Fact or Fiction: Who owns the information?

The ONS, OBR, and IFS are talked about alot during Budgets and forecasts – but who really owns the facts?

This week’s Knowledgeshop looks at who really owns the facts? The Office of National Statistics, the Office of Budget Responsibility, and the Institute for Fiscal Studies are organisations we hear bandied about a lot when the Government talks about Budgets and forecasts – but who are they and what exactly do they do? And how are their facts and figures feeding into the big claims being made about our future in or out of Europe?

Lies, damned lies and statistics

The Office of National Statistics (ONS) is the UK’s largest independent producer of official figures and measurements. It collects data, provides analysis and publishes statistics that cover the UK economy, population and civil society.

After legislation pushing for the organisation’s independence appeared in every major party manifesto in 1997, it was finally made autonomous in 2006 by Prime Minister Gordon Brown. A non-ministerial department staffed by civil servants, it has aimed to improve public trust in official statistics. It adheres to a National Statistics Code of Practice and is scrutinised by the UK Statistics Authority (UKSA). The UKSA is directly accountable to Parliament and replaced the oversight role the Treasury previously played.
The ONS has come under fire in the past. Shortly after the banking crisis of 2009, it made the controversial decision to not include any ‘temporary operations’ in its figures – this included emergency measures of nationalising banks and providing liquidity support, huge parts of the British finances.

“I was much more comfortable with the data in Canada”
Mark Carney, Bank of England

A few years later, early into his career at the Bank of England, Governor Mark Carney openly criticised the institute’s quality of data and ex-Governor Sir Charlie Bean agreed, believing that the ONS hadn’t grasped the opportunities coming out of the ‘Big Data’ revolution.

Let’s get fiscal

The Institute for Fiscal Studies (IFS) is an economic research institute with an interesting history and powerful presence. Founded by financial professionals in response to what they believed were ‘half-baked’ proposals by the then Chancellor James Callaghan, it aimed to focus on the data behind taxation and public spending.

“It is quite extraordinary that it is regarded as the ultimate authority”
Robert Peston, ITV

The IFS enjoyed extraordinary growth during the 1980s and 1990s by offering rapid and comprehensive responses to the Government’s Budget. Mainstream media outlets began to see it as fairly fiscally conservative, but increasingly an arbitrator of economic fact.

Their speed at making sense of complex fiscal events and their media shrewdness in creating a Budget ‘narrative’ and a strong storyline for journalists has permitted the IFS considerable sway over policy decisions. Osborne’s back down on tax credits, for example, came in part from a damning assessment from the IFS.

However, some see the IFS as an organisation incentivised by publicity to pick holes in the Budget. Others see it as far too focused on the minutia of data and the Budget’s ‘winners’ and ‘losers’, drawing discussion away from the bigger picture. The Spectator has also argued that it is unsurprising that it favours ‘meddling by the state’, as it is funded by research grants coming from tax money. It certainly is very influential commentator in British life, but without the oversight that applies to formal government bodies.

Budgeting responsibly

Often cited in the annual Budget, the Office of Budget Responsibility (OBR) has a short but controversial history. Created formally after the 2010 General Election, it had been around in ‘shadow’ form for the opposition for a number of years. Many saw it as the Government’s attempt to create an internal counterpart to the IFS and it is currently headed up by Robert Chote, formerly IFS Director.

Since its origin, it has since become a core part of Mr Osborne’s cost-setting. It regularly organises the spending around important political decisions. In the 2015 Autumn Statement, for example, a small change in the OBR’s deficit forecasts enabled the Chancellor to find the funding necessary to U-turn on highly contentious cuts to tax credits.

As a result of this, it has faced consistent scrutiny over its independence. A 2016 Parliamentary inquiry into the scope and performance of the OBR revealed widespread concerns across the Treasury Select Committee about ministerial interference. This focused around Treasury pressure on the content of reports, the ability for Ministers to see reports pre-release and the OBR’s general reluctance to provide additional information. The Select Committee also took issue with a review by the HM Treasury led by Sir David Ramsden that, amongst other things, focused on the idea of the OBR ‘costing’ manifesto pledges. George Osborne was known to oppose this particular idea, and, not surprisingly, the senior Treasury official Ramsden agreed.

Fact, fiction and the EU referendum

The strength of economic facts has been a source of much debate in the referendum on the European Union, where economic forecasts and analyses have been ten a penny.

In terms of ‘fact-checking’– it’s a bit of a minefield.  The Chancellor released his Treasury Analysis on 18th April, announcing that the UK households will by worse off by £4,300 a year. It was welcomed by some, but roundly criticised by others for looking far into the future. Channel 4 News’ ‘Fact Check’ commented that the estimate was an over-simplification – looking at the number of households in the UK now and not appropriately defining the difference between income and GDP.

The Bank of England Governor Mark Carney has also spoken out tentatively about the danger of a Brexit to UK financial stability, professing it was his duty, not politics, to draw attention to major economic risks.

The UK in a Changing Europe, supported by the Economic and Social Research Council and based at King’s College London, and Full Fact have been praised as impartial and independent fact-checkers – but others, like In Facts, that seemingly look to offer independent information are guided by the mission statement of “making the fact-based case for Britain to remain in the EU.”

During the EU referendum debate, the ONS, OBR and IFS have continued to play a key role in the conversation around the facts and figures, struggling to maintain their various degrees of independence. George Osborne was caught out twisting OBR predictions on Brexit to suit his world view. The UKSA chair has also worked hard to resist pressure from Leave and Remain camps and announced they will publish the details of the number of EU migrants paying tax and claiming benefits in the UK. The IFS have also waded in, taking the opportunity to estimate the UK’s contribution to the EU and backing the Chancellor’s £4,500 loss a household claim.

According to a poll last year, just 16% of Britons trust politicians to tell the truth, one of the most significant lows over the last 30 years. Another survey stated that a majority (81%) of the British public trust official statistics. Quoting data to back up their claims has become a way for politicians to boost their credibility and ‘sell’ their policies, with the current Conservative Prime Minister and Chancellor particularly adept.

However, when it comes to the ballot box – it seems that the facts may not make a difference. A US study found that almost 90 percent of the change in voting intention can be explained by people’s emotional response. In the run-up to the 23rd June, although it will be particularly important for those truly impartial to have their voices heard, the public are likely to vote with their hearts, not their heads.