Radstats conference – 4 March 2006 Government spin and statistics

1. Radstats conference – 4 March 2006Government spin and statistics Ray Thomas Faculty of Social Sciences, Open University. Campion Fellow, Royal Statistical Society, 2003-2005

2. The background • The Labour Party’s 1997 election pledge for an independent statistics system • Meaning unclear in 1997and still unclear in 2006 • One point of clarity – Jack Straw in 1995

3. Jack Straw’s 1995 paper • Recommended National Statistical Service • Merger of CSO and OPCS • NSS should serve “the public interest, Parliament, and government, in that order” • NSS to be similar to NAO • Budget controlled by Parliament • NSS staff not civil servants

4. Manifestations in the labour market • Dominance on welfare to work, labour supply, exits from unemployment • Evidence on local variation in unemployment and entry to unemployment ignored • Nearly three million recipients of incapacity benefit. Allegations, but no official statistics on, how much is disguised unemployment. • Inadequate statistics on local employment

5. Long-term unemployment • “the long-term unemployed still form a substantial and important group … this has a significant macroeconomic impact because the long-term unemployed tend to lose skills and motivation as well as being discriminated against by employers. This weakens their attachment to the labour market... They become ineffective in holding down wage inflation and this leads to the impact of adverse shocks to the economy … Nickell, 1999

6. Status of Nickell’s position • Member of Bank of England Monetary Committee • Leading authority on unemployment in academia • Statement about long-term unemployed supported only by misleading statistics • Contradicted by other evidence

7. Evidence from Beveridge • Frictional unemployment – short-term. • The unavoidable gap between finishing one job and starting another. • Demand deficiency and structural unemployment • Depends on stated of demand for labour

9. RSS recognises defects in the standard measure .... when unemployment is falling the percentage of long-term unemployment will increase if most of the slack is taken by those recently out of work.’ (from RSS Report on unemployment statistics published in 1995).

10. ILO also recognises problem Changes in the incidence of long-term unemployment, however, often lag behind changes in total unemployment. … when recovery begins, as the short-term unemployed usually find jobs more quickly, leaving behind an increasing share of long-term unemployed.

11. Population-at-risk (PAR) year-or-more rate Number unemployed for year or more divided by number unemployed a year earlier PARt>1 = 100 * Ut >1/ Ut-1

12. PAR less-than-year rate • Numbers unemployed less than 1 year divided by number of entrants in previous year • PARt<Y = 100 * U<Y / E(t-1):t

14. Why PAR rates not recognised? • Concept of a less-than-year unemployment rate not recognised • Because ONS, ILO, Eurostat, UN, OECD, etc. could not specify a denominator

15. ILO definition of unemployment • Recognises only uncompleted spells of unemployment • Does not recognise concept of less-than-year unemployment • (Because) it does not recognise concept of entry to unemployment

16. Labour Force Survey • Questions about unemployment only to respondents who are unemployed • Distribution by duration truncated at left hand side • Misses completed spells of unemployment of less than four weeks • Misses entry to unemployment

20. Why no change in geographical pattern? • Government has applied same exit-from-unemployment policies everywhere • Absence or ineffectiveness of local employment policies • Inadequate statistical support for local employment policies

21. Local employment statistics • Latest available – for 2003 • National Insurance/PAYE returns from all employers every month • Could have employment statistics for all local areas every month • Local policies vacuous without statistics

22. A summary on labour market • Most serious spin is inadequate local employment statistics that pretend that policy belongs exclusively to national level • Spin reinforced by ironing out statistics for entry to unemployment pretending that solution to unemployment belong exclusively to the unemployed

23. Consequences • Stable growth achieved at cost of growth of inequalities in pre-existing geographical patterns of unemployment • Problems pushed into other areas, notably incapacity benefit. Part-time employment? • Policy emphasis on social exclusion (more difficult to measure).

25. Growing entwinement of government and statistics • Idea of NS has supported this spin in labour market statistics. • Attempts to centralise on ONS • RSS proposal for minister for ONS in cabinet • CeMGA established within ONS • Lack of trust in statistics

26. Precedents to Straw’s paper • 1/ Winston Churchill in establishing the CSO in 1941 • 2/ Margaret Thatcher started Rayner Review in 1980. Rayner Doctrine. Statistics just for Government use.

27. Status of Jack Straw’s paper • Only paper on the government of statistics by a leading politician. • Not published, treated as samizdat by RSS • Debate on government of statistics dominated by ONS and RSS

28. The debate since 1997 - RSS Responses • Green Paper "Statistics: A Matter of Trust" May 1998 • Responses to White Paper "Building Trust in Statistics" Oct & Dec1999 • June 2000 meeting "National Statistics: vision and values" • Evidence submitted to Treasury Committee in October 2000 • Statistics Commission on need for legislation on NS 2002 • RSS demands progress on NS code of practice Jan 2001 • Response to consultation on NS Code of Practice Apr 2002 • Eight response on protocols for NS • Call for Statistical Legislation, October 2004

29. National Statistics • A brand name for quality? • Who decides scope? • What is connection to the independence issue?

30. Production of statistics • Ministers have formal responsibility. The purpose of the statistics is to support government policy. • A departmentalised system • Civil servants including the GSS and ONS are required to produce statistics to support their minister and government policy.

31. Growing entwinement of government and statistics • NS makes only formal references to public and Parliament • Centralisation on ONS • RSS proposal for minister for ONS in cabinet • CeMGA established within ONS • Lack of trust in statistics