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Office for National Statistics follow-up correspondence to the Welsh Parliament’s Finance Committee on quarterly growth data for Wales

Dear Mr Griffiths,

I wanted to follow up on my letter to the Committee of 21 October relating to quarterly growth data for Wales.

As you will be aware, the Office for National Statistics (ONS) made the decision to pause the publication of our Quarterly Regional GDP (QRGDP) publication due to concerns raised by users regarding the quality and volatility of the estimates. In the meantime, in agreement with the Welsh Government, we have continued the production and delivery of Welsh Short-Term Indicators (WSTI) to provide quarterly data for Wales.

The ONS have been working with the independent Economic Centre of Excellence (ESCoE) to review the methods for QRGDP. Their report has now been published, and includes several short-term and longer-term recommendations to improve these key statistics.

I can confirm to the Committee that the ONS plans to take on many of these recommendations immediately, which will allow us to reinstate quarterly estimates of regional GDP in an improved form. We will recommence publication of these figures for Wales later this year. Further information on our plans for reintroduction are detailed in a blog.

Yours sincerely,
Professor Sir Ian Diamond

Office for National Statistics correspondence to the Treasury Committee on economic statistics

Dear Dame Meg Hillier,

Thank you for your letter of 26 March. Please find in the enclosed annex answers to your questions relating to Office for National Statistics (ONS) economic publications. As I committed in my letter to the Committee on 3 March, I also enclose an update on our plans for the Transformed Labour Force Survey (TLFS).

The ONS continuously improves methods and processes to ensure that our statistics are as accurate, timely and granular as possible and this includes thorough quality assurance. The
nature of statistics and our modernisation work to move off old technology and future proof delivery helps identify quality improvements. We encourage colleagues to raise issues and highlight any concerns with data. Where issues are identified, we communicate these as soon as we can, in line with the Code of Practice for Statistics. We work closely with statistics users and stakeholders on our methodological improvements; where there is not a consensus, we set this out transparently and welcome feedback.

Labour Market Statistics

Work to advance a programme of improvements to our labour market statistics continues to be our highest priority given their importance for economic decision making. We have successfully tested an experimental, shortened TLFS questionnaire and undertaken quantitative and qualitative research and methodological development, working closely with external experts and in partnership with our main users. Citizens are at the centre of the new design, which aims to address the quality issues communicated in previous updates by improving completion rates, representativeness, and data quality. The design and implementation approach have been endorsed by Professor Ray Chambers, Professor James Brown, the Labour Market Technical Group and Stakeholder Advisory Panel. The Stakeholder Advisory Panel includes representatives from the Bank of England, HM Treasury and the Office for Budget Responsibility, as well as independent experts.

The new design comprises a short longitudinal ‘Core’ labour market-focused survey, which takes on average 15 minutes to complete and is delivered online first, supplemented by targeted telephone or face-to-face contact for non-responders. This will be complemented by a separate cross-sectional ‘Plus’ survey to provide wider socioeconomic, household and local data. An article and technical report have been published today which provide the evidence for the new design.

Work is already under way to make the new TLFS design operational, with introduction planned across the second half of 2025. We will carry out a readiness assessment in collaboration with main users in July 2026, aiming for transition of our published headline labour market statistics in November 2026, though transition timing will be data-led and could be in 2027 if our assessment, or user needs, require more data to be collected and assessed.

The Labour Force Survey (LFS) will continue as the lead measure while further development of the TLFS takes place. The initiatives and improvements made to collection, methods, and communication have led to LFS quality improvements, including quarterly person data reweighted back to 2019 using updated population estimates in December 2024; achieved individual responses to the LFS (UK including imputation) have now increased to 63,069 in October to December 2024 from 44,238 in July to September 2023, with further increases expected over the coming months.

Office for Statistics Regulation Report

On 7 April, the Office for Statistics Regulation (OSR) published an interim report on their systematic review of ONS economic statistics. We recognise and share their concerns about data quality and are addressing these as a matter of urgency. Our new Strategic Business Plan published in early April includes a renewed focusing of resources on our core economic and population statistics.

I am copying this letter to Simon Hoare MP, Chair of the Public Administration and Constitutional Affairs Committee.

Yours sincerely,
Professor Sir Ian Diamond

Response to the Committee’s letter of 26 March 2025

Trade statistics

Two separate and unrelated errors in UK trade statistics were recently identified during our routine quality assurances processes, one related to trade in goods data delivered to the
ONS by HM Revenue & Customs (HMRC), and one related to trade in services data processed by the ONS. Both errors were fully corrected on 28 March 2025 as part of the postponed UK Trade release, which now resumes its regular publication schedule, as well as being incorporated into the Quarterly National Accounts and the Balance of Payments. Additional quality assurance procedures, such as further congruence checks, have been put in place to reduce risk of re-occurrence.

Trade in goods

HMRC trade data and ONS trade data are published on different methodological bases: HMRC report trade based on goods physically moving across the UK border (known as a “physical movement of goods” basis) and the ONS report trade based on how goods change ownership between residents of different countries, which may involve the goods not physically crossing a border (known as an “economic ownership” basis). This difference in methodological approach complies with international standards. As a result, the monthly data will always differ.

When HMRC delivered the annual microdata to the ONS in December 2024, this was compared with the monthly deliveries as part of our routine quality assurance. A discrepancy was identified relating to the January 2023 reference period onwards, which was escalated to HMRC. Working with HMRC to understand the cause of the discrepancy and whether an error had occurred, HMRC determined that some imports data related to a specific Customs Procedure Code had been erroneously excluded from datasets sent to the ONS. The issue was caused by a technical change being implemented in error to the long-standing process used for extracting imports information shared with the ONS.

HMRC resolved the cause of the error in the data feed and provided the ONS with the correct data on 22 January 2025 for periods January 2023 to November 2024 (and on 18 February 2025 for period December 2024). On receipt of the data, we undertook further processing to bring it onto the required methodological basis. Once the indicative impacts of the error were understood and could be shared with users, this error was communicated by a public notice on 13 February 2025, in compliance with the Code of Practice for Statistics. The Code states that users should be promptly notified of errors or revisions, and that ‘corrections that result from errors, should be explained alongside the statistics, being clear on the scale, nature, cause and impact’.

