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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

Office for National Statistics follow up correspondence to the Lords Economic Affairs Committee on labour market statistics

Dear Lord Bridges,

Firstly, David and I wanted to thank you for the opportunity to discuss labour market statistics with the Committee on 23 April. During the session we promised to follow-up on several areas of interest to the Committee.

How household composition has changed since before COVID-19

During our discussion, we said that we would revert with further information we have on how household composition has changed since the start of the COVID-19 pandemic. This was in response to a point raised by Lord Blackwell who asked if there is any evidence that more young people are living at home with their parents since the start of the pandemic.

The ONS produces a report called Families and Households in the UK. This release includes tables looking at the prevalence of different types of households, including the number of households with dependent children and households that have non-dependent children only. This report does not show a significant change in the mix of households by type or size since the start of the pandemic. There has been a recent change in family type between couples being married or not married when there are no dependent children in the family, with unmarried cohabiting couples slowly on the increase when there are no dependent children. However, this does not affect the household composition relating to non-dependent children. Longer term trends can also be found in analysis comparing the 2021 Census with the 2011 Census.

Economic inactivity in Scotland

Whilst discussing how inactivity varied between the nations of the UK, Baroness Liddell asked for some further information on the economic inactivity picture in Scotland specifically.

The ONS publishes information on the comparative labour market situation in each of the regions and countries of the UK in its monthly report, Labour market in the regions of the UK. The proportion of people aged 16 to 64 years in Scotland who are economically inactive, tends to be one or two percentage points higher than the UK average, but generally moves in the same ways.

Of those who are economically inactive, Scotland tends to have a higher proportion than the UK of those who consider their main reason for inactivity to be long-term sickness or disability. Conversely, Scotland tends to have a lower proportion economically inactive because they are looking after the family or home. Scotland also has a higher proportion of the economically inactive who consider themselves to be retired. Scotland also has a lower proportion of men who are economically inactive due to being students than the UK as a whole, although the proportion of women is comparable.

International comparisons of economic inactivity

Baroness Wolf raised whether the United Kingdom could be considered an “international outlier” when it comes to economic inactivity. I wanted to provide some further detail on this point.

Even though the UK maintained relatively strong employment throughout the pandemic, the UK is the only country within the G7 with employment rates below pre-pandemic levels and economic inactivity rates above pre-pandemic levels.

The economic inactivity rates for France, Germany and Italy are well below pre-pandemic levels as well as those of Canada and the US. Further information is contained in the annex to this letter.

Please do let us know if any other questions, and if we can help the Committee further on either this topic or any of its other inquiries.

Yours sincerely,

Mike Keoghan

Deputy National Statistician for Economic, Social and Environmental Statistics

 

ANNEX

International Summary

The UK maintains relatively strong employment within the G7 and all countries in the OECD dataset throughout 2021 and 2022. However, the UK remains the only G7 country with employment rates still below pre-pandemic levels (down 1.1%).

While the UK has seen unemployment rates above pre-pandemic levels for prolonged periods, it is now largely unchanged compared with pre-pandemic levels. Recently, the UK had seen the highest rise in unemployment since before the pandemic out of the G7 countries, however now we are down in 4th, with Japan, the United States and Canada all above their pre-pandemic levels. The other G7 countries are below their pre-pandemic unemployment rates.

Pre-pandemic, the UK had relatively low economic inactivity rates compared with other countries. It is now the only G7 country where the economic inactivity rate is still above pre-pandemic levels (1.1 percentage points above pre-pandemic rates).

Looking at it more broadly, the OECD members collectively have generally seen a growth in employment rate, and a decrease in unemployment and inactivity rates since the pandemic; with the UK performing in mostly the opposite direction to its fellow members.

OECD employment, unemployment and economic inactivity rates

EmploymentUnemploymentEconomic Inactivity
CountryPre-pandemic rate (Q4 2019)Q1 2024*ChangePre-pandemic Rate (Q4 2019)Q1 2024*ChangePre-pandemic Rate (Q4 2019)Q1 2024*Change
Canada74.675.00.55.75.90.220.820.0*-0.8
France66.768.3*1.68.27.5*-0.727.326.0-1.3
Germany75.877.3*1.63.23.1*-0.122.120.1*-1.9
Italy59.062.1*3.19.67.3*-2.334.632.9*-1.7
Japan78.179.11.02.32.50.220.018.7-1.3
United Kingdom76.175.0*-1.13.93.8*0.020.821.9*1.1
United States71.772.00.33.63.80.225.625.1-0.5
EU Average68.070.6*2.66.66.0*-0.627.024.8*-2.3

*Where Q1 2024 figures are unavailable, Q4 2023 figures have been used.

