Independently advising on official statistics

Annual Report 2005-06

Presented to Parliament by the FinancialSecretary to the Treasury by Command of Her Majesty

July 2006

Statistics Commission Annual Report 2005-06

Cm 6857 £15.40

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This report is also available on the Commission’s website at: www.statscom.org.uk

Contents

Chapter 1: Chairman’s report 05Chapter 2: Issues and stakeholders 11Chapter 3: Reports and research 17Chapter 4: Forward look 25

Annexes

Annex A: The role of the Commission 29Annex B: Who we are 30Annex C: Plans and performance 2005-06 36Annex D: Code of Practice casework 39Annex E: Other issues considered by the Commission 41

Financial statements 45

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The Statistics Commission works with all those who fund, produce or useofficial statistics, to review practice and identify the scope for beneficialchange, supporting present practice where appropriate.

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The 2005-06 financial year was both successful and challenging forthe Commission, raising questions about our future whilstunderlining the importance of our role – in essence to ensure thatUK official statistics are produced and managed in the publicinterest.

Chapter 1: Chairman’s report

During the year we published severalreports including major ones on schooleducation statistics, the arrangements forquality management of all officialstatistics, the statistical robustness of allthe main government targets and aninterim report on crime statistics. Eachcontains recommendations togovernment departments which we arenow pursuing with them. Elsewhere in thisreport, there is a full account of the mainissues we addressed. However, it was theChancellor’s announcement in November2005 of plans to introduce a statutoryframework for official statistics, andsubsequent more specific Treasuryproposals for legislation, which were thekey events of the year and have directimplications for the governance of theentire UK statistical system. I thereforefocus below on the big questions thatnow need to be resolved.

Legislation

In March 2006 the Treasury publishedIndependence for Statistics: A ConsultationDocument. This set out plans to create a

statutory board with oversight of officialstatistics to replace the existingarrangements – under which there arenon-executive members on the currentboard of the Office for National Statistics,as well as independent members of theStatistics Commission. The Commissionwelcomed the Government’s commitmentto legislation but stressed that theresponsibilities, accountability andconstitution of the proposed board wouldbe crucial.

We have since submitted our formalresponse to the consultation andpresented evidence to the Treasury Sub-committee of the House of Commonswhich is carrying out its own inquiry. Wehope now to see plans for legislationannounced in the Queen’s Speech in theautumn of 2006. That will be a crucialmilestone. In developing our own viewson the Treasury proposals, we have kept inmind the arguments in the report wepublished in 2004, Legislation to Build Trustin Statistics, and the messages from thereport we prepared with MORI in 2005,Official Statistics: Perceptions and Trust.

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We also held a high-level seminar for 150experts in May 2006 to stimulate publicdebate and inform our own thinking. Allthis has convinced us that theGovernment’s plans will be a timely andvaluable evolution of the earlier non-statutory Framework as long as, in theirexecution, key requirements are met.

For example, we believe it is essential forthe new arrangements to relate to allofficial statistics, not just those that arecurrently the responsibility of ONS orlabelled ‘National Statistics’ – a term withlittle real meaning presently. Many of themost politically sensitive and controversialstatistics are produced by the major policydepartments of government and arebased on administrative data – crime,education, health, social security records –not on sample surveys. The newarrangements must recognise and engagewith this broader and inter-connectedstatistical system.

In order to engage with all the statisticalwork carried out by many largelyautonomous parts of government, a keycomponent of the arrangements will needto be a statutory Code of Practice that willdefine the practices which governmentdepartments and other relevant bodiesare expected to follow in collating anddisseminating official statistics. We want tosee this Code drafted by the NationalStatistician and approved by the proposedboard rather than by governmentMinisters. Ministers should of course beconsulted but we do not think theiragreement to the terms of the Codeshould be a prerequisite. Moreover, it willneed to cover issues that the current non-statutory Code does not fully address.These include the planning arrangementsfor the statistical service as a whole, userconsultation and data release practices.

Funding arrangements will also need tobe more transparent than they arecurrently – and auditable in relation totheir adequacy to meet agreed plans. Itwould be counter-productive if theindependence of official statistics wereperceived to be undermined by an unclear

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The Chancellor’s announcementof plans to introduce a statutoryframework was a majordevelopment.

funding mechanism and suspicions ofundue political influence.

Independence

The Statistics Commission wants to see anend to the arrangements under whichministers decide which statistics should beregarded as ‘National Statistics’. We alsowish to see an end to the practicewhereby Ministers have earlier access tostatistical reports than other interestedparties. This type of independence is ofmore fundamental importance thanwhether the Office for National Statistics ismade into a non-ministerial governmentdepartment – a central part of the currentTreasury proposals but one which doesnot mean much to the world outsideWhitehall.

The statistical service also needs a muchmore effective consultation mechanism,including targeted surveys to establish thereal needs of users and their satisfactionwith the statistical outputs. These mustcover all user groups, not just those incentral government.

Equally, it is essential, though not easy, toensure that the messages are consistentlyextracted from the statistics. Clearly no-one can control the use of statistics inpolitical debate but statisticians shouldprovide publicly more interpretation

about what the data mean and how farthey can be taken. In our view, allstatistical series should be published witha frank commentary written in plainEnglish. This should include someindications of the limitations of the data,for example whether a small change isreally a meaningful one or likely just to bea ‘blip’. Ministerial comment on the figuresshould normally be released only after thestatistical statement is published.

Resources will always be in short supply.New information is needed in some areaswhilst existing statistics may no longer beessential in others. As a consequence,effective and efficient use of publicresources to create official statistics canonly be achieved through co-ordinatedplanning across all governmentdepartments of official statistics, ratherthan simply being a matter for eachindividual department to address as iftheir statistical decisions had no bearingon anyone else.

The Commission

As is good practice, we carried out areview of how well we are seen to haveachieved our goals. This was based on asurvey of stakeholders, a review of presscoverage and an analysis of take-up of ourresearch recommendations. The results,whilst not wholly uncritical, were

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A high-level seminarfor 150 experts washeld in May 2006 tostimulate publicdebate and informour own thinking.

overwhelmingly supportive. By these andother indications, we infer that we arehaving some positive effect. During theTreasury consultation, the importance ofthe Commission’s role has beenhighlighted by many contributors. We areseeking to ensure that this is not lost ordiluted under the new arrangementsalthough we have accepted that theCommission in its present form will needto be replaced under a statutoryframework.

I would like to pay special tribute to twokey personalities who left the orbit ofofficial statistics in the year. One was LenCook, the National Statistician since 2000,who has now been succeeded by KarenDunnell. Just as we are sorry to lose Len’seffervescent presence at the helm, wewelcome Karen, who has immenseexperience of UK official statistics, to hernew and undoubtedly challenging role.The other notable departure was that ofDame Patricia Hodgson, whose term of

office as a member of the StatisticsCommission came to an end in the year.She was one of the prime architects of theCommission’s views on the need for astatutory framework. Her place on theCommission has been taken by Joly Dixonwho brings with him vast experience ofthe use of official data in the EuropeanCommission and beyond.

We have much important work to do inthe year ahead and I look forward toreporting on it in due course.

Chairman

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The photographs in this and the following chapters are of participants in Commission meetingsincluding the May 2006 seminar on legislation.

Through its research, the Commission has established a public profile withParliament and Government.We have also pursued more active engagementwith the news media to achieve greater recognition for our advice andrecommendations.

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In his report in Chapter 1, the chairmanhighlights issues that bear on publicconfidence in official statistics, includingthe part that new legislation should play.Here we look at some of the otherconcerns of the Commission and how weare addressing them with stakeholders. Asin previous years, our research findingshave underscored the importance of goodcommunication of statistical messages,weaknesses in user consultation and theneed for transparent planning (ofstatistical services) across the whole ofgovernment.

Communication

Most of the more important figures arepublished with a statistical commentarywritten by professional statisticians. Butthis commentary is given little attentionby the media and public commentatorswho instead focus on the press noticesissued, often simultaneously, by Ministersand departments. In the interests ofdeveloping a distinct statistical voice, wewant to see the statistical commentary

produced in a way that secures attentionwithout losing its balance andindependence. One possible strategy tofocus more attention on the statisticalcomments would be to introduce a timedelay after the statistics come out beforeMinisterial comment can be issued; andfor the statisticians to offer fuller and morereadily understood commentary on thefigures - explaining in plain English thestrengths and limitations of the statisticsin the context of their likely use. TheCommission is pursuing these ideas inrelation to the future governancearrangements.

However communication is not just aboutclear statistical statements: we needimproved design of reports and websitesto make the plethora of official statisticsmore accessible to those who wish to usethem. In response to widespread concernsabout the utility of statistical sources, wehave started a research project to lookinto questions of accessibility and will bereporting in 2006-07.

Chapter 2: Issues and stakeholders

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User consultation

Users of statistics outside centralgovernment often complain about theinadequacy of consultation arrangementsdesigned to ensure that their needs areidentified and that these inform statisticalplanning. One recurring manifestation ofthis is the difficulty in finding comparabledata for the four UK administrations – apoint made forcefully at our Open Meetingin November 2005.We have more recentlybeen promoting the case for a bettercoordinating mechanism which wouldensure harmonised statistics where theseare needed whilst also accepting that thedifferent administrations should sometimesadopt different statistical solutions wheretheir needs justify that. In some cases itshould be possible to produce bothharmonised UK statistics and additionalones for local use.

Statistical planning

Statistical planning across government ispiecemeal with individual departmentstaking decisions on their future statisticalactivities largely autonomously and withlittle systematic engagement with thosewho will use the statistical data to informdecisions. The Commission has stressedthe case for a more structured and co-ordinated approach across government,informed by improved user consultation.We hope that under a statutory framework,as proposed by the Treasury, a way can befound to bring high level statisticalplanning together under the auspices ofthe National Statistician. She currently haslittle direct authority over the statisticalwork of departments other than ONS.

Code of Practice

The National Statistics Code of Practicesets out the principles and practices thatgovernment departments and agenciesshould follow in producing and publishingofficial statistics. Much of it is non-prescriptive in nature and requires nospecific evidence of compliance. Theevidence that does exist thus refers only tocertain detailed aspects, particularly thosedealing with the public release of statisticalinformation. Annex D sets out cases, arisingin the year, in which the Commission wasconcerned about compliance with thesemore specific areas. In July 2005, thechairman of the Commission wrote topermanent secretaries in Whitehall and thedevolved administrations about theCommission’s interpretation of the broaderaspects of the Code and we will be followingthis up in 2006 by reporting on ways tostrengthen the Code under the newstatutory framework that the Treasury hasproposed.

