I have just read The House of Commons Treasury Select Committee First Report on the Office for National Statistics, and there are three points to which I would like to draw your attention.

First, the report discusses the communication between the Bank, the Treasury and the ONS in the period leading up to the publication of the rebased earnings data on 14 October. It states that the Committee is "dismayed that the Bank, the ONS and the Treasury were all aware of the programme of work which had been in train for many months yet concerns over the figures were only raised the day before publication" (paragraph 27).

We had of course been aware for some months that new weights would be used to aggregate the data collected across industries and different sizes of firm from October. However, the ONS were clear that their own analysts would not be able to predict the effects of the changes until very close to publication. We were therefore unable to raise any concerns until we saw the rebased data 36 hours prior to publication, in line with their code of practice.

Second, the Committee appears to misunderstand the structure of the review set up by the Chancellor after consultation with myself. Sir Andrew Turnbull and Mervyn King were asked by the Chancellor to conduct the inquiry reporting to him. They, in turn, asked Martin Weale, an independent expert in economic statistics, to carry out an investigation, supported by Peter Sedgwick, a senior Treasury official, who were asked to cover methodological and managerial issues. It is not clear to me that there is anything inappropriate about this structure or Mervyn King's position. (The Committee "remained to be convinced that it was wise for . . . Mr King to be involved in reviewing managerial issues in the ONS" (paragraph 25).)

Finally, the report says: "We are aware that Mervyn King has not yet attended any meetings of the Statistics Advisory Committee (SAC) of which he is a member" (paragraph 27). This is in fact true but I am not clear as to its relevance. The Statistics Advisory Committee is not concerned with operational matters, such as the rebasing of the average earnings index, or the management of the ONS. Mervyn wished to resign from this committee a year ago, because its meetings regularly clashed with other commitments. However, Tim Holt, after consultation with the Chancellor, asked Mervyn to stay on the committee in order to contribute by reading and commenting on the committee papers.

17 December 1998