MPs warned that problems with UK economic data could become widespread

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Gaps in Britain's jobs data could lead to wider problems for the country's statistics, a top lawmaker has warned, saying economic policymakers are being blindsided by failures.

Meg Hillier, Labor chair of the finance committee, said she and fellow MPs were shocked and dumbfounded to receive a letter last month from Britain's chief statistician saying it could be until 2027 before a new labor force survey is ready.

She drew parallels with other government agencies such as the Bank of England, warning of the damage caused by underinvestment in the system.

It really made me frown. [as] Hillier told the Financial Times that this was a very big problem. If there is a data gap here, what other data gaps could exist? How might this affect your predictions?

A review last year by former U.S. Federal Reserve Chairman Ben Bernanke criticized the BoE for underinvesting in forecasting tools, leaving the system complex and unwieldy with ad hoc fixes.

Hillier said the Office for National Statistics labor data issue was not just a one-off issue.

If labor market research were to address this issue, there would be other areas we would need to look at, she said. Bernanke picked up some of it from the bank [of England].

An internal review of the ONS last month found its failure to produce reliable jobs data was caused by a systematic lack of investment and issues with strategy and internal culture. The ongoing instability of data based on existing jobs surveys will take time to improve and will prevent policymakers and investors from getting a clear picture of the UK jobs market.

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Senior officials, including BoE Governor Andrew Bailey, have warned that gaps in UK employment data are making monetary policy setting more difficult. Bailey highlighted his frustration in a Mansion House speech last November, warning that not knowing how many people are participating in the economy was a real problem, not just monetary policy.

ONS has been working over the past year to increase the number of respondents to its survey, which is its main source of information about the state of the UK jobs market. As response rates plummeted during the pandemic, we first discontinued workforce survey-based data and then presented it as development statistics.

Hillier said the Treasury Committee was likely to call Sir Ian Diamond, the national statistician who oversees the ONS, to discuss the situation. “We were very puzzled to see the letter that said we would not actually solve this problem until 2027,” she said.

In his letter to the Treasury Committee, Diamond said he could not set a firm timetable for the transition to the Transformed Workforce Survey (TLFS), although he added his ambition was 2026 rather than 2027.

Lawmakers want to question Diamond, but Hillier said it is not our purpose to publicly bash him and how we will find a solution to this problem now because this will be a big problem.

These difficulties make it more difficult to assess issues such as Britain's sluggish growth, she said. Policy makers are acting blindly and this is creating real problems by causing productivity issues. [and] We don't understand what's happening.

She said there were more questions about public institutions and their ability to modernize funding-constrained systems.

In his letter, Diamond, who is chief executive of the Office for National Statistics, cited stagnation in key funding, budget constraints and the significant inflationary impact following the last Conservative government's 2021 spending review.

In this context, operating within a budget makes prioritization difficult and creates a need to deliver efficiencies and cost savings across the organization, he wrote.

Hillier said: We have seen cases where other regulators and others outside the sector are asked to do more without being given the funding to do it.

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