Reaction to past recommendations

Whilst our recommendations have notalways prompted a rapid or joined-upresponse from Whitehall departments,there are now signs of growing acceptancethat the arguments the Commission putsforward reflect valid concerns. The Officefor National Statistics has a good trackrecord of responding to points raised bythe Commission in recent years but manyof our recommendations are directedtowards other departments which havenot always been so willing to engage withus. We hope that the proposed statutoryframework will help to resolve this.

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Parliament

The chairman and colleagues gaveevidence to the Treasury Sub-committeein November 2005. The committee wasparticularly interested in issues of publictrust in official statistics and our work onPSA targets and quality management. TheTSC is currently (June 2006) holding aninquiry into the Treasury’s legislativeproposals.

Open Meeting

Our annual Open Meeting is designed tostimulate public debate with and betweenour various stakeholders. Nearly 100people joined us on 16 November 2005 tohear invited speakers give presentationson statistical governance: John Pullinger,chairman of the Royal Statistical Society’sNational Statistics Working Party; KarenDunnell, the National Statistician; andDame Patricia Hodgson, a member of theCommission. A full report is available onthe Commission’s website.

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Office for National Statistics

The Commission has regular dialogue withthe Office for National Statistics. Wherethe Commission can do so withoutcompromising its independent view, itinvites ONS to contribute directly to itsresearch projects. This can take the form ofsenior level advice to project boards ormore substantive research, as in the casesof our reports on statistical qualitymanagement and work on the level ofpublic trust. The Commission secretariatalso contributes directly to ONS projectsfrom time to time.

Government Statistical Service

As part of our ongoing dialogue with thewider Government Statistical Service(GSS), senior statisticians in governmentdepartments and devolvedadministrations accepted theCommission’s invitation to a meeting inMay 2005 to build an understanding ofthe views and issues which are commonacross departments and to discuss how

we could take the dialogue forward.Topics covered ranged from the use ofadministrative data, reliability and userengagement, to the role of the NationalStatistician and the Code of Practice. TheCommission also visited the Home Office,the Department for Transport and HMRevenue and Customs in the year tounderstand better the priorities,challenges and statistical operations ofthese departments.

Devolved administrations

The first in a series of lunchtime seminarsaddressing statistical requirements in thedevolved administrations was held inCardiff in February 2006. The seminar,titled ‘Do we have the data we need tounderstand the economy in Wales?’included four presentations from expertsin the field. A similar event is planned inScotland in September 2006. Prior to theCardiff seminar, the chairman andcolleagues had meetings with the WelshAssembly Minister responsible forstatistics, the permanent secretary, and

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officials in the Assembly and localgovernment. Regular dialogue was alsomaintained with the otheradministrations.

Royal Statistical Society/Statistics UserForum

Discussions took place in the year with theStatistics Users Forum (SUF), the RoyalStatistical Society (RSS), and the Economicand Social Research Council (ESRC) aboutthe future role of SUF. All parties agreedthat SUF should be supported indeveloping into an increasingly influentialpart of the consultative arrangements thatwill, in turn, underpin an effective cross-government statistical planning system.

In line with our continuing commitmentto the Forum, the Commission providedfinancial support for the SUF conference inNovember 2005 at the Royal Society, onthe theme of neighbourhood and regionalstatistics.

Overseas organisations

The year saw an expansion of theCommission’s contact with internationalorganisations and statistical officesoverseas. The chairman and chiefexecutive had a series of meetings inCanada with Statistics Canada, theUNESCO statistical office and other bodies.The chief executive also attended theUnited Nations Statistical Commission asan observer in March 2006.

Statistical governance is a key concern forthe Statistics Commission – one thatcannot be considered in isolation from thewider statistical community in Europe andinternationally. Statistical advisory bodies,in their various forms, play an importantrole in governance structures around theworld. As a preliminary to visiting thedirector general of Eurostat and hiscolleagues in September 2005 to discussstatistical governance, the Commissionprepared a note (available on Commissionwebsite) outlining the particularcharacteristics of the UK StatisticsCommission which was intended toinform thinking in relation to a newEuropean body.

It was with particular sadness that theCommission learned of the death ofGunther Hanreich, director of Eurostat, laterin the year.

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Among several reports we published in 2005-06 were ones on revisions topublic sector finances, on school education statistics and on statisticalaspects of government targets. We also reported on how externalstakeholders saw the Commission itself.

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Here we summarise the findings from ourresearch reports. Annex E highlights somefurther concerns that were brought to ourattention and which we investigated inthe year.

During the year we published researchreports on:

• perceptions of the Commission

• revisions to public sector finances

• user perspectives on school educationstatistics

• quality management of officialstatistics

• processes of compiling and publishingcrime statistics

• impact of EU statistical requirementson the UK

• statistical aspects of PSA targets.

The full texts of all Statistics Commissionreports are available on our website.

Set out on the following pages are someof the main points from the reports.

Chapter 3: Reports and research

Perceptions of the Commission research

(www.statscom.org.uk/media_pdfs/reports/Perceptions_internalreport.pdf )

In mid-2005 the Statistics Commission hadbeen in existence for some five years andthis seemed an appropriate point at whichto assess our impact on statistical work ingovernment over that period and togauge the views of our variousstakeholders. Under the umbrella of thisresearch, we developed three strands: aquestionnaire-based survey addressed to243 stakeholders from inside and outsidegovernment; an analysis of mediacoverage of the Commission in 2002-2005;and an assessment of the take-up andimpact of Commission researchrecommendations 2003-2005.

Whilst the results were overwelminglypositive about the Commission’s role, wedid identify some important messages forthe future:

• We need to be still more active in ourcommunication with externalstakeholders. We are now consideringmore effective ways to deliver ourmessage, especially to Parliament andcentral government, as well asdeveloping our engagement withdevolved administrations and buildingalliances with other organisations.

• There is considerable support for astatutory body responsible for scrutinyof the statistical service and answerableto Parliament to replace the currentnon-statutory arrangements.

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• Our more active engagement with themedia has been effective in achievinggreater recognition and influence butthere is scope to go further. A constrainthere is that the accuracy of pressreporting on Commission activities, andindeed statistical matters generally, isvariable and unpredictable.

• We need a clear short statement of theCommission’s role for publicconsumption (instead of ‘watchdog’)which stresses the advisory role thatgovernment has given the presentbody.

Report No. 25:

Revisions to Public Sector Finances:Estimates of Depreciation for the RoadNetwork

June 2005

(www.statscom.org.uk/media_pdfs/reports/025%20-%20Roads-_Rep_Rev_Public_Sec_ Finances.pdf )

Following an examination of thebackground to changes to the PublicFinance First Release, the Commissionaccepted the case ONS had made forrevisions to correct a problem of doublecounting in relation to depreciation onroads.

This issue arose out of controversy overthe proper counting of expenditure onroad repairs, as announced in the PublicFinance First Release on 18 February 2005.The suggestion in some of the newsstories that followed was that the natureand timing of the proposed changes mayhave been influenced by politicalconsiderations. Following an examinationof the background to the changes, theCommission endorsed the case for makingthe revisions which corrected a complexproblem in relation to depreciation onroads. On the basis of the many papersavailable to us, we saw no evidence of anyinappropriate involvement of Ministers orpolicy officials. On the question of the waythe revision was made, we noted thatthere were, and remain, essentially twoaccounting options which have differenteffects at more detailed levels of thenational accounts but have the sameeffect on the fiscal aggregates.

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Published reports

We recommended that:

• The four UK administrations shouldeach aim to improve the transparencyof their planning processes foreducation statistics.

• The producers of the statistics shouldre-assess whether the scope and natureof existing statistical databases, reportsand other outputs are likely to meetthe needs of the full range of potentialusers.

• The four UK administrations shouldeach make a commitment to ongoingparticipation in internationalcomparative studies of educationperformance.

• Full and informative statisticalcommentary should be providedalongside the figures to guide users.

• In the interests of users of statistics,including parents, a consistentapproach should be taken across theUK to the publication of examinationand test results for individual schools.

Report No. 26:

School Education Statistics:User Perspectives

June 2005

(www.statscom.org.uk/media_pdfs/ reports/026_School_Education_Report_User_Perspectives.pdf )

Official education statistics have improvedsubstantially in recent years and there isnow a wealth of valuable data available forpeople who need such information to guidetheir decisions. However some users ofstatistics need more guidance and support.

The Statistics Commission invited theNational Foundation for EducationalResearch (NFER) to carry out a review ofUK primary and secondary schooleducation statistics, focusing on the extentto which the needs of users of statistics,both within the education sector andmore generally, were being met. This wascompleted in June 2005 and was thesecond in an ongoing series of reviews ofstatistics relating to major areas of policy;the first was of health statistics.

We concluded that the range and detail ofofficial education statistics had beenextended substantially in recent years butthere were signs that some potential usersof the statistics needed more support andguidance. There were also a few gaps andinconsistencies in the otherwiseimpressive coverage of the statistics.

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Crime Statistics: User Perspectives – InterimReport

December 2005

(www.statscom.org.uk/media_pdfs/reports/crime_stats_interim_report.pdf )

The process of compiling and publishingcrime statistics should be put at arm’slength from the policy functions ofgovernment and be seen to be so. Wethink that the interests of all parties,including those of the government itself,would be served by taking early steps inthis direction.

In August 2005, the Statistics Commissioninitiated a review of official statisticsrelating to crime and appointed MatrixResearch and Consultancy to lead theresearch. The Commission’s interim report,published in December 2005, identifiedfive important issues: public trust in crimefigures, measurement of the fear of crime,measures of total crime, internationalcomparisons and getting the best fromdata held by local police forces. Wediscussed these matters with the thenHome Secretary who subsequentlyannounced the establishment of anindependent cross-party review of theissues. These will be explored in greaterdepth in the final report, due to bepublished in September 2006.

Report No. 27:

Managing the Quality of Official Statistics

October 2005

(www.statscom.org.uk/media_pdfs/reports/QualityManagementReport.pdf )

The quality of official statistics is fundamentalto the quality of decision-making at all levelsin society and to the trust citizens place intheir government. Although the definitionof quality in statistics is not straightforward,there should be greater emphasis on ‘fitnessfor purpose’ rather than on more abstractor highly technical concepts such as‘accuracy’. Fitness for purpose should bethe foundation for a set of quality standards.

Under the Framework for National Statisticsquality management of statistics acrossgovernment is the responsibility of theNational Statistician.Our report concludedthat a clear,strong statement of the NationalStatistician’s authority in respect of qualityassurance and management would behelpful in enhancing public trust in officialfigures.An audit-based approach to qualityreviews was recommended,with the NationalStatistician taking a central role in setting theagenda and guiding the programme ofreviews.

