Declined To Quantify

Amy Borrett and Sam Fleming writes:

Long-term sickness may be keeping fewer Britons out of work than previously thought, the Office for National Statistics said, citing early estimates from its overhauled survey of the UK labour force.

In an update on Tuesday, the statistics agency said estimates of types of economic inactivity were responsible for the “largest differences” between its current survey of the labour market and the so-called Transformed Labour Force Survey.

The latter, which the ONS is now aiming to fully introduce at the end of next year, is showing lower levels of inactivity due to long-term sickness than the existing Labour Force Survey, which is used to produce the UK unemployment figures, it said.

The ONS declined to quantify the differences but the findings mirror a 2024 report from the Resolution Foundation think-tank, which concluded that a sharp drop in response rates had led to “an overly pessimistic picture” of the UK jobs market.

The scale of the issue will not be known until the ONS publishes more detailed analysis next year. This is a blow to policymakers who rely on the survey for employment data and to Bank of England officials who use it as a key factor in interest rate decisions.

James Benford, the ONS director-general for economic statistics, said the ONS had changed its survey design to help improve its estimates of why people are out of the workforce.

He said early indications suggested the TLFS was giving “a more clearly defined and lower estimate” of the number of people reporting being long-term sick.

However, the ONS said it needed to conduct more analysis of the estimates as the two surveys use different definitions of long-term sickness.

The ONS has been struggling to repair long-running problems with the existing jobs survey, including a falling response rate. This fell abruptly when Covid lockdowns disrupted face-to-face interviews and stood at 25 per cent in the first quarter of this year.

The ONS said the TLFS was showing “improved performance” with higher response rates, fewer surveys that are only partially completed, and a marked decline in the amount of time required to respond to the questionnaire.

It will decide midway through next year whether to give the green light to a long-delayed switch to the TLFS as the basis for official employment and economic inactivity figures.

Hannah Slaughter, an economist at the Resolution Foundation, said an assessment of the significance of the discrepancies would have to wait for the publication of the underlying data from the TLFS. But she stressed that other indicators point to long-term sickness being a genuine problem and not just a “data quirk”.

“If this is a better measure and long-term sickness is lower that is a good thing — we all want a healthy population — but given the other measures on ill health this is not a reason for policymakers to think it is not an issue.”

Benford was appointed last June to help lead a turnaround at the ONS in the wake of a series of damaging errors in critical economic indicators. He has been working on plans to cut the statistical output to focus on quality over quantity, prioritising investment in a small number of core, market-sensitive datasets.

The UK government has still not appointed a national statistician, more than a year after Sir Ian Diamond stepped down from the role.

The ONS said that the cost of running two surveys on the labour force simultaneously was “increasingly constraining data quality and limiting the ONS’s ability to invest in wider statistics improvements”.

Warnings about budget pressures come as the agency scales up its work on the 2031 census, which will be more costly than expected after the ONS was forced to abandon plans to switch to admin-based estimates last year.