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15 November 2006

Speech by the Financial Secretary to the Treasury, John Healey at the Statistics Commission Open day

Thank you for inviting me to join you for this event.

I hope you’ll forgive me for breaking the first rule of public speaking, by keeping you from your lunch.

I come directly from the Queen’s Speech in Westminster. I could not pre-empt the Sovereign. However, I can now officially confirm that we will legislate in this Parliament for the independence of statistics.

I aim to introduce a Bill in the House of Commons on 21 November, with the second reading likely to be before Christmas.

It is sixty years since the last significant piece of statistical legislation – the Statistics of Trade Act 1947 – was introduced in Parliament.

So this is indeed an historic day in the development of the UK’s statistics system, as we announce legislation to create a new independent statistics board, outside the control of Ministers and accountable to Parliament, with statutory responsibility for ensuring the quality and comprehensiveness of official statistics.

I am also today publishing the Government’s response to our recent public consultation – Independence for statistics.

It sets out the proposals we intend to implement more fully than I was able to do last month in responding formally to the Treasury Select Committee’s (TSC) report. I am grateful to the TSC and to the 79 respondents to the consultation – including many of you at this conference – for the contribution and challenge they have offered to the development of our thinking.

This morning I want to set out for you the reforms we will legislate for – so that you as statistical specialists are first to hear the full details.

Our aim is to establish a system in statute that will deliver the highest standards of quality, integrity and credibility in government statistics. A system that can evolve in light of experience and the developing demands for National Statistics that are reliable, timely and relevant.

Importance of modern statistics

Statistics matter – and in a rapidly changing economy and society they matter more and more.

They provide the data to help us analyse and understand our economic, demographic, political, social and environmental worlds. They form the evidence for debate, planning and policy. And, importantly for our modern democracy, they inform the judgments people make about the promises and performance of government.

So statistics are central to the business of government. But statistics serve us all. They are also a much wider public good, with an ever-widening range of users and currency.

High quality statistics are an essential resource for business, academia, the media, charities and the wider community, whilst advances in technology and in the availability of data particularly via the web also means that more people use statistics than ever before.

Such important, varied and changing demands mean that the new independent system must ensure a continuous improvement in quality and accessibility, as well as integrity and credibility.   

There are three important elements to the hereditary of our legislation:

  • First, the successful reforms to managing monetary policy introduced in 1997;
  • Second, the long-established strengths of the UK’s decentralized system of statistics within Government; and
  • Third, the major reforms we made to statistics in 2000.

Reforming the machinery of modern economic governance

So first, the new statistics system is based on the approach the Chancellor has taken with the Bank of England’s Monetary Policy Committee, the Financial Services Authority and the Competition Commission – formal devolution of ministerial power in statute to credible independent institutions with a clear remit set by government and Parliament. Independence for statistics is the next step in the Chancellor’s reforms of the machinery of modern economic governance.

And I can confirm today that in a further demonstration of his commitment to transfer ministerial power to the independent Board, the Chancellor has decided to legislate to devolve full responsibility for the scope, methodology and definition of the of the Retail Prices Index (RPI). There remains a risk that changes may damage the interests of holders of index-linked gilts and the public finances, so the legislation will retain a limited safeguard based on the judgment of the Governor of the Bank of England to reduce that risk.  

Building on established strengths of the UK system

Second, it is a system based on established strengths of the UK statistical system.

The strongly decentralised nature of statistical production has been a feature of the UK system for as long as statistics have been collected – and we have compiling official statistics on imports and exports in the UK for at least four centuries, with the first population census conducted over 200 years ago.

As we explained in our consultation paper, and reflecting a long history of decentralised statistical production in the UK, the devolved administrations retained authority over statistics as part of the 1998 devolution settlement.

Nevertheless, we wanted an integrated statistical framework for the UK, a concern clearly shared by the Treasury Select Committee and respondents to the consultation. But deciding what approach to take in response to our proposed reforms rightly remains a matter for the devolved administrations.

So I am pleased to be able to announce today that Scotland, Wales and Northern Ireland will all participate fully. This will strengthen the statistical system for users across the UK and help deliver more coherent and comparable statistics in future. 

The Board’s remit to monitor and report on concerns on official statistics will include devolved statistics, and ministers in Scotland, Wales and Northern Ireland will be able to nominate devolved statistics for Board assessment and approval as National Statistics.

Each devolved administration will be consulted before the appointment of one non executive member to ensure their interests are reflected on the Board.

The Board will be required to lay an annual report before each of the devolved legislatures, and – just as the Westminster Parliament may wish to consider how it can best hold the Board to account for its statutory remit – so the Scottish Parliament, the Welsh Assembly and … I hope before long… the Northern Ireland Assembly may want to do the same.

The location of the UK statistical system within the executive has also been a long-established strength, keeping statisticians close to policy makers and data suppliers.

Some advocate statistics – “NAO style” – as an office of Parliament. We trawled the world for examples of such a model and, with the single exception of Mongolia, it is a universal feature of statistical systems that they are a function of the executive, and not the legislature. As a public good, the purpose, value and users of official statistics go well beyond the function of Parliament.