Published reports

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Report No. 28:

Impact of European Demands on the UKStatistical System

January 2006

(www.statscom.org.uk/media_pdfs/reports/EUdemands_on_UKstats.pdf )

The demands placed on the UK statisticalsystem by European legislation and otherEuropean agreements constrain thestatistical service but also offer potentialbenefits to UK users of statistics, not leastthrough increased comparability betweencountries of the UK and across the EU.

We looked at some of the benefits andburdens of EU requirements andconsidered ways in which the UK mightmanage those demands to maximise thebenefits to users. We found substantialoverlaps between demands for statisticswithin the UK and at the European leveland that UK officials play an importantrole in shaping the development of thecurrent European system. However, weidentified scope for greater openess andtransparency:

• We would like to see more evidencethat the full range of costs and benefitsare being taken into account inprioritisation of EU demands.

• The transparency and visibility of theUK government’s contribution to thedevelopment of EU statisticalregulation needs to be enhanced.

• More opportunities should be createdfor individual users (either organisationsor people) to influence EU requirements,or the UK position on thoserequirements.

• Consultation on statisticalrequirements should be organisedmore coherently.

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Report No. 29:

PSA Targets: the Devil in the Detail

March 2006

(www.statscom.org.uk/media_pdfs/reports/Final%20PSA%20Targets%20Report.pdf )

The targets set by, and for, governmentdepartments are important to thoseexpected to deliver them, to clients ofpublic services likely to be affected bythem and for those judging whether theadministration of the day is delivering onits commitments. Our concern is to assesswhether the statistical evidence used tosupport Public Service Agreements isadequate for that purpose.

We reviewed each of the 109 individualtargets associated with the allocation ofresources from the 2004 Spending Reviewand recommended that governmentdepartments follow up issues that weidentified for specific targets.We also madea number of high-level recommendations:

• ‘Technical Notes’ should be developedinto more comprehensive TargetProtocols which would also coverbroader issues, including the rationalefor the target, an indication of dataquality, historical data for key measures,and details of how performance will beevaluated.

• A brief record should be kept bydepartments of the more substantivedecisions (on policy, resources,structures, management) that had beeninfluenced by the monitoring of eachquantified PSA target.

• A robust cross-government planningsystem for official statistics is neededso that future data requirements (tosupport the setting of targets) can bepicked up at the earliest possible stageand fed effectively into the allocationof departmental resources.

• Government departments should paymore attention to data quality issues.

• This report was initially issued in draftform in October 2005, prompting anumber of detailed comments andobservations, many from governmentdepartments. We worked throughthese systematically, taking on boardvalid observations whilst maintainingour independent perspective andpublished the final report six monthslater.

Published reports

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The Commission’s main objectives are to understand the needs of users ofofficial statistics, make proposals to enhance the service and advise onfuture governance arrangements.

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Objective 1: Main projects 2006-07

• Devolution issues: Further examinethe need for a) greater comparability ofstatistics across the UK and b) the needfor local statistical services in thedevolved administrations; and makerecommendations relating to thegovernment machinery for addressingthese issues.

• Crime statistics: Complete the currentreview of crime statistics, examiningadequacy, use made in decisionmaking, methodological issues andneeds of users. To report September2006.

• Review the statistical use of tax data:Undertake a review of tax data, lookinginter alia at legal and other restrictionson data sharing. Aim to report Autumn2006.

Chapter 4: Forward look

The Commission has a number of projects either already in train orplanned for 2006-07. The Statistics Commission Business Plan isupdated twice a year to take account of our assessment of publicpriorities and competing demands on our resources.

The 2006-07 Plan identifies three objectives:

Objective 1:

To develop our understanding of theneeds of users of official statistics,including Parliament and the public,and to make proposals that willenhance the statistical service to allusers.

Objective 2:

To consider and advise on theGovernment’s current proposals inrelation to the future governance ofofficial statistics.

Objective 3:

To carry out the Commission’sfunctions impartially and useresources efficiently, effectively andeconomically.

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• Accessibility of data: Undertake areview of data accessibility from a userperspective, examining the provision ofadequate metadata, data quality andformat. Aim to report end of 2006.

• ‘Use made’ research: Undertake astudy of the use actually made ofofficial statistics by organisations andindividuals in decision-making. Thestudy will illustrate wider needs byidentification and discussion of specificexamples. Aim to report in 2007.

• National Statistics planning: Considerand comment to Ministers on theNational Statistics Work Programme2006/07 – 2008/09 and the NationalStatistics Annual Report 2005-06.

• 2011 Census planning: Review theplanning for the 2011 Census and lookahead to future challenges and issues.Aim to report early 2007.

Objective 2: Main projects 2006-07

• Legislation: to advise on currentproposals; in particular to advise on therole, responsibilities, accountability andconstitution of the proposed GoverningBoard.

• Impact assessment: Assess the impactand future relevance ofrecommendations in previousCommission reports and prepare aconsolidated overview for publicationin 2007.

• Public trust: Consider further theissues raised in our report OfficialStatistics: Perceptions and Trustpublished in 2005.

• Code of Practice: Makerecommendations in relation to thefuture development of the Code ofPractice - a report is now planned forlate 2006.

Objective 3: Main projects 2006-07

• Value to stakeholders: take action toaddress the issues identified in theFebruary 2006 report Perceptions of theStatistics Commission

• Business processes: Maintainsystematic procedures for managing thework of the Commission. This willinclude regular updates of the BusinessPlan and individual project plans, andadherence to project managementprocedures.

• Website usability: Building on thepositive feedback from users, furtherimprovements to the Commission’swebsite will be implemented to enhanceusability.

• Staff development: Review and updatethe training and developmentframework for all staff to meet the needsof the Commission.

• Business continuity: Test disasterrecovery procedures and update theBusiness Continuity Plan accordingly.

• Risk register: Review and update therisk register twice a year in January andJuly.

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Addressing User Needs

SupportRSS/SUF

Accessibility to data

Crime‘user perspective’

report

Tax and data sharing

‘Use made’research

2011 Census issues

Address devolution and

its impact on meeting

needs

Proposals on Code of

Practice

Support othermechanisms to

consult users

Summary of Key Projects 2006-07

Promote Code compliance and address user

issues

Advise on legislationrequirements

Follow up interviews withopinion-formers

Assess impactof existing

recommendations

The Future of UK Official

Statistics

Statistical Governance

arrangements

Indicates projects expected to leadto a Commission report in 2006-07.

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The Commission aims to ensure that official statistics can be trusted by,and meet the needs of, decision-makers, other users and the public.

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We have adopted the following objectivesfrom April 2006:

Objective 1:To develop our understanding of theneeds of users of official statistics,including Parliament and the public, andto make proposals that will enhance thestatistical service to all users.

Objective 2:To consider and advise on theGovernment’s current proposals in relationto the future governance of officialstatistics.

Objective 3:To carry out the Commission’s functionsimpartially and use resources efficiently,effectively and economically.

Strategy

Bearing in mind the strategic issuesdiscussed in the Commisson’s BusinessPlan, the current strategy is to:

• continue to promote the case for astatutory Code of Practice binding onall government departments andagencies and overseen by anindependent board/commission

• urge government to use theforthcoming legislation to make all UKofficial statistics subject to this statutoryCode and oversight arrangements

• make proposals to strengthen the non-statutory arrangements for themanagement of UK official statistics (tothe extent that these are not replacedby a statutory framework)

• pursue, through correspondence anddialogue, the numerous proposals andrecommendations that the Commissionhas made in recent years

• undertake, or commission, research andproduce public reports

• support and supplement existingchannels of communication betweenusers and producers of official statistics

• foster a constructive dialogue with theOffice for National Statistics, othergovernment departments, thedevolved administrations and otherpublic bodies with substantialresponsibility for official statistics

• explore issues of concern raised with theCommission on statistical matters, makingrecommendations where appropriate.

Annex A: The role of the Commission

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The Statistics Commission is an independent non-statutory publicbody sponsored by HM Treasury. It was set up in June 2000 to “helpensure National Statistics are trustworthy and responsive to publicneeds”, to “give independent, reliable and relevant advice” and by sodoing to “provide an additional safeguard on the quality andintegrity of National Statistics”. It operates openly andindependently of Ministers and the producers of statistics.

Values

In carrying out its tasks the Commissioncommits itself:

• to respect and promote all uses ofofficial statistics that are of public value

• to report the results of all itsinvestigations openly and dealsystematically with criticism of its work,seeking to learn lessons andcontinuously improve

• to consult interested parties before therelease of Commission findings so as tounderstand and respond to their views– without shrinking from giving anindependent view on controversialissues

• to operate in a transparent way withthe minutes of its meetings,correspondence, evidence it receives,and advice it gives, normally madeavailable on the Commission’s website

• to present its views in an impartial way.

Annex B: Who we are

The Commisssion:

1. ChairmanProfessor David Rhind

2. Vice ChairmanSir Derek Wanless

The Commissioners:

3. Ian Beesley

4. Colette Bowe

5. Sir Kenneth Calman

6. Joly Dixon

7. Dame Patricia Hodgson

8. Dr Isabelle Low

9. Janet Trewsdale

10. Martin Weale

11. Chief ExecutiveRichard Alldritt

2

3

6

10

1

9

4

7

11

5

8

30

31

At the end of 2005 three commissionershad completed their second terms ofoffice. Dame Patricia Hodgson decided tostep down from the Commission. As aresult of the recruitment exercise inDecember 2005, commissioners SirKenneth Calman and Martin Weale wereboth reappointed for a final term, theformer until 31 January 2007 and thelatter until 31 January 2008 Two furthercommissioners were also appointed. JolyDixon took up office on 1 February forthree years in the first instance. Dr IsabelleLow will be joining the Commission on 1July, also for three years.

The Commission

Chairman

Professor David Rhind

David Rhind is Vice-Chancellor andPrincipal of The City University in London.A Fellow of the Royal Society and anHonorary Fellow of the British Academy,he was until 1998 the Director General ofOrdnance Survey, Britain’s nationalmapping organisation and a governmentdepartment. He has recently beenappointed as a non-executive director onthe Bank of England’s Court of Directors,has been a member of the Economic andSocial Research Council and is a Fellow ofthe Royal Statistical Society. In past times,he was centrally involved in building orusing major statistical databases, notablyof census data. He was appointed throughthe normal competitive process aschairman in May 2003.

