £17 billion as public sector debt was incorrect. Also, the extent of private finance initiative liabilities is understated, according to Capital Economics, by some £25 billion, thus ignoring the requirements of UK accounting standard FRS5, which seeks to ensure transparency in corporate accounting for off-balance-sheet items. Also the public sector unfunded pension liability has, according to the actuaries Watson Wyatt, been understated by some £230 billion and the local government pension shortfall by some £71 billion, because too high a discount rate has been used.
So it is ironic, but nevertheless welcome, that the Chancellor, as Minister for national statistics, has made moves to improve the independence of statistics. Last November, he announced that the Government intended to,
"legislate for . . . the creation of an independent Governing Board for the Office for National Statistics, with delegated responsibility for meeting an overall objective for the statistical system's integrity".[Official Report, Commons, 28/11/05; col. 78.]
In March this year, the Treasury launched its consultation document. I found the document a bit of a curate's egg; it has some merit. One promising
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proposal is to make the ONS a non-ministerial department directly accountable to its independent governing board and Parliament. Professor David Rhind, chairman of the Statistics Commission, stated at the recent Cass Business School seminar that the key points about the board were its two roles: the oversight of the Office for National Statistics and scrutiny of all government statistics. The board also has an important role in reporting to Parliament.
However, I am concerned that unless the powers given to the governing board are considerable, it may not be able to resist ministerial interference in the ONS's statistical output. At a recent seminar, Professor Adrian Smith, principal at Queen Mary, University of London, had concerns about how the board would function. Would it have executive powers, a monitoring role, or both? I put the same question to the Minister.
At the same seminar, John Pullinger, chairman of the Royal Statistical Society national statistics working party, thought that the board could play a leading role in getting departments to work together to create a single statistical system but that would be successful only if it was non-executive. He believed that executive responsibility, as the noble Lord, Lord Moser, stated, should remain with the National Statistician, who should have a statutory duty to lead the ONS and to co-ordinate colleagues across government departments so that there is a single agreed picture of what is going on in society and the economy.
One move that may improve confidence in the ONS's output is for the Treasury to relinquish its role as the ONS's parent department. Even if the ONS becomes a non-ministerial department, as proposed in the document, it is likely that there would still be Treasury departmental involvement. An ideal could be an organisational structure similar to the National Audit Office or the Electoral Commission, answerable to Parliament rather than to the Treasury. Or, as the noble Lord, Lord Moser, stated today and in the debate of 23 February last year, the ONS could report to the Prime Minister, through the Cabinet Office, where its predecessor was until 1989. However the document is silent on this subject.
In my view, it would be foolish to see independence as a magic solution: scrutiny is also key, either through a new body or a strengthened Statistics Commission. A scrutiny body should be able to influence the quality of official statistics over time. It would help to identify a gold standard applying to key statistics and it would drive up the quality of other statistics by establishing high expectations.
The document's biggest failure, in my view, is the relative discussion of the data issued by departments. These include such politically sensitive issues as the Home Office's crime figures and the Department of Health's hospital waiting times, or subjects such as public sector productivity, where early experimental data from the ONS showed a truly dire picture.
These departmental data are especially vulnerable to ministerial spin on release. The big question is: what can be done about these figures? I ask the Minister
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whether the Government would consider the radical proposal to centralise all data compilation and delivery in the ONS, out of government departments. Alternatively, a half-way house would be to transfer release procedures from the departments to the ONS, distancing them from any accompanying ministerial statements. Without that transfer of power, the notion of independence of statistics is a pipedream.
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