Outlook: ONS fiasco

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The Independent Online
AN INABILITY to meet customer needs is perhaps the most serious management failing there is. But that is precisely what seems to be wrong with the Office for National Statistics. The ONS might like to think it doesn't really have any customers, that rather it is a public service which floats above all that kind of thing. Fortunately it no longer works that way.

The ONS's customers are the Treasury, the Bank of England and the financial markets. All three believe they have been seriously misled as a result of the fiasco surrounding the earnings figures, and they want action.

The ONS, led by the beleaguered Tim Holt, has come under heavy fire for its decision to revise radically the figures for UK earnings growth in early October. The agency changed the numbers not once, but twice, in the space of ten days. The net result? Earnings growth was not - as we were led to believe - accelerating in early 1998. Rather, it was plodding along at a reasonably measured pace. Using the new ONS figures, it now looks as though the increase in interest rates ordered by the Bank of England in June shouldn't have happened.

The problem here is not so much with the revisions as such. Statistics are always being revised and improved. If the new set of numbers paints a more accurate picture of the economy, that is wholly desirable.

The fault is rather that the ONS failed adequately to explain the changes or their likely impact to those that use them. We should be a little bit careful with our strictures here, of course. The ONS makes a very convenient scapegoat for the Bank of England, which stands accused of an overly aggressive tightening of monetary policy last summer. The Bank didn't base its decision solely on the earnings figures.

Even so, there is plainly a certain complacency and other worldliness about the way the ONS conducts itself which cannot be appropriate in a modern statistical service. The ONS needs to take a good long look at what it is for and where it is going, especially if its hopes for greater independence are to be fulfilled.