Vice Chairman

Sir Derek Wanless

Sir Derek Wanless is a director of NorthernRock plc and Northumbrian Water Groupplc and a trustee of the NationalEndowment for Science, Technology andthe Arts. In 2002 he reported on UK healthservices to the Chancellor of theExchequer and, in 2004, on Public Healthto the Prime Minister, Chancellor andSecretary of State for Health. He has alsoadvised the Welsh Assembly Government.He worked for NatWest Bank for 30 yearsand was its Group Chief Executive forseven years. In 2006 he completed theWanless Social Care Review for the King’sFund. He has an MA in Mathematics fromCambridge University and qualified as aMember of the Institute of Statisticians (MIS).

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Commissioners

Ian Beesley

Ian Beesley is a retired senior partner atPricewaterhouseCoopers who now runshis own strategy consultancy. He is aFellow of the Royal Statistical Society andof the British Institute of Management. Asa consultant he worked with organisationsin the media and arts, defence, UK andforeign public sector and with internationalagencies. Before joining PWC in 1986, hewas head of the Prime Minister’s EfficiencyUnit. He started his career in the CentralStatistical Office working in the fields ofbalance of payments, national accountsand monetary policy. He has an MA inpolitics, philosophy and economics, and aPost Graduate Diploma in statistics, bothfrom Oxford University.

Colette Bowe

Colette Bowe is the chairman on the OfcomConsumer Panel. She is also deputychairman of Thames Water Utilities, and aboard member of Axa Farlington, theYorkshire Building Society and MorganStanley Bank International. She is thechairman of the Council of Queen MaryUniversity of London and also a memberof the Council of Management of theNational Institute of Economic and SocialResearch and a board member of CamdenPeoples’Theatre. She has a PhD in Economics.

Sir Kenneth Calman

Sir Kenneth Calman is Chancellor of theUniversity of Glasgow and Vice-Chancellorand Warden of the University of Durham.Before that he was Chief Medical Officerfor the Department of Health and chairedthe Executive Committee of the WorldHealth Organisation. He was previouslythe Chief Medical Officer for Scotland. Heis a Member of the Nuffield Council onBioethics. He is a surgeon by training and has a particular interest in the field ofcancer treatment and research.

Joly Dixon

Since 2003 Joly Dixon has been chairmanof the Board of Governors, Indirect TaxAuthority for Bosnia and Herzegovina.Prior to this he spent nearly 30 years at theEuropean Commission, holding a varietyof senior posts including: principal advisorto the Director General for Economic andFinancial Affairs, working mainly on EUenlargement and relations with theBalkans; Director for International Affairs,leading the team advising on theeconomies of candidate countries andother main economic partners; andDeputy Special Representative of theSecretary General in the UN’s Mission inKosovo, where he was in charge ofeconomic reconstruction. He was alsospecial advisor to European CommissionerPascal Lamy from 2003-2004. His careerbegan as a lecturer in economic statisticsand econometrics at York and ExeterUniversities. (From 1 February 2006)

Dame Patricia Hodgson

Dame Patricia Hodgson is chair of theHigher Education Regulation ReviewGroup, a Governor of the WellcomeFoundation and a member of theCommittee for Standards in Public Life.She is a non-executive director of GCAPMedia plc and the CompetitionCommission. Until the beginning of 2004she was chief executive of theIndependent Television Commission and,before that, a main board director of theBBC. She also served for six years as amember of the Monopolies and MergersCommission. (Until December 2005)

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Isabelle Low

Dr Isabelle Low became a member of theAccounts Commission for Scotland in 2001and has been its deputy chair since 2003,also chairing its Performance AuditCommittee. She is currently a boardmember of: the Scottish ConsumerCouncil; the David Hume Institute; and theFinancial Director of the Year Awards anduntil recently was a board member of theState Hospitals Board for Scotland. From1997 to 2001 she held senior posts in theScottish Executive, including: director of21st Century Government Group, leadingthe process of modernising governmentScotland-wide; Head of Land Use Division;and Head of Constitutional Policy Division.Prior to that she spent 20 years at theScottish Office, where her roles included:Head of Management and OrganisationDivision; Director of Health Care for theNHS in Scotland; and Head of EmploymentDivision. (From 1 July 2006)

Janet Trewsdale

Janet Trewsdale was, until last year,chairman of the Northern IrelandEconomic Council and senior lecturer inEconomics at The Queen’s University ofBelfast. She is a Chartered Statistician. Sheis a past vice-president of the RoyalStatistical Society (RSS) and member ofthe Statistics Advisory Committee (NI). Sherepresented the RSS on the StatisticsUsers’ Council for 19 years.

Martin Weale

Martin Weale is the director of the NationalInstitute of Economic and Social Researchand has written widely on economicstatistics. He previously lectured inEconomics at Cambridge University, wherehe was a Fellow of Clare College. Beforethat he worked in the National StatisticalOffice in Malawi. He is an Honorary Fellowof the Institute of Actuaries and Treasurerof the Alzheimer’s Research Trust. TheEuropean Commission has recently adoptedproposals from a project he led forproducing prompt estimates of economicgrowth in the Euro Area. He holds an Sc. D.in Economics from Cambridge University.

Chief Executive

Richard Alldritt

Richard Alldritt is the chief executive ofthe Statistics Commission. He has workedin several government departmentsincluding the Home Office, Office forNational Statistics and the NationalAssembly for Wales where he was mostrecently head of Information andKnowledge Management. Before that hewas head of the Statistical Directorate inthe Welsh Office and Welsh Assembly.

Commissioners (continued)

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Audit Committee

Sir Derek Wanless (chairman)John Gant*Linda Peacock*

Devolution and Regional Sub-committee

Janet Trewsdale (chairman)Sir Kenneth CalmanSir Derek Wanless

Research and Review Sub-committee

Martin Weale (chairman)Colette BoweSir Kenneth CalmanCarolyn Sinclair*

Legislation Working Group

David Rhind (chairman)Sir Derek WanlessJoly Dixon

Review of Crime Statistics Project Board

Martin Weale (chairman)Chris Fox (Matrix)**Professor Tim Hope (Keele University)**Jon Simmons (Home Office observer) Carolyn Sinclair*

Review of School Education Statistics Project Board

Janet Trewsdale (chairman)

Malcolm Britton (Department for Educationand Skills observer)

Peter Rudd (National Foundation forEducational Research) **

Ian Schagen (National Foundation forEducational Research) **

Martin Weale

Perceptions of the Commission Project Board

David Rhind (chairman)Simon Brooks (HMT)Brian Gosschalk (MORI)Mike Hughes (ONS)

*consultants **project contractors

Our committees

35

Annex C: Plans and performance 2005-06

Devolution research: Examine thecomparability of statistics across the UK andassess a) the need for common UK datasetsand b) the adequacy of the governmentmachinery for handling devolution issuesrelating to statistics.

Education statistics: Complete the review ofschool education statistics with NFER. Aim toreport summer 2005.

Crime statistics: Undertake a review of crimestatistics. Aim to report May 2006.

PSA targets: Prepare a report on thestatistical robustness of quantified targets inPublic Service Agreements acrossgovernment. Aim to report summer 2005.

‘Excessive use’: Produce a published paperon the over-use and misuse of officialstatistics and make proposals.

‘Use made’ research: Research the actual usemade of official statistics – on a sample basis –in decision-making across government anddraw conclusions. Aim to report in 2007.

European project: Examine the impact on UKusers of incorporating EU requirements intonational statistical systems and invite similarcontributions from other countries.

National Statistics planning: Consider andcomment to Ministers on the NationalStatistics Work Programme 2005/06 – 2007/08and the National Statistics Annual Report 2004-05.

Revisions to statistics: Monitor developmentsin this area, in the context of therecommendations of the review of revisionsto economic statistics, published in April 2004.

Legislation: Promote the case for primarylegislation as recommended in the reportLegislation to Build Trust in Statistics.

Meetings held with a range of users andproducers in Scotland, Wales and NorthernIreland. Report of Welsh seminar publishedMarch 2006. Further seminars planned.

Final report published June 2005.

Seminar of experts in crime statistics heldOctober 2005. Interim report publishedDecember 2005. Final report to be publishedSeptember 2006.

Draft report published October 2005.Final report published in March 2006

Partly addressed in the PSA targets report.This continues to be an issue.

A research proposal has been agreed andwork has commenced.

Final report published in February 2006.

Letter sent to the Financial Secretary to theTreasury in September 2005.

Letter sent to ONS about constructionstatistics in November 2005. ONS publishedupdate on progress towards Commission’srecommendations in December 2005.

Superseded by Chancellor’s announcementto legislate for independence for officialstatistics.

AC T I O N S P L A N N E D P E R F O R M A N C E

Performance against the 2005-06 Forward Look included in the Annual Report 2004-05

36

Framework review: Contribute to thegovernment review of the non-statutoryarrangements in the Framework for NationalStatistics.

Quality reviews: Review UK official statisticsquality management, including the NationalStatistics quality review programme.

Public confidence: Take further steps to assessthe level of public confidence in officialstatistics, and identify the underlying reasons.

Code of Practice: Make recommendationsrelating to the interpretation of the NationalStatistics Code of Practice.

Value to stakeholders: Establish a regularassessment of the Commission’s value in theeyes of stakeholders.

Value of research: Assess the impact ofCommission-funded research projects andmake results available publicly.

Business processes: Maintain systematicprocedures for managing the work of theCommission. This will include regular updatesof the Commission Plan, maintenance of IssueSummaries and individual project plans, andadherence to project managementprocedures. A ‘Potential Actions List’ has alsobeen developed to record all matters raisedwith or by the Commission.

Website usability: Monitor and improve theCommission’s website to enhance usability.

Staff development: Review and update thetraining and development framework for allstaff to meet both the short and long termneeds of the Commission.

Business continuity: Maintain disasterrecovery procedures and update the BusinessContinuity Plan accordingly.

Risk register: Review and update the riskregister twice a year in January and July.

Wrote to the Financial Secretary to the Treasuryin September 2005. Held discussions with HMTreasury, ONS and others. HM Treasurypublished consultation documentIndependence for Statistics on 22 March 2006.

Final report published October 2005

Commission is considering further interviewswith stakeholders. Letters sent to PermanentSecretaries in July 2005.

More detailed work to be done in 2006.

Commission surveyed over 240 individualstakeholders and produced a report inFebruary 2006.

Impact assessment undertaken and resultsproduced in a report in February 2006.

Business plan and project plans all updatedregularly.

Contractor to maintain website andrecommend enhancements.

Framework updated and training priorities forstaff reviewed.

Disaster recovery plans tested successfullyAugust 2005 and Business Continuity Planupdated.

Risk register updated July 2005 and January2006. Changes reviewed by Internal Auditand Audit Committee.

