“Holidays are to be taken – and enjoyed,” declared the dictatorial memo from my employer decades ago. While enjoyment cannot be enforced in that way, the thrust of the instruction has long been pointless: the British already take plenty of rest.
But it seems that our national statisticians failed to understand this and, as a result, set battalions of economists, business theorists and politicians agonising over what became known as Britain’s “productivity puzzle”. Why, oh why, did British workers seem to produce less economic value, per hour worked, than workers in other countries? It was a mystery.
But it now turns out that the many hours of investigation and pontification devoted to solving this puzzle have been wasted. Brits were not less productive. They just worked fewer hours than the bean counters reckoned. It turned out that the “productivity puzzle” didn’t exist.
This would have come as no surprise to Americans, who’ve always regarded UK holiday allowances as extraordinarily generous. But, for years, the Office for National Statistics missed this basic aspect of the productivity equation.
What this means is that, in the decade after the 2008 financial crash, instead of producing minuscule average productivity growth of 0.7%, the real number for the UK was more like 1.3%, and has continued to hover at around that level.
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On one level, this may be of only marginal interest: the actual economic output of the country is not changed by the revision of the productivity numbers. But official statistics matter because of the extraordinary reliance put on them by governments and financial institutions.
Significant conclusions on the health of economies – and countries – are taken on the basis of these numbers, yet they are not reliable. Despite the fact that the figures are regularly revised, they are accorded a ludicrous degree of authority.
Last year, questions were raised over some ONS numbers, particularly relating to the labour force. The head of the organisation resigned – for health reasons – and yet the numbers continue to flow and continue to be taken seriously.
Public confidence is gauged by the strength of retail sales figures. Yet these are derived from a monthly survey of 5,000 businesses, run by people who won’t have the time to fill in the necessary forms.
As for the trade figures, on which weighty national decisions may be based, they provide a fascinating glimpse into a world long gone, rather than one being shaped by AI. The categories still listed include data on the production of “gimped horsehair yarn”, “mechanical street organs” and “travelling menageries”.
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Clearly, national statistics are in need of an update. But so too are our attitudes towards them. Successive governments promise they are intent on finding growth. If they want that, then they need profits that generate higher earnings and more tax revenues.
As he tussles with how far to address this in his budget at the end of this month, chancellor John Healey has little room for manoeuvre. But he should try to avoid the traditional ritual of his predecessors, in which they reel off forecasts for the years ahead as if they will be achieved. They are projections based on a series of potentially deeply flawed premises – and yet they will instantly become a national preconception. And that is a dangerous thing.