Trade is one of the components within the expenditure measure of GDP. Due to the integrated nature of the National Accounts, the earliest a correction could be made was in the Balance of Payments and Quarterly National Accounts releases which were published on 28 March 2025. In light of the trade in goods error and reference periods impacted, the ONS exceptionally updated the National Accounts revisions policy to allow revisions back to Q1 2023 in the National Accounts publications.

Trade in services

A separate error was identified in our International Trade in Services (ITIS) survey results processing system, which impacted services imports and exports estimates from 2023. The error was identified as part of our quality assurance of the trade in services data feeding into National Accounts, when large data movements were identified following results processing. Due to the scale of the revisions, we undertook a deep dive into our systems which identified that some data related to some of our quarterly survey respondents had been erroneously excluded. This was confirmed as an error on 12 March 2025, 2 days prior to the announced publication date. The system issue was promptly rectified, with further processing required to re-run all affected reference periods and bring through all relevant data. The error was announced by a notice published on 13 March 2025, which included indicative impacts of the trade in services error, as well as communicating the decision to delay the 14 March 2025 monthly UK Trade bulletin.

This enabled us to bring all corrected trade data for both goods and services together on 28 March 2025 at the same time as the Balance of Payments and Quarterly National Accounts releases, the earliest a correction could be made in line with the National Accounts revision policy.

Producer Price Index and Services PPI statistics

Several business prices statistics, including the Producer Price Index (PPI), Export Price Index (EPI), Import Price Index (IPI) and Services Producer Price Index (SPPI), collectively referred to as the Producer Price Inflation (PPI) statistics, have been affected by an error with the way certain year-to-year linking methods were applied to the underlying data. This issue was identified as part of an ongoing programme to modernise the ONS’s statistical processing systems. Consumer prices series (CPI, CPIH and RPI) are completely unaffected.

The weights for business prices series used to be updated every five years to reflect changes in the economy. Starting with the publication in November 2020, these statistics were moved to an annual chain-linking methodology, which is the method of updating weights on an annual basis and statistically linking them to produce a time series which reflects changing sales patterns more quickly than under the five-year method. This move to increase accuracy and reliability was implemented alongside several other related methodological improvements.

The ONS has recently commenced a programme focussed on modernising our legacy statistical processing systems for business prices. As part of the preparation for this work, in mid-February we identified a potential issue with the chain-linking methods used to calculate these indices, including the treatment of item level price relatives (the ratio of an item’s price at a given time to its price at another time). Additional investigation, with the support of internal and external methodological experts, confirmed that the method had not been implemented as intended in 2020 and did not align with best practice. As soon as this quality assurance was complete, the ONS issued a public notice on 21 March 2025 and made key stakeholders aware of the problem and its expected implications. We subsequently paused the publication of PPI and SPPI statistics to rectify this issue, starting with the publication due on 26 March 2025.

This work was part of a broader work programme by the ONS to improve the quality of our PPI statistics, most recently in response to a suite of OSR recommendations. These have focussed on a number of specific areas, including:
• sampling
• data validation methods
• revisions review
• non-survey data sources
• imputation
• refining published data, and
• updating the Quality and Methodology Information (QMI).

OSR identified, and the ONS agrees, that further investment in business price statistics is needed. There remains a significant element of processing on legacy technology systems, primarily focussed on the processing of the item level price data submitted by our respondents. However, constrained resources may impact the pace at which we can move production off legacy systems.

The ONS’s latest assessment of the impact on PPI and SPPI

This problem affects the years from 2008 onwards. However, investigations suggest that the main impact on annual producer price inflation rates was in 2022 and 2023, because of the large movements in relative prices during that period.

As noted in the statement of 21 March 2025, whilst it is too soon to calculate the overall impact, our current assessment is that while the effects are likely to be mixed for different products and industries, we would expect the headline output PPI level to be revised upwards. Conversely, the headline SPPI level is likely to be revised downwards.

Plans for publication to resume and quality to be restored

The ONS fully recognises the challenges some users will face from the pause in our monthly business prices publications. However, given the number of series affected, and the legacy systems described above, our current corrective action is focussed on two principal workstreams:

• In the short term, we have chosen to prioritise correcting the detailed price deflators which are needed for high priority economic statistics, a substantial proportion of which rely on underlying inputs from PPI, IPI, EPI and SPPI. These include the inputs needed for our 2025 Annual National Accounts (Blue Book and Pink Book) revisions.

• Further ahead, the ONS will look to restart publication of monthly PPI and quarterly SPPI during summer 2025. The longer time required reflects the need for a significant rebuild of a fragile processing system, and time required to do sufficient quality assurance on the outputs.

The ONS is currently consulting actively with experts from our Technical Advisory Panel on Consumer Prices and key stakeholders (both internally to the ONS and externally) and will publish further updates in due course as these two workstreams progress.

Defined benefit (DB) pension wealth

Modelling defined benefit (DB) pension wealth is a complex area of economic statistics, particularly given wider changes to the economy and the heterogeneity of public sector pensions given changes to the schemes over time. To accurately estimate current values on future pensions promises both before and after retirement we need to make assumptions and methodological choices. We keep our methods under regular review, to ensure they continue to be fit for purpose should the wider economic or pensions context change.

The ONS commissioned the Government Actuary’s Department (GAD) in 2023 to review the modelling approach for valuation of defined benefit pension wealth as used in the Wealth and Assets Survey (WAS). This review was in response to the changing economic context in the UK, along with user feedback on assumptions and inputs into the DB pensions model, including from the Institute for Fiscal Studies (IFS). As part of this review, the ONS asked GAD to make recommendations on:
• the discount rate to use in the model,
• how increases to pensions should be recognised in the model,
• what review processes would be appropriate to maintain the model going forwards,
and
• valuing defined contribution (DC) pensions in payment wealth using the DB pensions
model.

In line with government user needs, stability was the primary objective, with a secondary objective being consistency in approaches used to determine the value of other types of wealth, and further objectives of practicality, durability, and continuity. Government user need for minimising undue volatility when valuing DB pension wealth was first highlighted to the ONS by WAS consortium members following the 2008 financial crisis. The previous market-based approach for DB pension valuation used in WAS waves 1-2 led to large changes to published pension wealth estimates between survey waves, which did not wholly reflect actual growth in respondents accrued pension amounts or entitlements, and as such more stable “market immune” approaches were preferred.

