Select Committee on Treasury Minutes of Evidence


Memorandum from HM Treasury[1]

RESOURCE IMPLICATIONS OF BRINGING OFFICIAL STATISTICS INTO THE SCOPE OF NATIONAL STATISTICS

  As the White Paper on statistics set out, extending the initial coverage of National Statistics—at the extreme to cover all statistics put out in the public domain—is not a straightforward issue. Too ambitious a programme of expansion, or too broad a definition of initial scope, would pose considerable practical difficulties, particularly in terms of establishing priority-setting and quality assurance processes.

  Of particular importance in this context is the programme of quality assurance processes which are planned under the new arrangements. The White Paper set out plans for a programme of thorough reviews of key outputs, at least every five years, with the involvement of methodologists and outside expertise, as appropriate. Each review will advise on implementing desirable change and quality assuring the result, and any recommended methodological improvements will need to be factored in to future National Statistics work programmes presented by the National Statistician.

  There would thus be significant resource implications from the extension of the scope of National Statistics. It is for these reasons that the White Paper proposed a considered expansion of the scope of National Statistics over time, having regard to available resources.

A NOTE ON THE ALLEGED LEAK OF AVERAGE EARNINGS DATA ON 16 FEBRUARY

1.  DETAILS OF WORK UNDERTAKEN TO ANALYSE MARKET MOVEMENTS ON 16 FEBRUARY, 2000

  On the day of the alleged leak following study of the news agency wire transmissions, the ONS sought advice on whether any atypical market movements were seen.

  ONS staff made contact with officials from the Debt Management Office who analysed the movements of short sterling interest rates. These were seen as the most significant rates in this context because other markets were liable to have been influenced by movements anticipated due to predicted activity in the German Bund market. Within the short sterling market, while there were some relatively sharp movements before the labour market and earnings data were released, the DMO felt that such movements were within the level of activity expected on the morning of release of market sensitive data.

  ONS staff, via the Treasury, also met with those LIFFE Officials who had been monitoring the trading activity in the short sterling futures contract. The LIFFE Officials were able to confirm that this activity had not been regarded as anything other than proper.

  On the basis of evidence from the Debt Management Office and LIFFE, ONS concluded that an investigation of the specific incident appeared unwarranted. However, given that rumours had circulated, the then Director of ONS decided that a general review of the security arrangements surrounding the pre-release access to all market sensitive statistics should be undertaken.

2.  CURRENT ONS SECURITY ARRANGEMENTS FOR LABOUR MARKET STATISTICS

Security Arrangements for Pre-Release Recipients

  Packs containing the data for pre-release recipients go out from the ONS Press Office 40 hours in advance of official release. They are double-sealed, with a clear "personal and confidential" marking on the inner envelope. The outer envelope has a "timed immediate" label, in line with ONS security guidance.

  Draft releases and the briefing sent to advance-recipients are clearly marked with a "Do not photocopy" watermark and a dated personal and confidential warning.

  Packs are delivered by hand to the security desks or post rooms of the departments of named pre-release recipients.

Security Procedures During Production

  All pre-release material, including work in progress, is kept in a security cupboard equipped with a combination lock.

  All electronic files are kept in restricted areas of the server. Access to these folders can only be granted by one named individual designated as data custodian.

  The area where Labour Market Statistics are produced within ONS is a self-contained unit. It would not be possible for a non-team member to see documents or computer screens without the team being aware of this.

  Staff are under strict instructions to lock away documents relating to the production of these statistics when they are away from their desks.

  The list of addresses of advance recipients are checked on a regular basis to ensure that material is delivered correctly.

3.  THE TERMS OF REFERENCE OF THE CURRENT SECURITY REVIEW

  ONS has an extremely good record in its security arrangements. Indeed, officials from EU Member States and around the world come to the UK to learn from our experience.

  Although there was no compelling evidence for a full inquiry, ONS takes the allegation of a breach of security extremely seriously. For this reason and to maintain market confidence in the security surrounding our outputs, Dr Holt, the then Director of ONS, ordered a general review of security procedures. This review will be undertaken with HM Treasury, the Department for Education and Employment, the Department of Trade and Industry, the Scottish Office, the Welsh Office and the Northern Ireland Office who receive pre-release statistics to review the way in which the releases are handled.

  The terms of reference for the security review are as follows:

    —  To review security procedures surrounding all market moving statistics.

    —  To review internal security procedures such as desktop security.

    —  To involve other departments in a review of the way in which ONS data is disseminated.

INFORMATION ON "HEALTH WARNINGS" AROUND THE ASSESSMENT OF THE TOTAL NUMBER OF VACANCIES IN THE LABOUR MARKET

  The published Jobcentre vacancy statistics in "Labour Market Trends" are accompanied by a health warning in the form of a footnote: "Vacanies notified and placings made by Jobcentres do not represent the total number of vacancies/engagements in the economy. Latest estimates suggest that about a third of all vacancies nationally are notified to Jobcentres; and about a quarter of all engagements are made through Jobcentres." On occasions where, for the sake of brevity, this footnote is omitted it is always made clear that the statistics relate to Jobcentre vacancies only.

  As explained in the earlier evidence provided to the Sub-committee, it is clear that the quoted market shares of the Employment Service are only broad estimates. For this reason the official vacancy statistics are not generally presented in a grossed up form to correspond to the whole economy, and where an overall figure has been given, for example, in paragraph 4 of the report "The Goal of Full Employment: Employment Opportunity for all Throughout Britain", it has been assumed it would be clear that the estimate of "around 1 million" vacancies is only broadly indicative, without giving a specific health warning. While this estimate is not precise, the available evidence is that it gives a realistic order of magnitude.

  The Office for National Statistics is aware of the demand for better estimates of the number of vacancies and has been experimenting with a simple regular enterprise survey-based approach to provide a fuller measure of vacancies across the economy. It is planned to commence such a survey, in consultation with departments, towards the end of this year with results beginning to be published next year.

ACCOUNTABILITY OF MINISTERS TO PARLIAMENT FOR STATISTICAL ISSUES

  The Economic Secretary is happy to confirm that, both at present and under the new arrangements for National Statistics, she and other Ministers will continue to be fully accountable to Parliament through written and oral questions, adjournment debates, Opposition Day debates and other procedures for all aspects of the statistics that the ONS and other Government departments are responsible for.

  The White Paper confirmed the Government's view that a scrutiny role for Parliament within the new arrangements would be desirable and that it would be for Parliament itself to decide how this might be achieved. In her oral evidence on 1 March, the Economic Secretary reiterated that the Government is attracted to the option that the scrutiny role on cross-cutting statistical policy issues could fall to a single committee, such as the Treasury Committee (or this Sub-Committee), given its wide ranging interests in both economic and social outcomes. In addition to this, it would be for other committees to consider statistical issues in their areas as they see fit. She has been glad to receive a letter subsequently from Mr Giles Radice confirming that the Treasury Committee is prepared to assume such a role.

10 April 2000


1   This memorandum was requested following the oral evidence session held on 1 March 2000. Back


 
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