Why the ONS credibility is under immense pressure amid data flaws

The credibility of the Office for National Statistics (ONS) is facing intense scrutiny, with mounting evidence of systemic issues undermining its ability to deliver reliable economic data. This problem was brought into sharp focus in late 2023, when the agency had to delay its unemployment figures due to a lack of usable Labour Force Survey results. The revelation sent shockwaves through financial markets and policy circles, exposing deep concerns about the integrity of one of the UK’s most critical institutions.

The Labour Force Survey, which forms the bedrock of jobs data used by policymakers, economists, and traders, has been rendered unreliable by historically low response rates. Surveys that were once conducted face-to-face prior to the pandemic have struggled to regain traction as many households remain wary of engaging with researchers, citing fears of scams or lingering concerns about COVID-19. By mid-2023, the response rate had plummeted to under 13 per cent, from nearly 50 per cent pre-pandemic, raising alarm across government and industry.

The Bank of England has voiced its frustrations, with unreliable data impeding its efforts to navigate interest rate decisions. Similarly, government ministers and public agencies have struggled to deploy resources effectively without an accurate picture of the labour market. Former pensions minister Sir Steve Webb remarked that the survey had previously offered vital insights into workforce dynamics, particularly among groups such as the self-employed and the long-term sick. Its recent flaws have made targeting specific support increasingly difficult.

The ONS has introduced several measures to address the issue. Financial incentives for respondents have been increased from £10 to £50 for the initial survey, while greater efforts are being made to simplify the process and expand sample sizes. While these adjustments have produced some improvement, drop-out rates for subsequent surveys remain alarmingly high. Crucially, the organisation has admitted that its current data should “still be treated with caution”. Analysts believe a full recovery of the Labour Force Survey’s reliability may take until 2027.

Critics argue that the ONS has been slow to react to brewing problems, despite staff raising concerns internally. A culture resistant to internal criticism has left front-line employees feeling their warnings are undervalued. This sentiment coincides with broader unrest among ONS staff, as disputes over office working policies, pay, and organisational changes have added to the agency’s challenges. Recent strikes have only amplified calls for a leadership overhaul and more transparent decision-making processes.

Many believe current shortcomings can be traced back to long-term issues, including the ONS’s relocation from London to Newport in 2006, which resulted in a significant loss of institutional knowledge. Although efforts were made to modernise the agency under previous leadership, experts have criticised the lack of sustained momentum to bolster its statistical output in recent years.

The ONS previously garnered praise for its quick and effective data collection during the pandemic, when it was tasked with tracking the economic and health impacts of COVID-19. However, this increased demand for new metrics, from economic wellbeing to mental health, may have stretched the agency’s capacity beyond its limits. Budgetary constraints have added further pressure, with the Treasury ordering the ONS to make £34 million in efficiency savings last year.

As the search for a successor to Professor Sir Ian Diamond, the ONS’s outgoing head, continues, many stakeholders are calling for the organisation to refocus on its core economic data while streamlining its scope. Though its reputation is bruised, experts agree that correcting these failings will be critical to ensuring policymakers and market participants can once again rely on robust statistical insights.