GAD’s review concluded that no discount rate could give the best outcome against all of the objectives. Consideration of relative priorities led to a recommendation to use a consistent Superannuation Contributions Adjusted for Past Experience ‘SCAPE’-based discount rate in all parts of the pension model. The recommendations were discussed with a range of stakeholders, including the IFS, during the review and ahead of their report. It was not possible to achieve consensus on the methodological approach, however key government users showed consistent preference for stability. Recommendations were subsequently implemented in our 2020-2022 Household Total Wealth in Great Britain statistics, published in January 2025.

We strongly refute the characterisation of this methodological change as ‘an error’, rather that there is a difference in views on the appropriate methods to apply. Further detail around implementation of recommendations and impact on our wealth estimates were published ahead of the statistical release. In line with GAD recommendations, the ONS plans to undertake a full model review of WAS pension methodology every third round and initiate “out of cycle” reviews should major unexpected economic events occur. Meanwhile, we will continue to engage with WAS consortium members and stakeholders via relevant technical and expert user groups.

Office for National Statistics follow-up written evidence to the Treasury Committee on economic statistics

Dear Dame Meg Hillier,

Thank you for your letter of 14 February, following up on our evidence session with your Committee on 4 February. As I mentioned during the session, we are grateful for your interest in this important area of work.

In response to the request in your letter, I can commit to providing regular updates on the progress of the Labour Force Survey (LFS) and the Transformed Labour Force Survey (TLFS), and any emerging issues of note, to both this Committee and the Public Administration and Constitutional Affairs Committee (PACAC). In the first instance, I will write to the Committee with an update following the upcoming decision regarding the future timings of the TLFS.

During the session, I promised to write regarding two further points.

Budget

We discussed the efficiencies the Office for National Statistics (ONS) made in 2024. Following clarification from colleagues, I wanted to confirm that by the end of the 2024/25 financial year we estimate that the annual effect of cumulative efficiencies and savings generated across the SR21 period will be £39.2m. This equates to 9.9% of forecast net expenditure estimated at £396m for 2024/25. I would be grateful if the transcript could be updated accordingly.

Public contact details

We also discussed the impact of contacting the public via telephone during the pandemic, the potential of using other contact methods to improve survey response rates and if the ONS requires additional powers to access contact details. The ONS currently uses both mobile phone and landline numbers to contact respondents. The Transformed Labour Force Survey (TLFS) sample of household addresses is telematched using commercially available datasets of mobile and landline numbers. This approach typically provides a phone number of varying quality for approximately 30% of addresses. Email addresses are less useful as they cannot be linked to an address, and we are not assured of their security, so we only use these where they have been provided to us by the respondent during our first interview with them. This enables us to contact them to ask them to complete later waves of the survey.

I am content that the ONS currently has the legislative framework it requires to obtain the data we need to deliver our surveys and contact respondents. Our new Survey Innovation and Research hub will accelerate our work this year to increase response rates and maximise respondent engagement across our surveys.

Thanks again for interest and as I mentioned in the session, I would be very happy to welcome you and your Committee to our office in Newport, Wales.

I am copying this letter to Simon Hoare MP, Chair of PACAC.

Yours sincerely,

Professor Sir Ian Diamond

Office for National Statistics written evidence to the Environmental Audit Committee’s inquiry into the role of natural capital in the green economy

Dear Mr Perkins,

Please accept my congratulations on your election as Chair of the Environmental Audit Committee. Further to our update to the previous Committee in November 2023, I am writing to provide a further update on recent and upcoming Office for National Statistics (ONS) environmental work.

This includes work on the UK natural capital accounts which will be of potential relevance to the Committee’s revived “role of natural capital in the green economy” inquiry.

Natural Capital Accounts

We continue to produce the UK’s Natural Capital Accounts, which estimate the current value of natural wealth and what it could provide for future generations, as noted in our previous update.

Widely regarded as world-leading, these accounts are produced on a consistent basis with the System of National Accounts (SNA) used to produce Gross Domestic Product (GDP) statistics, and so help to understand the links between the environment and economic statistics. Produced following UN standards and guidance, these are also broadly comparable internationally where other countries publish similar accounts.

Our latest annual release in November 2024 provides our best estimate of the total asset value of ecosystem services in the UK of around £1.8 trillion in 2022.

Building on 2023’s Principles of UK natural capital accounting, we have expanded the range of ecosystem services measured and data sources used, as detailed in our methods guide published with the annual release. For example, our latest tourism and recreation and associated health benefits estimates now include data from the People and Nature Survey for Wales, increasing our coverage to the whole of the UK.

Among ongoing methodological developments, we are working to increase timeliness of our statistics, adapting the methodology of recreation and tourism estimates to align with new data sources, improving coverage of urban heat regulating services from city regions to Local Authority level, and improving estimates of agricultural biomass provisioning, enabling us to produce enclosed farmland accounts which would be used by the Department for Environment, Food and Rural Affairs (Defra). We will also focus our development capacity on other key user needs, such as expanding service coverage to include measures such as valuing flood defence.

We also published our latest habitat-focused accounts, for woodlands, in May 2024.

The UK Natural Capital accounts are very relevant for policy development. Defra produce an annual paper covering key points for policy makers in the UK and England based on our Natural Capital Accounts. The next iteration of this is due for release in early 2025.

We are also aware of growing demand from local and combined authorities, as well as other organisations for even greater spatial granularity to support their work and policies. Elements of the natural capital accounts, e.g. air pollution and greenhouse gas regulating services, are already available at local authority level. Our intention is to add urban heat regulating services, and also to produce recreation services at England region level.

Given the increasing interest in these estimates, we are looking at the possibility of moving our natural capital accounts from statistics in development to official statistics, in 2026.

Depletion of natural resources

The upcoming revision of the SNA, due to be adopted by the UN Statistical Commission in March 2025, is for the first time expected to incorporate a measure of the depletion of natural resources in core economic metrics. This would likely to be included in Net Domestic Product, and comparing this with more widely used GDP data would provide a measure of the longer-term sustainability of the economy.

Measurement of depletion also contributes towards measurement and analysis of ‘inclusive wealth’, as outlined in the HM Treasury-commissioned Dasgupta Review of the Economics of Biodiversity. As a ‘beyond GDP’ measure, inclusive wealth is more ambitious than the SNA revision, bringing in a more comprehensive definition of natural capital, as well as human capital, to create more holistic measure of economic welfare. These measures highlight the impact of economic activity now and into the future, and potential trade-offs and synergies between resource use, depletion and regeneration and economic growth. Depletion data will support the production of adjusted macroeconomic aggregates, such as net inclusive income and wealth. The latest edition of the ONS’s work on this was also published in November 2024.

