Gordon Brown unveiled plans to make the country's much-criticised statistics body completely independent of government yesterday in an attempt to restore public confidence and defuse allegations of political "meddling".
In an unexpected move, the Chancellor said he would grant independence to the Office for National Statistics, a department of the Treasury, in the same way he handed over power to set interest rates to the Bank of England when Labour won power.
The Conservatives and Liberal Democrats, which have long called for the ONS to be freed from government control, gave the move a guarded welcome but said it did not go far enough.
There was a political dispute after the ONS revised the way it calculated public finances that improved the chances the Chancellor would hit his "golden rule" to balance the budget on day-to-day spending over the economic cycle. A recent Mori survey found just 17 per cent of people believed ONS figures were produced without political interference. In his keynote address to the annual conference of the employers' group, the CBI, Mr Brown said he would legislate to make the ONS the responsibility of a "wholly separate body at arm's length from government and fully independent of it".
It would set up a board with external experts and be responsible to Parliament. It is clearly modelled on Bank independence that created a Monetary Policy Committee to set interest rates.
Mr Brown told business leaders: "We have removed essential elements of monetary policy, competition policy and industrial policy and now statistics from the pressures of day-to-day politics. It [will take] government out of areas where it should not be and government guaranteeing that economic decisions are made as they should be - for long-term economic purposes and not for short-term partisan gain."
Vince Cable, the Liberal Democrat Treasury spokesman, said the announcement was long overdue and warned "the devil is likely to be in the detail". He urged the Chancellor to go further and allow the National Audit Office to judge when the economic cycle - which is key to testing the golden rule - had began and ended.
"Rather than simply auditing assumptions, the NAO should report progress against the Chancellor's fiscal rules at the time of the Budget and pre-Budget report," Mr Cable said.
It is understood the Chancellor wanted to reform the ONS before a series of upbeat economic data from the recovery the Treasury believes is round the corner.
One Whitehall adviser said: "The Conservatives will want to say that you can't trust these figures, but we have shot their fox." The move follows a series of problems over key figures.
Estimates of pension wealth had to be withdrawn because of problems with double counting. The results of the 2001 Census were thrown into doubt after it emerged tens of thousands of young people were "missing". The ONS also had to make substantial revisions to key economic data, which it said was due to late data rather than problems with the system.
Last week the Bank made clear it did not believe the ONS's estimates of growth, meaning that it is bypassing official GDP data when setting interest rates.
John Philpott, the chief economist of the CIPD, a labour market think-tank, said it was vital to improve public trust in the ONS as it prepared to embrace new ways of measuring public-sector output that could flatter the Government. "Although much of the criticism has been unfair, official statistics on crucial economic indicators such as economic growth, employment, pay, productivity and the public finances must be seen to be as accurate as possible, beyond reproach, and immune from political pressure or controversy."
Karen Dunnell, the National Statistician, said it was "an important step forward in enhancing the integrity of official statistics". George Osborne, the shadow Chancellor, said the Government appeared to be following his call last week for the ONS to be made independent. "Now that the Chancellor has admitted we were right to call for an independent ONS, he should have no problem agreeing to my other proposal to make the assessment of the fiscal rules independent too."