For comparability UK data shown here are sourced from the OECD and may differ from ONS published data as OECD do their own seasonal adjustment

Data are sourced from OECD – Employment is 15-64 (UK/USA is 16-64) and Unemployment is 15+ (UK/USA is 16+)

Office for National Statistics follow-up written evidence to the Welsh Affairs Committee inquiry on the impact of population change in Wales

Dear Mr Crabb,

I write following my appearance in front of your Committee on 6 December 2023 with my colleague Jen Woolford, as part of the Impact of Population Change in Wales inquiry, and your subsequent letter dated 22 February 2024. I have addressed the queries raised during the session and in the letter in turn.

Population Age and Economic Growth

During our discussion, the committee asked if a “Younger population always positively correlated with economic growth” and I agreed to share some further information on this topic.

There is evidence that average population age tends to be lower in cities and larger towns, and higher in smaller towns and rural areas.  For example, as outlined above the median population age of local authority districts in Wales range from 34.4 years in Cardiff in mid-2022, to 51.1 years in Powys. However, in terms of economic growth there is not a straightforward statistical relationship between population age (or type of area) and economic growthTo illustrate, the highest economic growth rates between 2011 and 2021, did not occur in Wales’ major cities (where population is youngest), but instead occurred in the local authorities of Pembrokeshire, Flintshire, and Merthyr Tydfil. The lowest economic growth, did occur in relatively rural local authorities with older populations, namely Ceredigion, Gwynedd, Isle of Anglesey and Powys.

The reason why there is not a direct correlation between age and economic growth is that there are a wide range of different factors that can influence economic growth. These will vary by place but can include, for example, an area’s industry mix, its levels of business investment, recent infrastructure improvements and changing consumer demands amongst many other factors.

Economic Inactivity

Rob Roberts MP asked me how the levels of economic inactivity in Wales compare to other parts of the UK.

Mr Roberts quoted that in Wales, 33.8% of working-age people were economically inactive because of long-term sickness. The figure of 33.8% shows that of those who were economically inactive, 33.8% were economically inactive due to long-term sickness, with the remaining 66.2% economically inactive for other reasons.

At the time of the quoted 33.8%, only 23.8% of the population of Wales aged 16 to 64 years was economically inactive. Of these 33.8%, or just over one third were economically inactive due to long-term sickness. Therefore, this represents 8.0% of the whole population aged 16 to 64 years who were economically inactive because of long-term sickness. For the period October 2022 to September 2023, 7.6% of the population of Wales aged 16 to 64 years were economically inactive because of long-term sickness.

Generally, Northern Ireland has the highest percentage of the population who are economically inactive because of long-term sickness, with recent rates in excess of 9% of the population aged 16 to 64 years. Wales tends to be in a group with Scotland, and the North East and North West of England with rates around 7-8.5%. Below this there is a group at around 5.5-6.5% consisting of Yorkshire and The Humber, and the East and West Midlands. Then the East of England, London, South East and South West have the lowest rates at around 4-5%.

Areas of Significant Population Change

During the session, it was discussed if there were any areas in Wales that stood out as having particularly significant levels of population change. Between mid-2011 and mid-2022, the local authority district in which the population is estimated to have increased the most is Newport, where the population increased by 10.8%. Cardiff (7.7%) and Vale of Glamorgan (5.4%) were the only other local authority districts in which population growth exceeded 5% over this period.

Between mid-2011 and mid-2022, there were six local authority districts in which the population is estimated to have decreased. These are Ceredigion (-4.9%), Blaenau Gwent (-4%), Gwynedd (-3.2%), Caerphilly (-1.5%), Isle of Anglesey (-1.2%) and Conwy (-0.9%).

Welsh Speaking Population Change

You asked what Census 2021 data indicated that the number of Welsh speakers in Wales is falling and any data that offers insight into changes in the Welsh speaking population. According to Census 2021, there were around 538,000 people aged three years or older reported as being able to speak Welsh in Wales, or 17.8% of the population.