While measuring UK natural capital asset depletion presents significant methodological and data challenges, we intend to build on our initial experimental estimates published in March 2024, which focused on non-renewables: oil, gas and coal. Our ambition would be to enhance our natural capital accounts to first quantify, then regularly produce, statistics on depletion of renewable resources – fish stocks, timber, renewable energy – and to estimate the costs of restoring environmental damage due to human activity.

Measuring private investment in nature

The Committee’s 18 December 2024 evidence session touched on measurement of the nature recovery investment target. The Minister for Nature referred to ongoing discussions between the Defra and the ONS on measuring this target.

These discussions have focused on the potential to transform our existing Environmental Protection Expenditure business survey to gather the data needed to produce annual statistics of relevance to this target. Progress is subject to the outcomes of ongoing internal business planning following the 2025/26 Spending Review and the second phase of the Spending Review.

Greenhouse gas emissions estimates

We produce estimates of greenhouse gas (GHG), alongside air pollution, emissions statistics on a residence, or production, basis. These complement territorial measure – emissions that occur within the UK’s borders – produced by the Department for Energy, Security and Net Zero that is used to monitor UK emissions targets, as they are residence-based, they are comparable with a range of important economic statistics, including GDP. We regularly update our explainer article about the different UK emissions measures.

Our latest provisional estimates of annual GHG and emissions statistics on a residence (or production) basis, published on 17 October 2024, found that GHG emissions decreased by 3.8% between 2022 and 2023, having increased 1.2% in 2022, and 0.3% below the 2020 level, during the coronavirus (COVID-19) pandemic.

Having remained stable of the last couple of years, emissions intensity was down 71% between 1990 (when this series began) and 2023 to reach its lowest ever level: 0.18 thousand tonnes of carbon dioxide equivalent per million pounds of gross value added.

Our modelled estimates of quarterly emissions statistics for quarter 2 (April to June) 2024 were published on 6 November. Noting that these estimates are subject to greater uncertainty as final emissions estimates for 2023 are not yet available, these found that residence-based GHG emissions were 2.5% higher than in the same quarter in 2023.

Our estimates for Quarter 3 (July to September) 2023 are due to be published on 30 January 2025. Having developed innovative modelling to provide these more timely statistics, we are working towards securing official statistics status for these previous experimental statistics in development in this next release.

We are also looking at developing our environmental taxes work, looking at environmental subsidies, and produced deflated versions of our measures.

Measuring green jobs

Following publication of our definition of a green job in March 2023, “Employment in an activity that contributes to protecting or restoring the environment, including those that mitigate or adapt to climate change”, and initial estimates in September 2023, we published a second set of estimates on 14 March 2024.

Findings included that, using the industry approach, UK employment in green jobs in 2022 was an estimated 639,400 full-time equivalents (FTEs), up 8.4% on the 589,600 FTEs in 2021 and 19.9% higher than the 533,200 FTEs in 2020.

We are hoping to be able to publish annual green jobs estimates on an ongoing basis, following the release of our low carbon and renewable energy economy statistics in each year. We are continuing to develop the measurement of green jobs, towards increasing timeliness and accuracy, thus enhancing the evidence base on this important issue.

UN environmental economy statistical framework review

Following the process leading to the 2025 SNA revision, the UN Statistics Commission is expected to approve a revision to the current System of Environmental Economic Accounting Central Framework (SEEA-CF), targeting adoption in 2028. Adopted in 2012, this explores environment-economy interlinkages, and provides an internationally comparable approach used in our emissions and Environmental Taxes publications.

The review is intended to ensure that SEEA-CF remains responsive to emerging demands for integrated environmental and economic data. Potential work areas include linkages with SEEA Ecosystem Accounting (which our Natural Capital Accounts follow, see above); consistency with the 2025 SNA revision and harmonisation with updates to other relevant international frameworks and classifications; and strengthening links with policy the social domain.

The UK – through the ONS – is likely to be involved in the review process, potentially co-leading one of the working groups that are likely to be established, potentially focusing on issues including: classification of environmental activity; climate mitigation (net zero) and adaptation expenditure; environmentally damaging subsidies; incorporating sustainable finance into an accounting framework; and potentially extending ‘environmental activities’ beyond environmental protection and resource management.

Business & Individual sentiment & actions

In November 2024, we brought data on sentiment and responses to environmental issues from two of our rapid surveys – the Business Insights and Conditions Survey (BICS) and the Opinions & Lifestyle Survey – together in Public and business attitudes to the environment and climate change, Great Britain; 2023 and 2024. Key points from the release can be found in Annex A.

More recently, when asked about the important issues facing the UK today, during the period 6 November to 1 December 2024, 59% of adults in Great Britain selected climate change and the environment as an important issue. The other most commonly reported issues were NHS (86%), the cost of living (85%), the economy (68%), and crime (60%). Females (65%) were more likely to consider climate change and the environment as an important issue facing the UK than males (54%). The next release in this series is on 24 January 2025.

Additionally, when asked in BICS in late December 2024:

  • Nearly three in five (59%) businesses reported that they were not concerned about the impact climate change may have on their business; this is up 3 percentage points from late September 2024 and is the highest proportion reported since the question was first introduced into the BICS in September 2022.
  • 17% of businesses reported that they had taken at least one action to protect the environment, up 3 percentage points from late September 2024, but in line with late June 2024; the most commonly reported action was monitoring climate-related risks at 7%, broadly stable over the same period.
  • More than half (51%) of businesses reported that they had taken at least one action to reduce their carbon emissions, up 3 percentage points from late September 2024; the most reported actions taken were switching to LED bulbs (34%), adjusting heating and cooling systems (24%), and installing a smart meter (15%).

Note: Industries excluded from the BICS sample include those in agriculture, oil and gas extraction, energy generation and supply, public administration and defence, public provision of education and health, and finance and insurance.

