Policymakers risk making “misinformed” decisions because they are relying on a defective jobs survey that may not be fixed until 2027, the chair of the Treasury select committee has warned.
The Office for National StatisticsONS) chief executive, Ian Diamond, wrote to the chair of the cross-party committee of MPs on Tuesday, saying his “ambition” is to introduce a new, more accurate data series in 2026, but it may not happen until a year later.
Committee chair Meg Hillier described the delay on drafting a more accurate picture of the labour market as “a major blow”.
“These delays will make some of the most consequential decisions taken by the Treasury and Bank of England challenging at best and misinformed at worst,” she said.
The ONS’s labour force survey (LFS) is the official measure of employment and unemployment, but response rates to the monthly survey have plunged in recent years, raising questions about its reliability.
Matching the survey against alternative data sources, the Resolution Foundation thinktank recently suggested the LFS may have “lost” up to 930,000 workers, and accused the ONS of “leaving policymakers in the dark”.
The ONS has been constructing a new survey – the transformed labour force survey (TLFS), to replace the faulty LFS, and has recently been trialling shorter questionnaires in the hope of keeping more respondents engaged.
In an update published on Tuesday, the statistics body said it still had too many “quality concerns” to move across to the new survey in mid-2025, as had been hoped.
Instead, it suggested “aiming to complete this process in 2027” would allow the two series to run in parallel for a longer period, to ensure the new approach works well.
“We are continuing to explore options to minimise the timeframe to transition. We will provide an update on timescales in spring 2025,” the ONS added.
In a separate “Lessons Learnt Review,” also published on Tuesday, the ONS admitted that the drawn-out process of developing the TLFS has had, “a profoundly negative impact on morale and wellbeing, which corroded relationships, undermined confidence in the vision, and affected buy-in”.
The review identified, “pervasive and recurring over-optimism at different levels of the organisation throughout the project lifetime”, adding, “there were many unchallenged assumptions that things would turn out right, as well as a lack of planning or consideration of worst-case scenarios”.
The Bank of England governor, Andrew Bailey, told the Mansion House dinner last month that the shortcomings of the LFS were a “substantial problem”, adding: “I do struggle to explain when my fellow governors ask me why the British are particularly bad at this.”
The Bank’s nine-member monetary policy committee is monitoring the labour market closely as it decides when to make the next cut to interest rates. The Bank cut rates by 0.25 points to 4.75% last month.
Policymakers are also keen to track how the £25bn increase in employer national insurance contributions coming into force next April will affect jobs, as companies in some industries have warned they will have to cut staff.
In a separate announcement on Tuesday, the ONS also said it had been reweighting aspects of the LFS in line with recent higher population estimates. The new reweighted findings show employment 402,000 higher than previously thought.
The ONS admitted it had made particularly large adjustments to the data for Northern Ireland because of “the correction of an error in the weighting method used”.
The new estimates show the employment rate in Northern Ireland has returned to its pre-pandemic peak, at 72.9% – contrary to the data the ONS had previously published, which showed employment at 70.3%.