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Reinforcing the major reforms of 2000

And thirdly, the new independent system is based on the major statistical reforms we introduced in 2000 which established the position of National Statistician, the concept of National Statistics and the function of the Statistics Commission.

Indeed, the further reforms for which we will now legislate are a tribute to the work of the Statistics Commission because they draw on the Commission’s 2004 report Legislation to build trust in statistics and develop the duties the Commission has carried out – particularly the duty monitor and report on quality and coverage across all official statistics.

So I can confirm today that our legislation will reinforce the role of the National Statistician, and will retain this title, as the TSC and others here have urged us to do.

The National Statistician will be statutory post and full member of the Board, responsible for the executive delivery of statistics, the running of the Office for National Statistics and reporting to the Board not ministers.

The TSC also recommended, I quote: “clear statutory separation between the role of the National Statistician in the executive (or operational) delivery of statistics, on the one hand, and the Board’s responsibilities for the oversight and scrutiny of the statistical system as a whole, on the other”.

Again, I can confirm that we accept this advice and will do so – not by creating competing centres of statistics expertise but – by spelling out in legislation the specific and separate scrutiny function led by a head of assessment who will also be a statutory post holder, reporting directly to the Board and who will be, together with all assessment staff, operationally independent of the production function.

Having outlined the principles and pedigree to our plans, let me turn to some of the more detailed elements of the legislation.

The independent board

At the heart of our reforms is the new independent Board, with oversight of the statistical system devolved from Ministers and with a statutory remit for the quality and comprehensiveness of the official statistical system. 

The Board will deliver its objective through three main functions:

  1. a statutory duty to monitor and report on areas of concern about the quality, good practice and comprehensiveness of all official statistics across Government and its arms-length bodies.
  2. a requirement to: draw up a code of practice to set professional standards for the production of National Statistics; assess and approve all existing National Statistics independently against these standards; and similarly assess all statistics submitted by Ministers for approval as new National Statistics.
  3. a formal position in overseeing the ONS, as the body to whom the National Statistician will report directly.

And in this new system, independence for the Board will be assured:

  • through its establishment as a non-ministerial department, outside of Ministerial control and with special funding arrangements separate from the established spending review process;
  • through appointments made in open competition, governed by guidance from the Office of the Commissioner for Public Appointments and with both the Chair and Chief Executive appointed by the Queen; and
  • through a non-executive majority membership bringing to the Board a broad range of skills and backgrounds in business, academia and public service.

And I can announce that this majority will be set out in legislation, with three executive and at least six non-executive members of the Board.

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Scope of the reforms

My starting point is this, in a decentralised system the most effective way to ensure both independence and the highest professional standards of integrity and quality, is through independent setting of standards and independent assessment against those standards.

So, building on the well-established principle that the current set of 1200 or so National Statistics together provide the key indicators that Government, business and the wider public rely on for an accurate, up-to-date and relevant description of the UK, we will legislate for:

  • a requirement on the Board to produce a code of practice for National Statistics;
  • independent assessment and approval by the Board of all current National Statistics against the code;
  • independent assessment by the Board of all additional statistics nominated by departmental ministers for approval as new National Statistics; and
  • publication of the results of these assessments.

I expect the added authority and credibility this independent audit will bring means ministers will actively look to submit additional departmental statistics for approval as National Statistics.

I also expect the independent Board to use its statutory role in monitoring and reporting on the quality and comprehensiveness of all official statistics, to comment publicly on the coverage of National Statistics.

There have been two counter arguments to this approach, including from some of you at this conference.

First, some say the scope of the system of Board assessment and approval should apply to all government statistics, not just National Statistics.

And second, some argue that the Board not ministers should have responsibility for submitting additional statistics for assessment and approval as new National Statistics.

I have looked carefully at the case put to us on both these points and let me explain the conclusions I have drawn.

On scope the nature of statistics, how they are published, the sources of data used, the officials responsible and the methods of production are all widening and changing rapidly. The changes by driven by the:

  • demand for evidence-based policies and programme investment cases;
  • requirement for performance data;
  • formulation of published policy delivery targets, as part of government performance management system; and
  • requests for information, partly through the new Freedom of Information Act and Parliamentary Questions.

In government, we no longer just use the traditional collection methods of census and surveys – increasingly, important statistics are derived from administrative and management systems.

In government, we no longer see statisticians working in semi-academic isolation – increasingly they contribute with other analysts as key members of multi-disciplinary teams.

And in government, we no longer expect professional statisticians only to produce formal series of statistics – increasingly, the offer expert advice on many other issues and government products with a statistical component.

Consequently, the old boundaries around the work and products of the government’s professional statisticians are less-and-less clear cut and more-and-more varied between – and indeed within – departments. The old definitions of what is and isn’t a statistic are therefore becoming more blurred.

So, in a modern statistics system – in which we have determined that such decentralized production and such flexibility to respond to user needs are real strengths – what is most important and most practical is not that the Board’s independent audit function cover all government produced statistics but that it covers all the statistics that are most relevant to policy formulation, delivery and accountability, and those that are most valuable to business, academics and a wide range of other user interests.