Climate & Health

The ONS is also leading an international project called Standards for Official Statistics on Climate and Health Interactions (SOSCHI), with funding from Wellcome and in partnership with UKHSA and colleagues in Ghana and Rwanda. The aim is to develop a transparent and globally usable framework, with accompanying statistical methods to better estimate climate-related health risk using real-world data sources, including modelling local-level impacts. The project will help stakeholders produce high-quality data and statistics and communicate with a range of audiences. Especially in low- and middle-income countries, where the ability to monitor the effects of climate change will be increased by the provision of practical, coherent standards and open-source tools.

An overview of the project is available on the ONS website. Outputs to date include a first ‘Alpha’ version of the statistical framework and introductory papers looking at health impacts and outlining metrics for several topics including heat and cold related mortality. The project will publish its final recommendations in spring 2026 and links to international indicator development on the effects of climate change by the United Nations, the World Health Organisation and others.

Other relevant ONS publications

Our latest annual energy efficiency of housing in England and Wales release was published on 8 October 2024. Findings include that new dwellings are becoming more efficient, regardless of property or tenure type: new dwellings in both England and Wales had a median Energy Performance Certificate score of 84 in the five years to 2024, compared with 82 in England and 81 in Wales in the five years to 2013.

Other publications of potential interest to the Committee since our previous update include:

  • High emission-intensity industries (digital content) 5 December 2023
  • Impact of hot days on productivity in Great Britain (ONS Working Paper), 15 May 2024
  • Quarterly Measuring progress, wellbeing & beyond GDP Q4 – Wellbeing, climate change & nature, 14 November 2024

We also made our first ONS Statistically Speaking podcast, on “Green Data: Measuring the Environment”, available in August 2024.

As ever, we would be happy to brief the Committee further on any aspect of our work if helpful.

I am also copying this letter to the chairs of the Environment and Climate Change Committee, the Environment, Food and Rural Affairs Committee, and the Energy Security and Net Zero Committee for their information.

Yours sincerely,

Mike Keoghan

Deputy National Statistician for Economic, Social and Environmental Statistics

Annex A: Public and business attitudes to the environment and climate change, Great Britain; 2023 and 2024: key points

Using the latest data collected from adults in Great Britain in October 2024 using our Opinions and Lifestyle Survey:

  • Around 6 in 10 (57%) adults reported climate change and the environment was an important issue, compared with a recent high of 69% in July to August 2023.
  • The most common ways adults reported climate change had affected them in the last 12 months were strong winds (40%), floods (35%) and heatwaves (30%).
  • The most commonly reported ways adults expected climate change would affect them in the next 10 years were increased temperatures (65%), increased flooding (60%), stronger winds (50%), rising sea levels or coastal erosion (44%) and water shortages (40%), with around 8 in 10 (83%) expecting to be affected in the next 10 years in at least one of the ways we asked about.

When considering public attitudes to climate change by different characteristics using data collected during August to October 2024:

  • Groups of the population who appeared more likely to report climate change and the environment was an important issue included adults with a degree or equivalent (66%), working in professional occupations (67%), those living in the least deprived areas of England (61%), women (60%), those living in the South West (61%), those aged 16 to 29 years (59%) or aged 70 years and over.
  • Around three-quarters (76%) of adults reported having made changes (68% some, 9% a lot) to their lifestyle to help tackle climate change; groups who appeared more likely to report this included those working in professional occupations (85%), adults with a degree or equivalent (85%), Asian or Asian British adults or Mixed or multiple ethnic group adults (82%), women (81%), those living in London (81%), adults aged 30 to 49 years (80%) or 50 to 69 years (79%).
  • Among the 24% of adults who had not made any lifestyle changes to help tackle climate change, the most commonly reported reasons were not feeling that their changes would have any effect on climate change (42%), thinking that large-scale polluters should change before individuals (37%), it being too expensive to make changes (24%) and not knowing how to make changes (19%).
  • The majority of adults in Great Britain (74%) reported they would support (41% strongly, 33% somewhat) the creation of renewable energy projects in their local area; this proportion appeared higher among groups including those with a degree or equivalent (84%) or those in professional occupations (85%).

Using data collected during late September 2024 from our UK Business Insights and Conditions Survey (BICS) to examine business attitudes towards climate change. Note that industries excluded from the BICS sample include those in agriculture, oil and gas extraction, energy generation and supply, public administration and defence, public provision of education and health, and finance and insurance.

  • The proportion of businesses that expressed concern (very or somewhat concerned) about the impact of climate change on their business had fallen from around a third (34%) in late June 2024 to less than 3 in 10 (28%) in late September 2024.
  • Among all businesses, the accommodation and food service activities industry had the largest proportion of businesses reporting some form of concern, at 44%, with the lowest level of reported concern being reported by the other service activities industry, which includes hairdressing and other beauty treatments, at 6%.
  • Concern about climate change increased as business size increased, from 26% for businesses with fewer than 10 employees, up to 57% for businesses with 250 or more employees.
  • When asked about which risks of climate change businesses had assessed, supply chain disruption and distribution (8%) was most commonly reported, followed by temperature increases (4%) and increased flooding (4%), but the majority of businesses (74%) had not assessed any of the risks listed (other response options included coastal erosion and water security.)
  • Among businesses that had assessed at least one climate change risk, 29% reporting having acted as a result, with the largest proportion having taken action against potential supply chain disruption and distribution risks (15%).

The majority of UK businesses surveyed (79%) reported in BICS for late September 2024 that they had not been affected by severe weather events in the last 12 months.  Of the remaining 21% of businesses that reported they had been affected, storms (7%) was the most commonly reported response, followed by flooding (5%), and increased temperatures or heat, at 4%.

Among those businesses who reported they had been affected by severe weather events in the last 12 months, the most commonly reported forms of impact were weather-related damage to physical infrastructure (20%), employee absence (13%), disruption to local supply chains (9%) and disruption to global supply chains (5%), 13% reported “Other”, while around half (50%) of businesses were not sure how they had been affected.

Office for National Statistics correspondence to the Treasury Committee on labour market statistics

Dear Dame Meg,

As National Statistician and Chief Executive of the UK Statistics Authority, I am responding to your letter of 21 November regarding the Labour Force Survey.

The Office for National Statistics (ONS), as the UK’s National Statistical Institute (NSI) and largest producer of official statistics, delivers independent and relevant statistics and analysis, continuously responding and improving to ensure these are of high quality and meet user need. The ONS is delivering a programme of improvements to increase the quality of data from the Labour Force Survey (LFS). While we are starting to see the positive impacts of these recovery efforts, our continued work to stabilise the data in partnership with key users is our highest priority. Alongside this, we are progressing our strategic solution to the international fall in survey response rates and sizeable inflationary impacts, through the online-first Transformed Labour Force Survey (TLFS).