AC T I O N S P L A N N E D P E R F O R M A N C E

37

Reports

Revisions to Public Sector Finances:Estimates of Depreciation for the RoadNetwork.Statistics Commission Report No. 25,June 2005

School Education Statistics: UserPerspectives.Statistics Commission Report No. 26,Incorporating: Review of SchoolsEducation Statistics by NationalFoundation for Educational Research,June 2005

Managing the Quality of Official Statistics.Statistics Commission Report No. 27,October 2005

Crime Statistics: User Perspectives –Statistics Commission Interim Report,December 2005

Impact of European Demands on the UKStatistical System.Statistics Commission Report No. 28,February 2006

PSA Targets: the Devil in the Detail.Statistics Commission Report No. 29,March 2006

All the above are available on our website:www.statscom.org.uk.

Articles

David Rhind,‘Keeping Politics Out ofStatistics’,Public Finance, August 5-18 2005, p.17

David Rhind,‘How to Achieve Public Trustin Official Statistics’,The Times, 27 October 2005, p.72

Richard Alldritt, ‘The Meaning of Trust’,RSS News, 33(3) November 2005. pp.1-3

Patricia Hodgson,‘The First Step inRestoring Public Trust in Statistics’,Financial Times, 1 December 2005, p.23

Presentations

Raising the GSS profile, GSS Conference,May 2005

Meeting the needs of users in the 21stCentury, National Statistics Open Day,September 2005

Government Statistical Service, AssistantStatisticians Conference,May 2005

Review of Crime Statistics, National CrimeRecording Steering Group,September 2005

Review of Crime Statistics, Crime andJustice Theme Working Group,October 2005

List of publications and presentations 2005-06

38

Much of the Code is non-prescriptive andrequires no specific evidence of compliance.Thus the evidence that does exist oftenrelates only to the more detailed aspects,particularly those dealing with the publicrelease of statistical information. TheStatistics Commission plans to report onways to strengthen and clarify the Code in2006-07. Uncertainty over questions ofinterpretation is reflected in the nature ofpossible breaches that were drawn to ourattention during the year.

The Commission has been notified by ONSof the following cases (not necessarilybreaches of the Code) since April 2005:

(i) The statistical first release of StudentLoans for Higher Education in theUK was put on the website of theStudent Loan Company, the producer,a day early. The document was nothowever easily accessible as links werenot in place.The document was removedas soon as the breach was identifiedand the procedures will be reviewed.

(ii) An individual in the Department ofHealth (DH) provided information to

the press on NHS WorkforceStatistics in advance of publication.These statistics are not within thescope of National Statistics but arecovered by release arrangements inthe DH Code compliance statement.The Commission nonetheless regardsthe leak as inconsistent with the Code.

(iii) NHS Waiting List Statistics forFebruary 2005, due for publication on8 April, were quoted in a press noticeon waits for orthopaedic surgery on 5 April. The monthly waiting liststatistics are not within the scope ofNational Statistics but are covered byrelease arrangements in the DH Codecompliance statement. In futuretimetabling improvements willreduce the likelihood of inadvertentleaks of this kind.

(iv) There was an apparently accidentalinclusion of some summary findingsfrom a statistical bulletin oncharacteristics of low attainingpupils on a DfES website ahead ofpublication in June 2005. There hadbeen a lack of clarity in the

Annex D: Code of Practice casework

The National Statistics Code of Practice sets out principles andpractices that government departments and agencies should followin producing and publishing official statistics. However, only a fewparts of the present Code are of a kind that readily allow anindependent judgement to be made about compliance.

39

completion of documentationrelating to the publication and staffhad not been familiar with theprotocols. The statistics were takenoff the website when the mistakebecame apparent, and explanatorytext was added. The Commissionaccepts that the inclusion wasaccidental.

(v) Additional commentary wasincluded with the tax creditsstatistical release of 23 December2005 to explain a substantial increasein the number of awards to a certaintype of household. The inclusion ofexplanatory commentary had beenannounced to the StatisticsCommission by HM Revenue andCustoms as it was felt that theincrease was exceptional enough towarrant a special note for the benefitof users attempting to interpret thestatistics. The Commission is contentthat this is not a breach of the Code.

(vi) Officials at the Department for Workand Pensions were granted extrapre-release access to HousingBenefit Review on the ground thatrevisions due to improvedmethodology may have changed thedepartment’s view of progressagainst its PSA target for fraud anderror. The Commission is concernedabout the amount of pre-releaseaccess given within policydepartments.

(vii) Energy Statistics was inadvertentlyput on the DTI website in advanceof the pre-announced release time.This is a minor breach of the Code.

(viii) DEFRA officials were grantedprivileged early access to the latestfarm income figures which hadbeen inadvertently included in aninternal briefing document. TheStatistics Commission was contentthat DEFRA officials had recognisedthe mistake and taken theopportunity to review internalcirculation processes.

(ix) The Statistics Commission wasapproached by journalists seekingcomments on a Home Office firstrelease of crime statistics the daybefore official publication. We assumethe journalists also approachedothers and discussed the figures withthem. It became evident that anembargoed press notice containingthe figures alongside ministerialcomment had been circulated by theHome Office to the media the daybefore publication. As well asexpressing concern about the HomeOffice’s interpretation of the Code,the Commission questioned theefficacy of the embargo process andits impact on public trust.

40

In addition to our programme of research,the Commission addressed a range offurther issues in the past year. Some ofthese were identified by the Commissionitself, some were brought to our attentionby users or producers of statistics andothers were raised in the media. Here aresome examples, which serve to illustratethe nature of our work.

Statistical Advisory Bodies – the UKExperience

Discussions between the EuropeanParliament, Council and member states ledto proposals for a new European statisticaladvisory committee. In September 2005the Commission prepared a paper forEurostat on the particular characteristicsand challenges of the UK StatisticsCommission as a contribution to thinkingabout the new European body.

Mapping for statistical purposes

The Commission believes that free andready access to official statistics is in thepublic interest. Where geographicalboundaries and place names provide anecessary context for these statistics, wealso believe that these should be madefreely available. To the extent thatgeographical information fromgovernment agencies is not currentlyfreely available to users for this purpose,the Statistics Commission wants to seethis matter explored and resolved.

National Address Register

Weaknesses in the address lists used in the2001 Census contributed to a lowresponse rate in certain areas. We havehad discussions and correspondence withinterested parties regarding the failure ofODPM initiatives to create definitiveregisters.

Population projections and immigration

The Commission was approached about aHome Office consultation document onthe economic case for immigration. Wecontacted the Home Office, ONS and theGovernment Actuaries Department onissues on the presentation andmethodology behind migration statisticsand their use in population forecasts.

NHS Information Centre

The Commission was concerned to ensurethat the public interest in official statisticswas kept at the forefront of thinking as thenew NHS Information Centre, and the relatedprivate-sector partnerships, was developed.

Ambulance response times

We raised concerns with the Departmentof Health and with ONS over ambulanceresponse time statistics. There had beenpublic criticism about inconsistency in theapproach of trusts to determine when the‘clock starts’ on ambulance response;particularly in relation to the use ofresponse times in monitoringperformance targets. We expect problemsof this kind to be discussed fully instatistical releases.

Annex E: Other issues considered by the Commission

41

Health data comparability

A number of concerns have been raisedwith us over the comparability of healthperformance data between the four UKadministrations. We have discussed theseissues with ONS and the head ofprofession for statistics in the Departmentof Health, the relevant National Statistics‘Theme Working Group’, and the devolvedadministrations.

Value added measures in schoolperformance tables

Concerns have been expressed byacademic experts about the quality andpresentation of value-added measures inschool performance tables. Followingdiscussions with DFES and Ofsted, we haveconcluded that statistical confidenceintervals around school performance dataare valuable to those who understandthem. We would like to see thisinformation, and findings drawn from it,made available and linked to performancetables.

Government Output and Productivity

We are keeping a watching brief onfollow-up work to the Atkinson Review onmeasuring government output, and onthe process of announcing andintroducing the consequential changesinto national accounts. The revisions madeto measurement of government output innational accounts at the end of June forthe 2005 Blue Book were non-controversialand had been pre-announced in detail amonth beforehand. Other changes fromthe Atkinson recommendations could be

more controversial, eg the introduction ofnew quality adjustments to themeasurement of output.

The Commission corresponded with theNational Statistician about concerns overthe timing of health output figures inrelation to the Atkinson Review and presscoverage. The chairman stressed the needfor great care to be taken to explain bothwhy any new estimates are beingintroduced and what level of interpretationthe new estimates will stand.

Drug Seizure and Offender Statistics

The House of Commons Library expressedconcern about the change in presentation,length and access to the Home Officepublication Seizures of Drugs in Englandand Wales, 2003. The key issue was theadequacy of consultation with usersahead of significant changes to publishedoutputs.

Accession States Worker RegistrationScheme

The Association of Labour Providers raisedconcerns over the collection and use ofstatistics through the Accession WorkerRegistration Scheme. The secretariatconcluded that the scheme itself is not astatistical system, but the limitations of thefigures should be fully explained whenthey are published.

Construction Statistics

Following difficulties with the earlyestimates of construction output for GDP,DTI and ONS have reviewed the case for

42

transfer of constructions statistics from DTI toONS. The review found that the responsibilityshould be moved. However budgetaryconstraints are preventing the transition fromtaking place. The Commission has expressedconcern about lack of progress.

Public Expenditure Statistical Analyses (PESA)

The Commission was contacted regarding errorsin country and regional data included in theTreasury’s Public Expenditure Statistical Analyses(PESA). The Commission subsequently wrote tothe Treasury about the issues.

Live Music Survey

The Department for Culture, Media and Sport(DCMS) has provided a table explaining itsderivation of statistical information used in apress release from 25 August 2004 on the LiveMusic Survey. This followed concerns raised withthe Commission. The Statistics Commission alsocontacted DCMS regarding the late rectificationof an error and the lack of publicacknowledgement of the error and suggested anindependent statistical release on the survey.

Use of claimant count

Following previous correspondence with HMT onthe use of claimant count in the Pre-BudgetReport, the Commission’s view is that the LabourForce Survey ought to be used as the source formeasures of unemployment in the PBR and otherpublic documents. The Commission wrote to theTreasury about this.

43

44

Contents

Management Commentary 46-49 Remuneration Report 50-54 Statement of the Commission’s and the Accounting Officer’s Responsibilities 55Statement on Internal Control 56-58The Certificate of the Comptroller and Auditor General to the Houses of Parliament 59-60Income & Expenditure Account 61Statement of Total Recognised Gains and Losses 62Balance Sheet 63Cash Flow Statement 64Notes to the Accounts 65-76

Statistics Commission Financial StatementsFor the year ended 31 March 2006

45

Management Commentary

History

The Statistics Commission was establishedin June 2000 as part of the newarrangements for National Statistics. It is anadvisory Non-Departmental Public Body,funded by grant in aid from HM Treasury’sRequest for Resources 1, and is independentof both Ministers and the producers ofNational Statistics. It has its own budget andis able to commission its own activities.

