Fears are mounting over the impact of data reliability issues at the Office for National Statistics (ONS) on Chancellor Rachel Reeves’s upcoming autumn budget, according to sources familiar with the matter. Staff at the Treasury and the Office for Budget Responsibility (OBR) are struggling to obtain a clear economic picture due to problems at the ONS, which has delayed or cancelled several key releases.
Insiders at the OBR believe it may have to again highlight “significant uncertainty” in its forecasts because of poor official data, as it did in March. The OBR’s forecasts are crucial for the budget process, as they determine the headroom the chancellor has against her fiscal rules and influence tax and spending decisions. Economists warn that unreliable data risks Reeves making “missteps” on tax and spending.
The ONS’s labour force survey, the official measure of employment, has been beset by plunging response rates since the Covid pandemic. This week, retail sales data was postponed for two weeks for “further quality assurance”, while household wealth data has been downgraded and is no longer treated as “official”. One source said: “We are, to a significant extent, flying blind on major areas such as the jobs market.”
Bank of England Governor Andrew Bailey earlier this year described it as “critical” that these issues are addressed. In April, OBR head Richard Hughes told MPs the forecaster was relying on a “panoply” of alternative data due to quality issues and frequent revisions. Ruth Gregory of Capital Economics said inadequate data could lead Reeves to cut spending or raise taxes unnecessarily at the autumn budget.
The ONS has faced harsh public criticism over “deep-seated problems”, and earlier this month former top Cabinet Office official Darren Tierney was appointed as its new chief executive. No date has been set for the autumn budget, but the chancellor must give 10 weeks’ notice for the OBR to produce its forecasts.