Recovery of the LFS

The sharp fall in survey response rates, a long-term trend that rapidly accelerated during and after the pandemic period, has been a significant challenge in the UK as well as for other NSIs around the world. There are many reasons for this decline, including increased cautiousness around the sharing of personal information, declining trust in government and public institutions, a reluctance to have interviewers inside homes and increased challenges accessing secure/gated properties.

The LFS involves five ‘waves’ of data collection – an initial survey interview, then eligible households repeat the survey each quarter on four further occasions to track changes in employment over time. The voluntary nature of the UK’s LFS as well as its significant length (around 45 minutes per wave per household on average) have meant LFS response rates have been more heavily impacted than other countries.

We are acutely aware of the significance of reliable labour market statistics as a source of evidence for economic decision making and that some indicators are only available from surveys such as the LFS. We do not underestimate the challenges involved with the use of data to inform the decision making of central banks in times of uncertainty, as the 2023 Bernanke Review set out.

Following the disruption of the pandemic and a period of substantial inflationary impacts with difficult prioritisation decisions, the ONS worked to re-establish high quality survey data collection, by re-introducing face-to-face data collection survey by survey, re-training interviewers and re-establishing the operation. By 2023, it was evident that societal behavioural changes as a result of the pandemic had influenced the data collection environment and were contributing to the survey quality not recovering at the rate anticipated. At its lowest point in 2023, the LFS response rate was 17.4% (UK, including imputed cases). This had significant implications for the quality of the statistics derived from the survey, resulting in the temporary suspension of the LFS as a source of labour market data in October 2023. Due to the dwindling response rates, we introduced the LFS Recovery Plan to restore the quality of its estimates, focusing on data collection improvements and methodological enhancements. The complexity of the survey and issues meant the interventions would take time to fully embed in the survey and subsequently improve the quality of the estimates.

As part of data collection improvements, we increased the targeted sample by over 50% in January 2024 from 16,700 to 25,800 new households each quarter, returning it to the levels adopted in the aftermath of the pandemic period. We increased face-to-face interviewing and the incentives for participation from £10 up to £50, with a particular focus on Wave 1 responses (our initial collection with a household). As a result, the achieved sample is now 15,000 higher than at its lowest point, an increase in the overall UK response rate from 17.4% in Jul-Sep 2023 to 24.6% in Jul-Sep 2024. We are currently recruiting an additional 150 interviewers to further support Waves 2-5.

Methodological enhancements have focused on the weighting of survey results to support quality. Weighting utilises population projections and estimates to ensure data collected from only a sample of the population produces outputs that are representative of the entire population. Population projections are usually provided once every two years but during this period they were impacted by the unusual migration pattern following the pandemic and the effects of changes to the immigration system following the UK’s exit from the EU. Therefore, the ONS introduced an additional partial re-weighting in February 2024 as well as for December 2024. LFS quarterly person data has been reweighted back to 2019 using updated population numbers. An article to illustrate the impact was published on 3 December 2024 and full results will be released on 17 December 2024. Reweighted two-quarter longitudinal LFS person outputs are expected in spring 2025. A more complete reweighting of all LFS data will follow during 2025/26, as well as Annual Population Survey (APS) data which makes use of LFS responses and additional sample boosts to deliver regional and local level statistics.

As noted above, the wave nature of LFS means data collection and methodological improvements take time to feed through fully into the estimates. Autumn 2024 has seen significant volatility and we have supported users to navigate the data uncertainty in this interim period. This includes being clear on our website, social media and broadcast media interviews on the data limitations and how they affect the use and interpretation of LFS estimates. Our expanded commentary recommends that, at this time, users make full use of all available data sources when assessing the labour market, such as HM Revenue & Customs (HMRC) data on the number of people on payrolls and the number of workforce jobs, which the ONS has developed and published. We highlight that these sources are currently likely to be providing a better read of recent trends in employment, particularly of employees.

Acknowledging the complexities of the challenges and the vital importance of these statistics to users, we have strengthened our engagement with stakeholders and channels for external challenge, support and expertise to inform our approach. We introduced a new monthly Technical Engagement Group in October 2023 with members from the Bank of England (BoE), HM Treasury (HMT), Office for Budget Responsibility (OBR) and the Department for Work and Pensions (DWP) to provide a forum to discuss upcoming developments and improvements in an open and transparent manner, which is providing invaluable input and feedback on our plans for both LFS and TLFS. In addition, in June 2024, we established a Stakeholder Advisory Panel on Labour Market Statistics chaired by Professor Jonathan Portes with representation from academics, think tanks, core government organisations and the Devolved Administrations, to provide independent advice and guidance on the production, publication, uses and application of labour market statistics and their technical aspects.

One focus has been on exploring how survey response challenges might be introducing potential bias in the LFS estimates, in particular for young people and ethnic minorities. This was considered at the Stakeholder Advisory Panel on 24 October 2024 and will be further addressed in a special session later this month that will also be attended by members of the Technical Engagement Group to assess whether any further methodological actions are necessary. We plan to extend our work on the coherence of key labour market data sources, with a further publication planned in the new year.

In summary, progress has been made in recovering the LFS with the achieved sample now significantly higher and the incorporation of the latest population information into the estimates. The major changes we have made to the LFS will be fully included through all five of the survey waves by the first quarter of next year, which will inform the LFS estimates for publication in May 2025.

Progress on the TLFS

Our long-term solution to falling response rates and quality challenges on the LFS is the development of an online-first evolution of the LFS called the Transformed Labour Force Survey (TLFS). The ambition of the TLFS is to improve the quality of our labour market statistics, provide a more adaptive and responsive survey to meet user needs and enhance respondent experience. While the online-first nature of the survey enables a far larger sample size than the LFS, to ensure quality of the survey and reduce bias, ONS field force still visit 3,855 addresses a week on the TLFS to encourage them to complete the survey, referred to as ‘knock-to-nudge’.