And surely it is self-evident that statistics produced in and published by government clearly do differ in importance.

Few would contest the importance of unemployment statistics for a wide range of purposes and users. But others may well regard the results of the DCMS’s Television Exports Survey as rather less important and still fewer, I suspect, would argue that regularly published data on departmental stationery consumption should be treated with the same status as the unemployment figures.

That is why we are starting from the established principle of National Statistics that cover the vast majority of the relevant and valuable statistics on the economy, health, crime, education and other areas of activity.

But it is also why we are setting up a system that can and will evolve in light of experience. Just as statistics that are relevant and valuable to government and a wider range of users can be brought into the scope of National Statistics, so some that are currently National Statistics – perhaps the Egg Statistics Notice, or the Wine of Fresh Grape Duties Bulletin, or even the Waterborne Freight in the UK for example – may ultimately fall from scope.

On this question of the submission for assessment as National Statistics … as elected policy makers, ministers are best placed know which statistics are most relevant and important for policy formulation, delivery and accountability. Ministers are also responsible for deciding the resources in their departments, including those devoted to statistical production.

So if you take the view that such decisions are policy and resource, rather than professional and technical, judgments then these should properly be for ministers not statisticians.

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Data Sharing

Now I argued earlier that improvements in quality and relevance are a continuous challenge for a modern statistical system.

Following strong support in the consultation, I can further announce today that the legislation will include provisions to allow for increased data sharing between departments and the Board, where this is for statistical purposes only.

All proposals to allow sharing will be agreed through secondary legislation and therefore subject to further scrutiny and approval by Parliament.

And as you know, probably better than I do, that sharing such administrative data has the potential to bring real benefits in: improving statistical analysis and therefore the evidence base for better policy making and resource allocations; reducing the burden on businesses and individuals of completing surveys particularly on information already held by government; helping to deal with falling survey response rates; and also of reducing the cost of conducting such surveys.

The Government Statistical Service (GSS) has long history of maintaining data confidentiality and already securely holds sensitive information, including census returns, employees’ earnings, and individual businesses’ profits. Nevertheless there are rightly concerns about privacy of personal data, and so comprehensive safeguards will be set out in the primary legislation, with criminal penalties for unlawful disclosure.

Release arrangements

We will also legislate for the reform of statistical pre-release arrangements.

There is a clear case in principle for pre-release access to statistics for Ministers and policy officials, as recognised by the TSC in their report. Ministers need to account for the implications for policy on areas for which they are democratically responsible at the time new statistics are released – something the British public has come to expect, and the British media demands.

Indeed, the principle of early access to data for Ministers is widely accepted and established internationally, with many countries – including Australia, France, Ireland, New Zealand and the USA – having in place some form of pre-release regime.
However, many of the consultation responses argued that the concept of pre-release contributes to the perception of ministerial interference in statistics.

So I am able to announce today that pre-release arrangements will be given a special status in the new system. Unlike the rest of the Code, the content of which will be backed by but not prescribed in statute, new pre-release rules will be set out in secondary legislation – proposed by ministers but approved by Parliament.

By using secondary legislation, we can establish new arrangements with a greater clarity, transparency and enforceability. Indeed, we will place a statutory duty on the new Statistics Board to assess and report on ministers’ and officials’ compliance with the new rules.

Registration service and registration officers

Finally, although the central purpose of the Government’s proposals is further reform of the UK’s statistics system, the historically close relationship between statistics and the registration service in this country mean some changes for the registration service.

There has been general support in the consultation for the proposals to separate the General Register Office (GRO) and the NHS Central Register (NHSCR) from the ONS, and to retain these functions under Ministerial responsibility.

So we will do so, though future changes of location for the GRO and NHSCR will be carried out through a Transfer of Function Order, rather than set out in the statistical legislation.

There is, however, one outstanding concern that we will resolve in the new legislation.

The 1700 registration officers in England and Wales are statutory post holders, paid by the local authority in which they operate, responsible for their own actions, but with no legal employer.

They do not therefore have the employment status or rights of other employees – they can only be dismissed by the Registrar General, and they have no access to an employment tribunal.  So I am pleased to announce that the Bill will establish proper employment status and rights for registrars in England and Wales, as local authority employees. 

Conclusion

So in conclusion, there is an overwhelming case to legislate for independent statistics, as the Chancellor announced last November.

We set out a sound basis for doing so in the consultation I published in March.

Today, I have been able to confirm the strengthening of our plans with new announcements on:

  • the RPI
  • full UK coverage
  • data sharing
  • pre-release
  • the statutory status of National Statistician
  • statutory separation of production and audit functions; and
  • employment rights for registration officers.

Whilst closely scrutinising and debating the detail of the legislation, I hope all in Parliament, all in the statistics profession and all in the wider user community will accept the significance of this – the first legislation for statistics since the War – and I hope therefore it will command the wide and strong support necessary to get it onto the statute book.

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