UK Government Forced to Use Own Jobs Data Amid Chaos at UK Statistics Agency
(Bloomberg) -- The UK government is being forced to use jobs data from new sources because of shortcomings at the country’s official statistics agency, a minister said, acknowledging the crisis in reliable information that is affecting British economic policy making.
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Serious issues have been exposed in recent months in data from the Office for National Statistics, and in particular its Labor Force Survey - the main tool used to analyze the UK jobs market. While the ONS has acknowledged the deficiencies, it said earlier this month that it could take until 2027 to fix.
The unreliability of the jobs data poses a headache for Prime Minister Keir Starmer’s new Labour administration, which is grappling with how to coax Britons back into work. Data from the survey — which the ONS has acknowledged is flawed — suggests the employment rate in the UK, alone among Group of Seven industrialized nations, has so far failed to recover to pre-pandemic levels.
The scale of the challenge in the British jobs market is “too big for us to wait” for accurate data from the ONS, Employment Minister Alison McGovern told Bloomberg. Instead, ministers seeking to encourage Britons back into work are turning to data from the country’s benefits system to help guide their decisions, she said.
“We are using our own data to help find and fix the deep-rooted problems in our labor market – using insight from our front-line services and the Universal Credit system,” McGovern said. “Tackling the long-standing scars in the UK labor market depends on accurate diagnosis. And diagnosing that problem is getting harder because of low Labour Force Survey responses.”
The survey in question was suspended in October 2023 due to a sharp drop in responses and serious doubts remain over its accuracy since it resumed in February. Criticism of the ONS by Bank of England policymakers has grown sharper in recent months, as the problems have made it more difficult to judge the tightness of the labor market and set interest rates.
The ONS is developing an alternative survey to address the shortcomings, but has said the “complexity” of the task “it will take time for the impact of any improvements to be fully realized.”
Data from the flawed survey puts the UK unemployment rate at 4.3%, up from 3.9% in February 2020 before the coronavirus pandemic. An additional 587,000 people are in work but there has been an even faster expansion in the population and the employment rate has fallen to 74.9% from 76.5%. Part of that is due to an 890,000 increase in inactivity since the start of the Covid outbreak, three quarters of whom are classed as long-term sick. But the ONS has said the figures are not reliable, in particular the inactivity level. The Resolution Foundation think tank has said inactivity may be overstated by 900,000 due to survey errors.
The government is now publishing data showing the ‘into work’ rate: the proportion of people receiving Universal Credit benefit payments who move into work each month. That figure is only 8%, a statistic McGovern said might “shock people.”
Labour is also beginning to publish data around how many people are determined fit for work. Currently, “once someone is decided by the system that they are too ill to work, the chances of moving out of that group are tiny,” McGovern said. She said Labour “must re-invent active labor market policy for today’s labor market.”
Last month the government published proposals to increase the employment rate and reduce welfare bills, as Labour eyes a bold target to boost the level to a record 80%. The plan focused on supporting people with disabilities or health conditions into work, but contentious decisions on which benefits to cut and how were put off until next year, with a consultation to be held in the spring to gather views from disabled people.
--With assistance from Philip Aldrick and Tom Rees.
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