The ONS started a full parallel run of the TLFS alongside the LFS in October 2023 to determine whether the performance of the survey met operational and statistical quality criteria. Compared with the LFS, in this pilot the TLFS provides a larger achieved sample (quarterly datasets include more than double the number of people than LFS), a higher response rate at every wave (40% compared to 36% at Wave 1) and the potential for more stable weighted outputs. However, there was bias in response towards older age groups, higher levels of partial responses compared with the LFS, and quality issues with the online response to some more complex variables such as respondents’ occupation and the industry in which they work.

The analysis of the parallel run data for headline labour market outputs demonstrates differences in headline labour market outputs between the two surveys. While some of this difference is expected (e.g. the TLFS uses the latest labour market definitions and updated methods which differ from those on the LFS), we have a strand of work to further account for the differences and identify adaptations, working with users to understand the implications for outputs and manage how data are used in their own systems.

As part of our open approach and bringing in of external challenge and expertise around the survey design complexities, the ONS has enhanced the role of the Methodological Assurance Review Panel (MARP). Through MARP, we commissioned Professors Chambers and Brown to undertake a methodological and design review of the TLFS in April 2024. This review recommended new work on a shorter online survey with the capacity for designed modular additions, as well as the need to continue the parallel run for five quarters to assess how the surveys captured seasonal variations in the labour market. Based on this review and feedback from both internal and external users, in July 2024 we announced an extension of the parallel run of the LFS and TLFS and plans to test further design improvements within the TLFS.

Since July we have completed a series of discrete online design tests to assess the impact of a shorter TLFS questionnaire that aims to reduce average household completion time from 37 minutes to around 15 minutes. The test also included questionnaire changes to address bias, rates of partial response and collection of complex variables, as well as the use of a QR code to ease citizen response.

Early indications show positive outcomes from the design tests with some areas for development. We are now conducting a thorough evaluation and reviewing the content of the shorter survey to ensure it meets key labour market requirements whilst reducing respondent burden as much as possible. Pending evaluation of the test activity, an examination of our assumptions and engagement with our expert groups, there are several scenarios for when we are able to transition from using the LFS to using the TLFS, involving the implementation of the shorter survey and further periods of parallel run. Therefore, we cannot yet set out a firm timetable for transition but will layout potential timetables in quarter one 2025. While one scenario based on a shorter questionnaire is 2027, my ambition is to transition in 2026, with the timings being determined in collaboration with key users to ensure the TLFS meets their quality and system needs.

The development of the TLFS has provided a continuous opportunity for the ONS to learn and refine how it delivers this complex transformation project. In summer 2024, the ONS conducted an internal lessons learnt exercise including historical cultural issues. Our colleagues are committed and passionate about producing high quality labour market statistics and the exercise provided colleagues with the opportunity to contribute views with candour from across the totality of the project. A summary of the lessons learnt and the initial actions taken to address the issues is at Annex A. In particular, we strengthened technical and methodological leadership, including appointing two experienced senior colleagues to shore up analytical leadership capability. Additionally, the Director for Methodology is supporting oversight on the conditions for quality and the journey towards stability of the TLFS. We also raised awareness of channels that colleagues can use to escalate known issues and are promoting a culture that encourages the surfacing of risks and invites constructive challenge. While the report suggested a pause in development of the TLFS, the critical nature of the statistics and the decisions that flow from them means we are redoubling our efforts to improve and roll out the TLFS as soon as is practicable, with a continued focus on the wider issues raised.

International comparisons and further development

While some other countries do achieve higher response rates on their equivalent labour market surveys, many NSIs have also seen falling response rates in recent years. We are continually engaging with, and learning from, partner NSIs to boost response rates and reduce any response bias. The insights we receive from these NSIs are contributing to the ongoing evolution of TLFS design, specifically on the shorter survey, which harnesses the benefit of large-scale, online, self-completion.

The Independent Review of the UK Statistics Authority (the Authority) conducted by Professor Denise Lievesley earlier this year recommended that the Authority explore the consequences of mandatory completion of the LFS. Mandating would align with the census and business surveys and is akin to the civic duty of undertaking jury service. A move to mandating responses to the LFS would require legislation (as is the case for census and business surveys) and is not something the ONS can consider alone. We welcome a broader national conversation about the importance of citizens being represented in the country’s statistics and championing the value of data as critical national infrastructure.

Given the strategic challenges that surveys are facing, we are establishing a new Surveys Innovation Hub, expanding our portfolio of surveys research and are continuing to work closely with the Economic and Social Research Council (ESRC) funded Survey Futures project. On Survey Futures, the ONS is collaborating with other survey providers to explore the feasibility of using names and contact details to cross-reference with our address database to make contacting individuals easier. We are conducting a suite of research to improve our ability to reach the public, build trust and gain consent to overcome barriers to completion of our household surveys. We are also exploring the use of alternative data sources in our end-to-end survey design, for example enabling us to adapt our samples and focus operational effort on contacting those population sub-groups that are typically less likely to engage in our surveys.

The common picture across many countries, and the UK’s survey sector (public and private) as a whole, of falling response rates suggests that we can no longer rely on surveys alone. While there are some questions that only can be accurately answered by large surveys, such as the distinction between unemployment and inactivity, we have already begun publishing other data sources to build a fuller picture of the labour market. The Integrated Data Service (IDS), a functioning cross-government hub that allows full value to be extracted from data collected across the public sector and beyond, will seek to identify, share and link securely these and other data sources across government to further build our understanding of the labour market. LFS data and HMRC tax data (PAYE RTI) were linked through the IDS in November 2024 and this integration of survey data and administrative sources will be used to inform labour market quality assurance and survey methods. More effective sharing of de-identified administrative data across government will further improve the quality of statistics and evidence to support national and local decision making.

Working in partnership with our key stakeholders, and learning from other countries, we will extend our exploratory work on integrating survey and administrative data to produce a holistic picture of the UK’s labour market. This includes our plans to produce Labour Market Accounts, which aims to provide a comprehensive understanding of the UK’s labour market through the optimum balance of survey and administrative data.

Resourcing

As with other parts of the public sector, the Authority’s funding position throughout the Spending Review 2021 (2022/23 to 2024/25) has been one of constraint overall, including flatlined core funding, ring-fenced budgets, and substantial inflationary impacts. Operating within our budget in this context has led to difficult prioritisation decisions and the need to deliver efficiencies and cost savings across the organisation. Our efficiency and cost savings figure was approximately £11.4m for 2022/23 and £17.8m for 2023/24. We plan to deliver an estimated £12m in efficiencies and cost savings in 2024/25 taking the cumulative impact for the Spending Review 2021 (SR21) period to over £40m.