The Commission was set up on a non-statutory basis, but its role andresponsibilities are set out in the Frameworkfor National Statistics, published in June 2000.

Going concern

In March 2006 HM Treasury publishedIndependence for Statistics: A ConsultationDocument. This set out plans to create astatutory board with oversight of officialstatistics to replace the exististingarrangements – under which there are non-executive members on the current Board ofthe Office for National Statistics, as well asindependent members of the StatisticsCommission – with a single Governing Boardthat embraces both sets of responsibilities. Itis proposed that the role and responsibilitiesof the Commission will be subsumed withinthe new Board and that the Commission willbe wound up once the new arrangementsare in place. HM Treasury officials haveconfirmed that the Commission will not bewound up before 31 March 2007 and grantin aid for 2006-07 of £1.35 million hasalready been approved. It has accordinglybeen considered appropriate to adopt agoing concern basis for the preparation ofthese financial statements.

Aims and objectives

The Commission aims to ensure thatdecision-makers and the public can trustofficial statistics and that they meet theneeds of users. The following objectiveswere adopted in pursuit of these aims:

Objective 1:

To develop our understanding of the diverseneeds of users of official statistics, includingthose of Parliament and the public, and tomake appropriate proposals to enhance thestatistical service provided by governmentto users.

Objective 2:

In the light of the needs of users of statistics,to consider and make proposals relating tothe governance of official statistics in theUnited Kingdom.

Objective 3:

To carry out the Commission’s functionsimpartially and use resources efficiently,effectively and economically.

Further information on the strategy for 2005-06 is provided in Annex A of theAnnual Report and in the Commission’sBusiness Plan 2005-06 which is available onthe website at www.statscom.org.uk.

46

Performance

The Commission’s Business Plan for 2005-06outlined details of the major projectsplanned for the year. The Commission madesignificant progress on all these projectsand published three major research reportsas well as a range of smaller reports. Asummary of the research undertaken duringthe year is detailed in Chapter 3 of theAnnual Report. Details of performanceagainst the individual projects planned for2005-06 are in Annex C of the AnnualReport together with a list of publications.

One of our projects was to assess theimpact that the Commission itself had hadon statistical work in government and togauge how we were viewed by our variousstakeholders. The main messages arisingfrom this were to be more active incommunication with external stakeholdersand the media, and to take further steps toincrease public trust in official statistics.Action on these findings has beenincorporated in the Commission’s BusinessPlan for 2006-07. Further details of our workwith stakeholders during the year isoutlined in Chapter 2 of the Annual Report.

Funding & Results for the year

The Statistics Commission is funded bygrant in aid from HM Treasury’s Request forResources 1. Grant in aid available for 2005-06 was £1.35 million. Total grant in aidprovided for the year was £1,342,496.

Future work

Chapter 4 of the Annual Report outlines theCommission’s objectives and the mainprojects planned for 2006-07.

The Commission plans to undertakeresearch in a number of areas includingmaximising use of taxation data, the usemade of official statistics and examining theprogress towards the 2011 census. TheCommission will follow up therecommendations in its previous reportsand take action to address issues raised inour survey of stakeholders. The Commissionwill also continue to pursue concerns raisedby others. Further information is available inthe Commission’s Business Plan 2006-07which is available on the websitewww.statscom.org.uk

The Commissioners

The following were Commissioners duringthe period ended 31 March 2006:

David Rhind (Chairman)Sir Derek Wanless (Vice chairman)Ian BeesleyColette BoweSir Kenneth CalmanJoly Dixon (from 1 February 2006)Dame Patricia Hodgson (until 31 December2005)Janet TrewsdaleMartin Weale

Details of remuneration and appointmentare contained in the Remuneration Report.Further information about individualcommissioners is contained in Annex B ofthe Annual Report.

A register of Commissioners’ interests ismaintained by the Commission and isavailable for inspection on the Commission’swebsite at www.statscom.org.uk

Management Commentary

47

Chief Executive and Accounting Officer

Richard Alldritt is Chief Executive of theCommission. Further information iscontained in Annex B of the Annual Reportand the Remuneration Report. HM Treasury’sprincipal Accounting Officer, the PermanentSecretary, has designated the ChiefExecutive as Accounting Officer of theCommission. His responsibilities as theAccounting Officer and for the StatisticsCommission’s system of internal control areset out on pages 55-58.

Audit Committee

The audit committee is chaired by aCommissioner, Sir Derek Wanless. There aretwo other members, both external: JohnGant CB, previously Finance Director ofInland Revenue; and Linda Peacock,Financial Controller, Finance & ResourceManagement, Department of Trade andIndustry.

Annual Accounts

These accounts have been prepared in aform directed by HM Treasury as set out inthe accounts direction.

External Audit

The Comptroller and Auditor General hasagreed to be appointed as the auditor tothe Statistics Commission. The audit fee for2005-06 was £7,344.

The Accounting Officer confirms that:

• there is no relevant audit information ofwhich the auditors are unaware

• he has taken all the steps considerednecessary to ensure the auditors areaware of relevant audit information; and

• he has taken all the steps considerednecessary to establish that the auditorsare aware of the information.

Management Commentary

48

Payment of suppliers

HM Treasury processed the Commission’sinvoices on its behalf until 31 October 2005.HM Treasury’s target is to make all paymentsnot in dispute within 30 days or less ofacceptance of the relevant goods andservices, or the receipt of a legitimateinvoice if that is later. For 2005-06 HMTreasury achieved a performance of 94.70%against this target for all invoices. Since 1November 2005 the Commission has beenresponsible for making its own paymentsand for the period 1 November 2005 to 31March 2006 it achieved a performance of98.38% against the same target.

Post balance sheet events

There are no post balance sheet events toreport for the period ending 31 March 2006.

Staff issues

The Statistics Commission does not directlyemploy staff. At 31 March 2006 there wereeleven secondees from other governmentdepartments and public bodies and onetemporary member of staff. Given thesecircumstances, consultation andcommunication between staff andmanagement take place directly and on aninformal basis. Secondees remain subject totheir parent organisation’s terms andconditions of employment.

Pensions

Staff pensions remain the responsibility oftheir parent organisations. The StatisticsCommission is, therefore, exempt from anypension related liability. Further informationis given in Note 1i of the annual accountsand the Remuneration Report.

Equality and diversity

The Statistics Commission is committed tothe principle of equality of opportunity andvalues diversity. The Commission opposes allforms of discrimination and promotesequality and fairness in its recruitment andretention of staff.

Richard AlldrittChief Executive 3 July 2006

Management Commentary

49

Remuneration Policy and Appointment

The Statistics Commission is a non-departmental public body sponsored by HMTreasury and was established on a non-statutory basis.

Commissioners

The Chair and other Commissioners areappointed by the Minister for NationalStatistics. The level of remuneration issubject to review in the context of decisionstaken by Ministers from time to time inrelation to salaries of this kind.

Appointments to the Commission are madein open competition and in accordance withthe Code of Practice of the Commissionerfor Public Appointments.

Staff

HM Treasury directed that the staff of theStatistics Commission will be onsecondment from Civil ServiceDepartments, and will be subject to levels ofremuneration and terms and conditions ofservice applying in their parentDepartments. The Statistics Commission hasno delegated power to amend these termsand conditions.

Staff appointments are made through HMTreasury in accordance with the Civil ServiceCommissioners Recruitment Code whichrequires appointment to be on merit on thebasis of fair and open competition but alsoincludes the circumstances whenappointments may otherwise be made. Staffappointed from outside the Civil Service areloaned to, or placed on fixed term contract

by HM Treasury. Staff are then seconded tothe Commission for periods of one year ormore.

Further information about the work of theCivil Service Commissioners can be found atwww.civilservicecommissioners.gov.uk

Salary and Pension Entitlements

The following sections provide details of theCommissioners and Chief Executive of theCommission:

Commissioners Remuneration

The Chairman is paid an annual fee of£28,000 (2004-05: £28,000) for 60 (2004-05:60) days work and each of theCommissioners is paid an annual fee of£5,500 (2004-05: £5,500) for 20 (2004-05: 20)days work. Sir Derek Wanless was appointedVice Chairman in July 2004 and is paid an annual fee of £8,250 for 30 days work eachyear. Until 31 March 2005 Commissionerswere paid one month in arrears. From 1April 2005 Commissioners were paid on thelast day of the month. So for 2005/06 oneadditional payment appears in the accounts.

Remuneration Report

50

*The appointments of Sir Kenneth Calman and Martin Weale ended on 31 December 2005. TheFinancial Secretary to HM Treasury re-appointed them from 1 February 2006 for one year and twoyears respectively.

Remuneration is non-pensionable and the Commissioners received no benefits in kind during theyear.

Chief Executive’s Renumeration and Pension

The Chief Executive’s renumeration is as follows:

Commissioners 2005-06 2004-05

£ £

David Rhind (chairman) 30,333 28,000

Ian Beesley 5,958 4,125

Colette Bowe 5,958 5,500

Sir Kenneth Calman* 5,500 5,500

Joly Dixon (from 1 February 2006) 918 -

Dame Patricia Hodgson (until 31 December 2005) 4,583 5,500

Janet Trewsdale 5,958 5,500

Sir Derek Wanless (vice chairman) 8,938 7,562

Martin Weale* 5,500 5,500

2005-06 2004-05

Salary Benefits in kind Salary Benefits in kind£000 (to nearest £100) £000 (to nearest £100)

Richard Alldritt 70-75 38,500 70-75 37,600

Remuneration Report

51

Salary

‘Salary’ includes gross salary; performancepay or bonuses; overtime; reserved rights toLondon weighting or London allowances;recruitment and retention allowances; pri-vate office allowances and any otherallowance to the extent that it is subject toUK taxation.

This report is based on payments made bythe Commission and thus recorded in theseaccounts.

Benefits in Kind

The monetary value of benefits in kind cov-ers any benefits provided by the employerand treated by the Inland Revenue as a tax-able emolument. The chief executivereceived benefits in kind consisting of lodg-ing allowance, travel costs and settlement ofthe related tax liability.

