Statistics and Registration Service Bill

It is a pleasure to follow my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke), who covered the Bill’s various clauses extremely well. I look forward to joining him in Committee next week, where we can pick up on some of the concerns that have been expressed. I welcome the Bill, which is a good example of the deepening consensus among all parties on certain pieces of non-contentious legislation, particularly as it shows that the Government have picked up on clauses in the Conservative party’s last election manifesto. The Government have obviously read it, as it called for an independent national statistics office. It is also clear that, more recently, they have picked up on the shadow Chancellor’s call for a triple lock to ensure proper stewardship of public accounts, as the proposal in the Bill is one of the three important elements of that triple lock. The measure is necessary because we have had 10 years of spin on our national accounts and statistics. That spin was not confined to No. 10 Downing street, but emanated from No. 11, too, where it has been one of the Chancellor’s defining trademarks. A number of Labour Members, who are not present at the moment, sought to distance the Government and politicians from the lack of trust in our national statistics, but the evidence from the Treasury Committee report is pretty compelling on that point. On page 12, paragraph 14, it quotes the Statistics Commission, which undertook a review in 2005, in which it said:"““It is felt that, of late, the production of statistics has become politicised and when set against a backdrop of distrust in the Government generally, then a comprehensive restructuring of the statistical service is necessary.””" The fact that such a restructuring was necessary is made evident by the Bill, and by the Financial Secretary’s introductory remarks. He acknowledged that lack of trust in our national statistics, so his colleagues’ attempts to distance the Government from the problem fall rather flat on their face. I should like to illustrate, with a few brief examples, some of the problems that I hope that the Bill will seek to correct. They go right to the heart of the statistical base of the economy—to, for example, the definition of gross domestic product. The national accounts have been re-based several times in the past 10 years, and that has played havoc with data consistency and continuity of the series of that vital information. Items have regularly been added to the scope of measures of gross domestic product, and that offers the potential for rewriting recent growth history of GDP, often to flattering effect. A more recent example is the inclusion of own-account computer software, which increased GDP by 1 per cent. in 1999 and subsequent years. The Office for National Statistics subsequently acknowledged that software estimates—and I quote from its ““Economic Trends”” of February 2006—"““did not meet international best practice””," and that is why the series was revised the year before last. Another example is the impact on the public accounts of changes of definition of general Government spending, particularly since and including the adoption of the European standard accounts, known as ESA95. Let us consider the 1997-98 national accounts, the last set of accounts for which the Conservative Government could be held responsible, as they largely followed the 1997 Budget. Taking into account all the changes to the definitions of general Government spending and GDP over the past 10 years, a £10 billion reduction on Government expenditure is revealed. That is roughly equivalent to 1.4 per cent. lower expenditure, as a proportion of GDP, than was the case at the time. On the revenue side, the impact is even greater, as the ratio of non-oil taxation to GDP at market prices in the 1997-98 accounts is 1.7 per cent. less than the numbers that were reported at the time. Those figures clearly help to flatter the Government’s public accounts position and management of the golden rule and various other rules by which the Chancellor seeks to conduct his policies. Another example is the taxes paid directly to the European Union, which are excluded from the definition of Government receipts. Tax as a percentage of GDP is therefore reduced, as it is no longer paid directly to the Treasury, even though individuals and businesses have to fund the payment. They pay it, but the Government do not see it. In the fiscal year 1997-98, that sum amounted to £5.8 billion in today’s prices or 0.7 per cent. of market price GDP on current definitions. It is hard to find in official British data sources what the sum is. Quarterly figures for taxes paid directly to the EU, such as the VAT precept, are tucked away in a series of statistics in the ONS’s calculations of the balance of payments, and do not appear in its taxation series at all. Another statistic by which the Chancellor sets a great deal of store is the calculation of public sector productivity. I remind the House of his claim in the pre-Budget report of 1998 that productivity growth was the"““fundamental yardstick of economic performance””." That is an oft-quoted phrase, but the measurement of public sector productivity—I acknowledge it has improved over the past 10 years—remains woefully inadequate. As the ONS accepts, it is difficult to calculate that growth. It is important, both because it is the fundamental yardstick by which the Chancellor wishes to be judged, and because productivity gains swell GDP and thus, by definition, help him to meet his targets. An example of the potential for distortion is the calculation of the Gershon efficiency savings, which are more recent than other examples I have given. Despite Government efforts to present those efficiency gains as genuine and verifiable, I am not alone in doubting them. For example, if we look at non-cashable savings in local government, officer time spent working on efficiency gains counts as an efficiency gain. If we look at capital projects, reductions in tender prices through negotiation on capital projects that have not yet been contracted count as an