The work to prioritise activity and reduce costs started in 2022/23 and continued through 2023/24, impacted by the cost of increased colleague salaries and a notable inflationary effect on our cost bases, including through surveys. Significant cost saving measures to remain affordable, the need to dual run the LFS and TLFS and restrictions from ring-fenced budgets curtailed our ability to use the totality of organisational funding and dedicate the resources we would have ideally wanted to our social surveys operation.

The survey recovery plan in late 2023 set out how existing resources could be utilised to pivot to support the LFS/TLFS and other surveys to start to redress the downward trend. Given the skills and capabilities required to drive improvements and the scarcity of options, we further prioritised within the survey workforce. Simultaneously we set out our plans and a request for additional finance to HMT for the Surveys Quality Recovery Plan 2023/24, which was supported and the funding made available.

Prioritisation of surveys recovery formed a key component of our recent Spending Review 2025 (SR25) Phase 1 submission. Whilst funding for 2025/26 will remain at the same level as 2024/25 (flat cash) as part of our financial objectives we have been supported in significantly reducing the level of ring-fenced funding we receive as a proportion of the whole. This added flexibility will be vital for us in being able to pivot resources at pace in future and enables us to implement an LFS sustainability plan.

Throughout 2023 and 2024, the ONS’s three highest field data collection priorities have consistently been the labour force surveys (LFS and TLFS parallel run) and the Living Cost and Food Survey. Our decisions to not reapply for the contract to collect data for the National Survey for Wales for the Welsh Government in March 2023 and reduce interviewer resource on its financial surveys in February 2024 (including pausing the Survey of Living Conditions) reflect these priorities. Other surveys have also seen reduced support.

The additional investment allocated in the last year to recover the LFS and the ONS’s wider social surveys is enabling significant field interviewer recruitment. Our permanent face-to-face field interviewer community has grown from 477 (Dec 2023) to 544 (Nov 2024). Within the same timeframe we have also built up an agency workforce of 130 temporary field staff specifically to complete the ‘knock-to-nudge’ function on the TLFS, which releases an equivalent number of fully trained interviewers to support recovery across ONS’s social surveys. Compared with the 145 interviewers in October 2023, in the last month 275 face-to-face interviewers have worked on the LFS (across all waves). Recruitment continues, with a further 28 interviewers confirmed to start on the LFS in December to support improvements in Waves 2-5 response and recruitment ongoing to deliver the full requirement of 457 face-to-face interviewers across all LFS waves by the end of March 2025.

As an organisation, we fully comprehend the critical importance of high-quality labour market statistics and recognise the significant impact the response challenges are having on the reliability of data informing our key outputs. We are confident that by continuing to seek out internal and external challenges and expertise, progressing the improvements already made and delivering the solutions outlined above in partnership with our key stakeholders, we will be able to recover the quality issues with the LFS and continue our progress towards transition to the TLFS. Achieving a successful outcome from these programmes of work is the top priority for the ONS.

Yours sincerely,

Professor Sir Ian Diamond

 

Office for National Statistics follow-up correspondence to the Work and Pensions Committee on Defined Benefit pension scheme funding

Dear Ms Abrahams,

Firstly, congratulations on your appointment as Chair of the Work and Pensions Committee. I previously responded to a letter from your predecessor, Sir Stephen Timms MP, on Defined Benefit (DB) pension scheme funding at the beginning of this year. I wanted to write to update you on progress made on these statistics, prompted, in part, by the Committee’s interest in them.

The Work and Pensions Committee previously recommended that the Office for National Statistics (ONS), The Pensions Regulator (TPR) and the Pension Protection Fund (PPF) should reach an understanding of the funding position of DB schemes and publish the results. We note that the Secretary of State for Work and Pensions wrote to you with an update that the Department for Work and Pensions (DWP) is working to provide a full response to the report on this topic in the new year.

The ONS, TPR and PPF have worked alongside each other for many years, with increasing closeness since autumn 2022, to understand the differences between our respective datasets on DB pension schemes. Tomorrow, the ONS will publish a joint statement with TPR and the PPF to acknowledge and summarise the different approaches taken to both data collection and how the data are used by the three organisations, making this as clear as possible to our users and stakeholders. We will continue working together on an ongoing basis and expect our datasets will show greater alignment in future based on our collaboration and proposed changes.

Please do not hesitate to contact us if any questions.

I am copying this letter to Sir Stephen in his role as Minister for Social Security and Disability at the Department for Work and Pensions.

Yours sincerely,
Rebecca Richmond
Deputy Director, Financial Sector Accounts and Corporations

Office for National Statistics correspondence to the Welsh Parliament’s Finance Committee on quarterly growth data for Wales

Dear Mr Griffiths, 

Thank you for your letter of 4 October related to quarterly growth data for Wales. 

The Office for National Statistics (ONS) made the decision to pause the publication of our Quarterly Regional GDP (QRGDP) publication due to concerns raised by users regarding the quality and volatility of the estimates. This was announced on 7 July 2023, after the last publication and estimates were released on 18 May 2023.  

Before announcing the pause to the QRGDP publication, the ONS discussed the issue with the Welsh Government, as well as other stakeholders. Recognising the potential data gap caused by pausing QRGDP, we agreed to continue with the production and delivery of the Welsh Short-Term Indicators (WSTI) to provide quarterly data for Wales. WSTI and QRGDP differ in terms of source data, the coverage (QRGDP also covers English regions) and the constraining process (where QRGDP is constrained to Annual Regional Accounts and Quarterly National Accounts) to ensure consistency. 

These estimates had previously been funded entirely by the Welsh Government, but we agreed to fund the production and analysis of these estimates, with Welsh Government funding the data collection element, from 2023 Q2 delivery onwards. WSTI has continued to be delivered on a quarterly basis during the pause of QRGDP and is published on the Welsh Government website. 

In the meantime, the ONS have been working with the independent Economic Centre of Excellence (ESCoE) to review the methods for QRGDP and how these data are aligned to national estimates. This review is nearing completion, and we will consider its findings with a plan to bring back QRGDP as soon as is feasible. The ONS will keep this Committee, as well as other stakeholders, updated during this time to provide details on progress and time scales as they become clearer. 

Yours sincerely, 

Ian Diamond, National Statistician