Remuneration Report

52

RichardAlldritt

Accruedpension atage 60 as at31/3/06and relatedlump sum

£000

30-35

Realincrease inpensionand relatedlump sumat age 60

£000

2.0-2.5

CETV at31/3/06

£000

558

CETV at31/3/05

£000

409

Realincreasein CETV

£000

35

Employee contribution to partnership pension account

Nearest £100

3000

Pension Benefits

Chief Executive

Civil Service Pensions

Pension benefits are provided through theCivil Service pension arrangements. From 1October 2002, civil servants may be in oneof three statutory based ‘final salary’ definedbenefit schemes (classic, premium, andclassic plus). The schemes are unfundedwith the cost of benefits met by moniesvoted by Parliament each year. Pensionspayable under classic, premium, and classicplus are increased annually in line withchanges in the Retail Prices Index. Newentrants after 1 October 2002 may choosebetween membership of premium or joining a goodquality ‘money purchase’ stakeholderarrangement with a significant employercontribution (partnership pension account).

Employee contributions are set at the rate of1.5% of pensionable earnings for classic and3.5% for premium and classic plus. Benefitsin classic accrue at the rate of 1/80th ofpensionable salary for each year of service.In addition, a lump sum equivalent to threeyears’ pension is payable on retirement. Forpremium, benefits accrue at the rate of1/60th of final pensionable earnings foreach year of service. Unlike classic, there isno automatic lump sum (but members maygive up (commute) some of their pension toprovide a lump sum). Classic plus isessentially a variation of premium, but withbenefits in respect of service before 1October 2002 calculated broadly in thesame way as in classic.

The partnership pension account is astakeholder pension arrangement. Theemployer makes a basic contribution ofbetween 3% and 12.5% (depending on theage of the member) into a stakeholderpension product chosen by the employeefrom a selection of approved products. Theemployee does not have to contribute butwhere they do make contributions, theemployer will match these up to a limit of3% of pensionable salary (in addition to theemployer’s basic contribution). Employersalso contribute a further 0.8% ofpensionable salary to cover the cost ofcentrally-provided risk benefit cover (deathin service and ill health retirement).

Further details about the Civil Servicepension arrangements can be found at thewebsite www.civilservice-pensions.gov.uk.

Remuneration Report

53

Cash Equivalent Transfer Values

A Cash Equivalent Transfer Value (CETV) isthe actuarially assessed capitalised value ofthe pension scheme benefits accrued by amember at a particular point in time. Thebenefits valued are the member’s accruedbenefits and any contingent spouse’spension payable from the scheme. A CETV isa payment made by a pension scheme orarrangement to secure pension benefits inanother pension scheme or arrangementwhen the member leaves a scheme andchooses to transfer the benefits accrued intheir former scheme. The pension figuresshown relate to the benefits that theindividual has accrued as a consequence oftheir total membership of the pensionscheme, not just their service in a seniorcapacity to which disclosure applies. TheCETV figures, and from 2003-04 the otherpension details, include the value of anypension benefit in another scheme orarrangement which the individual hastransferred to the Civil Service pensionarrangements and for which the CS Vote hasreceived a transfer payment commensuratewith the additional pension liabilities beingassumed. They also include any additionalpension benefit accrued to the member as aresult of their purchasing additional years ofpension service in the scheme at their owncost. CETVs are calculated within theguidelines and framework prescribed by theInstitute and Faculty of Actuaries.

Please note that the factors used tocalculate the CETV were revised on 1 April2005 on the advice of the Scheme Actuary.The CETV figure for 31 March 2005 has beenrestated using the new factors so that it iscalculated on the same basis as the CETVfigure for 31 March 2006.

Real Increase in CETV

This reflects the increase in CETV effectivelyfunded by the employer. It takes account ofthe increase in accrued pension due toinflation, contributions paid by theemployee (including the value of anybenefits transferred from another pensionscheme or arrangement) and uses commonmarket valuation factors for the start andend of the period.

Richard AlldrittChief Executive 3 July 2006

Remuneration Report

54

Statement of the Commission’s and the Accounting Officer’sResponsibilities

Under paragraphs 31-35 of the CabinetOffice’s Guidance on Codes of Practice forBoard Members of Public Bodies, theCommission is responsible for ensuringpropriety in its use of public funds and forthe proper accounting for their use. On theauthority of the Chancellor of theExchequer, in his capacity as Minister forNational Statistics, the Treasury has directedthe Statistics Commission to prepare astatement of accounts for each financialyear in the form and on the basis set out inthe accounts direction. The accounts areprepared on an accruals basis and must givea true and fair view of the StatisticsCommission’s affairs at the year-end and ofits income and expenditure, totalrecognised gains and losses and cash flowsfor the financial year.

In preparing these accounts the StatisticsCommission is required to:

• observe the accounts direction issued bythe Treasury, including the relevantaccounting and disclosure requirements,and apply suitable accounting policieson a consistent basis

• make judgements and estimates on areasonable basis

• state whether applicable accountingstandards have been followed, anddisclose and explain any materialdepartures in the accounts

• prepare the accounts on a going concernbasis, unless it is inappropriate topresume that the Statistics Commissionwill continue in operation.

The Accounting Officer of HM Treasury hasdesignated the Chief Executive of theStatistics Commission as its AccountingOfficer. His relevant responsibilities asAccounting Officer, including hisresponsibility for the propriety andregularity of the public finances and for thekeeping of proper records, are set out in theAccounting Officers’ Memorandum, issuedby the Treasury and published inGovernment Accounting.

Richard AlldrittChief Executive 3 July 2006

55

Statement on Internal Control

Scope of responsibility

As Accounting Officer, I have responsibilityfor maintaining a sound system of internalcontrol that supports the achievement ofthe Commission’s policies, aims and objec-tives, whilst safeguarding the public fundsand assets for which I am personally respon-sible, in accordance with the responsibilitiesassigned to me in Government Accounting.The chairman of the Statistics Commission isappointed by the Minister for NationalStatistics and is personally responsible forprobity in the conduct of the Commission’saffairs. The chairman also has responsibilityfor providing effective strategic leadershipon the formulation of the Commission’sstrategy for discharging its duties, includingfor encouraging high standards of regularityand propriety and promoting the efficientand effective use of resources. The Ministerfor National Statistics also appoints ordinarymembers of the Commission. TheCommissioners including the chairman havecorporate responsibility for ensuring thatthe Commission complies with statutory oradministrative requirements for the use ofpublic funds.

Commissioners are also responsible for:

• ensuring that high standards of corpo-rate governance are observed at all times

• establishing the overall strategic directionof the Commission within the policy andresources framework agreed with theMinister for National Statistics

• ensuring that the Commission operateswithin the Framework for NationalStatistics and the terms of theManagement Statement and Financial

Memorandum, and in accordance withany other conditions relating to use ofpublic funds.

To help Commissioners fulfil their responsi-bilities the Commission has produced astatement of all matters which should bereported to Commissioners.

The purpose of the system of internal control

The system of internal control is designed tomanage risk to a reasonable level ratherthan to eliminate all risk of failure to achievepolicies, aims and objectives; it can thereforeonly provide reasonable and not absoluteassurance of effectiveness. The system ofinternal control is based on an ongoingprocess designed to identify and prioritisethe risks to the achievement of theCommission’s policies, aims and objectives,to evaluate the likelihood of those risksbeing realised and the impact should theybe realised, and to manage them efficiently,effectively and economically. The system ofinternal control has been in place in theCommission for the year ended 31 March2006 and up to the date of approval of theannual report and accounts, and accordswith Treasury guidance.

56

Capacity to handle risk

The Commissioners have ultimateresponsibility for deciding how much riskcan be tolerated and for managing theCommission’s risks, in particular for

• conveying their attitude towards riskmanagement to the Chief Executive;

• making decisions which affect theCommission’s risk profile or exposure;and

• reviewing at least annually theCommission’s risk strategy and the riskregister.

The Commissioners have delegated to theChief Executive the day-to-day responsibilityfor managing risk within the Commission.The Chief Executive, as informed by seniormanagers, is responsible for assessing andreporting risk to the Commissioners and theAudit Committee. Commissioners and staffare committed to delivering a robustcorporate governance and riskmanagement framework appropriate to thesize and type of the organisation. Key staffhave received risk awareness and riskmanagement training.

The risk and control framework

The Commission has a risk managementstrategy which follows the principles of theguidance issued by HM Treasury, NationalAudit Office and the Office of GovernmentCommerce. The approach developed isappropriate to the particular size andcircumstances of the Commission.

The identification and evaluation of risks isundertaken by holding a risk managementworkshop twice a year, attended by keystaff, at which all the operations and activities of the Commission in relation to itsobjectives are considered and associated risks identified and reviewed. Risks areevaluated by assessing the likelihood andimpact of the risk occurring and the risksthen categorised according to whether theyare high, medium or low. Risk appetites areassessed on a risk by risk basis on thedegree to which the Commission shouldaccept inherent risk; should attempt toreduce risk through mitigation and controlmeasures; or maximise opportunity throughrisk taking. This judgement is reached takinginto account the Commission’s generalapproach to risk and the attitude of theCommissioners to risk management. TheCommission considers its risk priorities to bebuilding links with stakeholders, researchand strategy and internal managementprocesses.

Each risk is assessed for the mostappropriate way to manage it andresponsibility for action assigned toindividuals. Risks identified are recorded in arisk register together with the Commission’sevaluation and planned action. This helpssenior staff in reviewing and updating thebusiness plan to ensure resources aredirected to areas of greatest risk. At thelower level staff have included action foraddressing risks in their work objectives andinclude risk assessment in project proposals.

Statement on Internal Control

57

Review of effectiveness

As Accounting Officer, I have responsibilityfor reviewing the effectiveness of thesystem of internal control. My review of theeffectiveness of the system of internalcontrol is informed by the work of theinternal auditors and the executivemanagers within the Commission who haveresponsibility for the development andmaintenance of the internal controlframework, and comments made by theexternal auditors in their management letterand other reports. I have been advised onthe implications of the result of my reviewof effectiveness of the system of internalcontrol by the Commissioners and the auditcommittee, and a plan to addressweaknesses and ensure continuousimprovement of the system is in place.

The main processes which have beenapplied in maintaining and reviewing theeffectiveness of the system of internalcontrol were:

• Commissioners approved the BusinessPlan and monitored progress at theirmeetings held six times per annum. TheChief Executive submitted a progressreport to each Commission meeting. TheCommissioners received periodic reportsfrom the Chairman of the auditcommittee.

• The audit committee met three timesduring the year and examined all internaland external audit reports and reviewedthe risk management strategy andprogress on maintaining the risk registerand addressing the risks identified.

• Two risk management workshops wereheld during the year attended by keymembers of staff, during which staff re-evaluated the risks likely to threaten theachievement of the Commission’sobjectives and reviewed progress on thecontrol strategies. Progress on, andchanges to the risk register werereviewed by the audit committee.

• Regular reports from staff to the ChiefExecutive on the steps they took tomanage risks in their areas ofresponsibility including progress reportson key projects.