efficiency gain. Those are notional gains—they are definitely non-cashable—and they leave plenty of room for doubt. I wish to consider three clauses in the Bill, including one on pre-release data, which has been well covered by other hon. Members. The Government have made a feature of seeking to encourage greater transparency across government and the private sector, where companies are encouraged to provide timely and complete disclosure. In the public sector, a raft of target-setting and value-for-money assessment regimes, as well as the Freedom of Information Act 2000, are designed in part to increase transparency and allow greater scrutiny by outsiders and independent bodies. In the Bill, however, the Government seek to apply the existing 40.5 hour pre-release limit to market-sensitive data—not a great advance. As we have heard from many speakers, that is the longest period of advance notice available to any Government of a comparable major economy. Why have the Government failed to take advantage of the opportunity offered by this welcome Bill to look at the issue again? On page 49 of its report, the Treasury Committee cites the conclusion on the release of market-sensitive data reached by the independent Phillis review of Government communications in 2004. The review decided that there was"““no need for the 40 hours of advance notice of National Statistics that Ministers receive””." I therefore support the call by my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) for a reduction in the time limit. Indeed, the board itself should decide what the time limit should be. On the issue of pre-release, data should be released in tandem with ministerial comment. Other hon. Members have referred to the problem of allowing Ministers time to put their gloss and spin on numbers as they are released. There would be greater confidence in the numbers if they were made available publicly in a simple format by the board—perhaps through the statistical hub that has been mentioned—with Ministers making a separate release in which they put whatever complexion they wish on the figures. Commentators would be more confident about the figures if they thought that a Government Department spin machine was not driving events. The Financial Secretary referred to the statistical hub. The expression is not used in the Bill, but it is an important and welcome development. If I understood him correctly, benefits would derive from consolidating data releases through the hub. That is quite right, but it is important to look at the proposal in detail in Committee. There are a number of problems with the release of data, many of which have not been covered in our debate, not least the importance of making information available in a readily accessible form. That applies not just to national statistics, as reform would be welcome across government. As the Economic Secretary is in the Chamber, may I remind him that the Chancellor’s pre-Budget and Budget reports have shown a worrying decline in the availability of simple, factual information compared with reports issued by his predecessors? For example, there used to be a standard form of release for politically sensitive figures on the way in which Budget tax changes affect particular income groups, but such figures are no longer available in the published documents. The economic trends published by the ONS used to show the way in which Britain’s tax and social security burdens compared with those of other countries, but that information has not been published since March 1999, so commentators have to dig around for the data independently. It would be useful if that information were restored to the statistical hub. The ONS increasingly tends to release less favourable data in a non-standard form on Excel spreadsheets, tucked away, without any announcement at the front of the website. Although the data appear on the website, it is important that in Committee we consider whether any new data that are released could be flagged up at the front of the website, rather than released on the website with no fanfare at all, so that only data junkies who expect to find it can go in and look for it. An example is the taxes and prices index, which shows the direct and indirect tax effect on prices. It appears to have been quietly dropped by the Treasury and therefore by the ONS, because it is hidden in the depths of the website. The solution would be to flag up every new release on the front page of the website, so that people who look at it regularly will know that it is there. The third clause on which I shall comment is clause 19, covering the retail prices index. Others have touched on the public concern about differing inflation rates, which are attracting considerable publicity. I wish to deal with the relationship between the national statistician, the Bank of England and the Chancellor in relation to any potential changes to the retail prices index. I welcome the fact that that is included in the Bill, confirming the power that the Bank of England has to consider whether any proposed changes to the RPI calculation would be sufficiently detrimental as to adversely affect holders of index-linked gilts. It is important that that is written into the Bill. However, if the Bank of England does so determine, it is merely up to the Chancellor to decide whether the change should be implemented. I am not sure that there is a sufficient safeguard to allow that to be done at the whim of the Chancellor. Although I am sure that he would recognise his responsibilities, it is important not just because of the impact that the decision would have on existing holders of the eight index-linked gilt issues that are outstanding, but because of the effect on the market, the public and international investors, and their confidence in the Government and in the Government’s integrity and credit rating. That would all be at stake, should changes of such magnitude be put through. The matter is so significant for this and any subsequent Government that the provision needs close scrutiny in Committee in order to ensure that the Government are obliged to honour their commitments.