This is the lowest percentage ever recorded in a census, driven largely by a decrease in reported Welsh speaking among children and young people. Although the percentage of the population able to speak Welsh decreased overall, there has been a slight increase in the percentage of people who can speak Welsh in the young adult groups (16- to 19-year-olds and 20- to 44-year-olds), with decreases in the older age groups.

The percentage of people aged three years or older who can speak Welsh fell between 2011 and 2021 in all of the 22 local authorities in Wales, except in Cardiff, the Vale of Glamorgan, Rhondda Cynon Taf and Merthyr Tydfil. Furthermore, all local authorities saw a decrease in the percentage of 3 to 15-year-olds reported as being able to speak Welsh between 2011 and 2021. The decreases for these age groups tended to be greater in areas with a lower density of Welsh speakers, such as in Blaenau Gwent, Newport and Torfaen.

Information about Welsh language skills in the census is based on a person’s self-assessment of their ability. In some cases, especially for children, Welsh language ability was reported by another person, for example, a parent or guardian. Census 2021 was held during the coronavirus (COVID-19) pandemic, on 21 March 2021. This followed periods of lockdown, remote learning for children and many people were working from home. It is not known how the pandemic may have impacted reported Welsh language ability (or perception of the Welsh language ability of others).

Alongside this letter, we have included a spreadsheet that details the change in the number and percentage of Welsh speakers by local authority and age band by comparing Census 2011 data to Census 2021 data.

Community Crisis Point

The Committee also asked us if the ONS has data indicators that can “identify definitively when a community reaches a crisis point”. Generally, this is a very complex question that ONS data alone could not answer. The topic and question would possibly be more holistically explored by local communities and academic experts in this field.

However, on the specific issue of second homes, our data can provide some insight. As part of Census 2021 the ONS has published data on the number of vacant and second homes in England and Wales. Unfortunately, this data is not comparable with 2011 data, so it is not possible to directly compare over time.

The Welsh Government regularly releases council tax dwellings statistics which include information about second homes and did an in-depth look at the variety of statistics available for Wales in the Second Homes: What does the data tell us? publication. ONS works closely with our colleagues in Welsh Government and elsewhere to provide data and statistics that can be used to provide evidence on priority housing topic areas such as second homes.

I hope this evidence is useful to the Committee. Please let us know if there is anything further we can provide as the inquiry continues, or on any other matter.

Yours sincerely,

Emma Rourke

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

Dear Sir Stephen,

Thank you for your letter of 13 December 2023 regarding Defined Benefit (DB) pension scheme funding. I am delighted to see the Committee’s interest in these statistics, following on from the work we have done to redevelop the survey. To take your questions in turn:

  1. Whether we have anything to add on the reasons identified by the PFF for the divergence between their estimates and on the value of DB scheme assets and those published from ONS’ Financial Survey of Pension Schemes (FSPS).

The current sample used in the survey began being used in Quarter 2 (April to June) 2022. However, as the FSPS is a quarterly survey, we have collected data from these schemes for more recent time periods, with our most recent bulletin covering data for January to March 2023. The FSPS captures data on asset allocations by type of instrument for private sector defined benefit and hybrid pension schemes, including estimates of LDI pooled fund holdings. These are included in the data tables published alongside the bulletin.

  1. Whether we plan on producing estimates of scheme funding levels in the future.

We collect and publish data on total assets, the net derivatives balance and non-pension entitlement liabilities but do not currently publish data on pension entitlement liabilities. We have an established work programme that recognises the demand for increased insight into UK funded occupations pensions and will explore the possibility of publishing these estimates to provide a full picture of scheme funding levels. This data will be subject to quality assurance and disclosure processes which may limit what we are able to publish.

  1. Whether the FSPS is able to estimate how much of the decline in asset values is due to market disruption, rather than a reflection of asset/liability matching strategies.

The FSPS also collects data on transactions, including acquisitions and disposals, realised and unrealised gains and losses by type of instrument, and investment income data which may provide additional insights into the questions asked by the Committee. We will explore the possibility of publishing this data, subject to quality assurance and disclosure processes. The survey does not directly ask pension schemes about their investment strategies.

Please do not hesitate to contact us if there are any further questions.

Yours sincerely,

Rebecca Richmond

Deputy Director, Financial Sector Accounts and Corporations