• The Commission’s internal audit serviceoperates to Government Internal AuditStandards. The Head of Internal Auditsubmitted regular reports to the ChiefExecutive, and the audit committee,including an independent opinion on theadequacy and effectiveness of theCommission’s system of internal control,together with recommendations forimprovements.

• A report from the National Audit Officeto the Chief Executive on the outcome ofits annual audit of the accounts.

Richard AlldrittChief Executive 3 July 2006

Statement on Internal Control

58

I have audited the financial statements ofthe Statistics Commission for the yearended 31 March 2006. These comprise theIncome and Expenditure Account, theBalance Sheet, the Cashflow Statement andStatement of Total Recognised Gains andLosses and the related notes. Thesefinancial statements have been preparedunder the accounting policies set out withinthem.

Respective responsibilities of theCommission, the Accounting Officer and theAuditor

The Commission and Accounting Officer areresponsible for preparing the AnnualReport, the Remuneration Report and thefinancial statements in accordance withTreasury directions and for ensuring theregularity of financial transactions. Theseresponsibilities are set out in the Statementof the Commission’s and the AccountingOfficer’s Responsibilities.

My responsibility is to audit the financialstatements in accordance with relevantlegal and regulatory requirements, and withInternational Standards on Auditing (UK andIreland).

I report to you my opinion as to whether thefinancial statements give a true and fairview and whether the financial statementsand the part of the Remuneration Report tobe audited have been properly prepared inaccordance with the Treasury directions. Ialso report whether in all material respectsthe expenditure and income have beenapplied to the purposes intended byParliament and the financial transactionsconform to the authorities which governthem. I also report to you if, in my opinion,

the Annual Report is not consistent with thefinancial statements, if the Commission hasnot kept proper accounting records, if I havenot received all the information andexplanations I require for my audit, or ifinformation specified by relevant authoritiesregarding remuneration and othertransactions is not disclosed.

I review whether the statement on pages 56to 58 reflects the Commission’s compliancewith HM Treasury’s guidance on theStatement on Internal Control, and I report ifit does not. I am not required to considerwhether the Accounting Officer’sstatements on internal control cover all risksand controls, or form an opinion on theeffectiveness of the Commission’s corporategovernance procedures or its risk andcontrol procedures.

I read the other information contained inthe Annual Report and consider whether itis consistent with the audited financialstatements. This other informationcomprises only the Chairman’s report, linkswith stakeholders, reports and research, theforward look and Annexes included withinthe Annual Report, the unaudited part ofthe Remuneration Report and theManagement Commentary. I consider theimplications for my report if I become awareof any apparent misstatements or materialinconsistencies with the financialstatements. My responsibilities do notextend to any other information.

The Certificate of the Comptroller and Auditor General to theHouses of Parliament

59

Basis of audit opinion

I conducted my audit in accordance withInternational Standards on Auditing (UK andIreland) issued by the Auditing PracticesBoard. My audit includes examination, on atest basis, of evidence relevant to theamounts, disclosures and regularity offinancial transactions included in thefinancial statements and the part of theRemuneration Report to be audited. It alsoincludes an assessment of the significantestimates and judgments made by theCommission and Accounting Officer in thepreparation of the financial statements, andof whether the accounting policies are mostappropriate to the Commission’scircumstances, consistently applied andadequately disclosed.

I planned and performed my audit so as toobtain all the information and explanationswhich I considered necessary in order toprovide me with sufficient evidence to givereasonable assurance that the financialstatements and the part of theRemuneration Report to be audited are freefrom material misstatement, whethercaused by fraud or error and that in allmaterial respects the expenditure andincome have been applied to the purposesintended by Parliament and the financialtransactions conform to the authoritieswhich govern them. In forming my opinion Ialso evaluated the overall adequacy of thepresentation of information in the financialstatements and the part of theRemuneration Report to be audited.

Opinion

In my opinion:

• the financial statements give a true andfair view, in accordance with theTreasury directions, of the state of theStatistics Commission’s affairs as at 31March 2006 and of its surplus for the yearthen ended;

• the financial statements and the part ofthe Remuneration Report to be auditedhave been properly prepared inaccordance with the Treasury directions;and

• in all material respects the expenditureand income have been applied to thepurposes intended by Parliament andthe financial transactions conform to theauthorities which govern them.

John Bourn Comptroller and Auditor GeneralJuly 2006

National Audit Office157-197 Buckingham Palace RoadVictoriaLondon SW1W 9SP

The Certificate of the Comptroller and Auditor General to the Houses of Parliament

60

Income and Expenditure Account For the Year Ended 31 March 2006

2006 2005

Note £ £ £ £

Income

Grant in aid 2 1,338,819 1,332,996

Other operating income 3 61,226 136,695

1,400,045 1,469,691

Expenditure

Staff costs 4 626,498 554,041

Commissioners’ fees 5 73,646 67,187

Other administration costs 6 491,581 818,522

Depreciation 7 57,656 63,246

Deficit on disposal of fixed assets - 73,349

Cost of capital charge 12 4,686 2,263

1,254,067 1,578,608

Retained surplus/(deficit) transferred to/(from) General Fund 12 145,978 (108,917)

The notes on pages 65 to 76 form part of these accounts

61

2006 2005

Note £ £

Retained surplus/(deficit) for the year 145,978 (108,917)

Unrealised surplus on the revaluation of tangible fixed assets 12 1,854 84

Total recognised gains/(losses) for the year 147,832 (108,833)

The notes on pages 65 to 76 form part of these accounts

Statement of Total Recognised Gains and Losses For the Year Ended 31 March 2006

62

Balance Sheet As at 31 March 2006

2006 2005

Note £ £ £ £

Fixed assets

Tangible assets 7 151,561 206,107

Current assets

Debtors 8 246,575 736,439

Cash at bank and in hand 9 20,165 2,169

266,740 738,608

Creditors: amounts falling duewithin one year 10 (231,218) (853,750)

Net current assets/(liabilities) 35,522 (115,142)

Creditors: amounts falling dueafter more than one year 11 (4,062) (4,062)

Net assets 183,021 86,903

Reserves

General fund 12 31,462 (119,202)

Government grant reserve 12 151,559 206,105

183,021 86,903

Richard AlldrittChief Executive3 July 2006

The notes on pages 65 to 76 form part of these accounts

63

Cash Flow Statement For the Year Ended 31 March 2006

2006 2005

Note £ £

Net cash inflow/(outflow) from operating activities 13 17,996 (28,492)

Capital expenditure

Payments to acquire tangiblefixed assets (3,677) (240,981)

Net cash inflow/(outflow) before financing 14,319 (269,473)

Financing

Grant in aid for capital expenditure 3,677 261,655

Increase/(decrease) in cash and cash equivalents 9 17,996 (7,818)

The notes on pages 65 to 76 form part of these accounts

64

a. Basis of preparation

These financial statements have beenprepared in accordance with the HMTreasury Accounts Direction and HMTreasury’s guidance GovernmentFinancial Reporting Manual. Theparticular accounting policies adoptedby the Statistics Commission aredescribed below. They have been appliedconsistently in dealing with itemsconsidered material in relation to thesefinancial statements.

Grant in aid for 2006-07 of £1.35 millionhas already been approved. HM Treasuryhave proposed to wind up theCommission in their Consultationdocument, Independence for Statistics,issued on 22 March 2006. However, theyhave confirmed that the Commission willnot be wound up before 31 March 2007.It has accordingly been consideredappropriate to adopt a going concernbasis for the preparation of thesefinancial statements.

b. Accounting convention

The financial statements have beenprepared under the historical costconvention, as modified to account forthe revaluation of tangible fixed assets attheir value to the business by referenceto their current cost.

Without limiting the information given,the financial statements meet theaccounting and disclosure requirementsof the Companies Acts and theaccounting standards issued by theAccounting Standards Board so far asthose requirements are appropriate.

c. Grant in aid and government grant reserve

The Statistics Commission is financed bygrant in aid from the Treasury’s Requestfor Resources 1.

Grant in aid applied to revenue isaccounted for on an accruals basis tomatch payments made during the yearthat will be funded by grant in aid, butfor which a claim had not beensubmitted at the year end.

A proportion of the grant in aid received,equal to expenditure on fixed assetacquisitions in the year, is taken to thegovernment grant reserve at the end ofthe financial year. Each year, an amountequal to the depreciation charge on thefixed assets acquired through grant inaid, and any deficit on their revaluation inexcess of the balance on the revaluationreserve, will be released from thegovernment grant reserve to the Incomeand Expenditure account.

d. Tangible fixed assets

Individual tangible fixed assets with apurchase cost in excess of £500 arecapitalised and are revalued each yearusing appropriate indices to their netcurrent replacement cost. All assetsacquired on an individual or groupedbasis (for similar items or those usedtogether) for ongoing use falling abovethis threshold will be shown as tangiblefixed assets.

e. Depreciation

Depreciation is provided on a straight-line basis, calculated on the revaluedamounts to write off assets, less any

Notes to the Accounts

1. Accounting policies

65

estimated residual balance, over theirestimated useful lives. The useful lives oftangible fixed assets have beenestimated as follows:

IT equipment 3 years

Office equipment 5 years

Furniture and fittings 5 years

Leasehold improvements Over lease term

A full year’s charge for depreciation isprovided in the year of acquisition andnone is provided in the year of disposal.

f. Operating leases

Rental payable under operating leases ischarged to the income and expenditureaccount on a straight-line basis over theterm of the lease. The StatisticsCommission’s commitments aredisclosed in note 14.

g. Notional charges

A notional cost of capital is calculated at3.5% (2004-05 – 3.5%) on average netassets, excluding the Paymaster Generalbank balance. Where there are netliabilities (excluding the PaymasterGeneral bank balance) a cost of capitalcredit arises. Notional costs are chargedto the income and expenditure accountand credited as a movement on thegeneral fund.

h. Value added tax

Value added tax (VAT) on purchases isnot recoverable, hence is charged to theIncome and Expenditure accountincluded under the heading relevant tothe type of expenditure.

i. Pension arrangements

The Commission is a non-statutoryorganisation and cannot directly employstaff. So everyone other than temporarystaff is seconded to the Commission. Theparent organisations of staff seconded tothe Commission invoice the Commissionfor the pension and social security costsof the individual secondees. Most pastand present Commission staff arecovered by the provisions of the PrincipalCivil Service Pension Scheme (PCSPS)which is an unfunded multi-employerdefined benefit scheme. The SchemeActuary (Hewitt Bacon Woodrow) valuedthe scheme as at 31 March 2003. Detailscan be found in the resource accounts ofthe Cabinet Office: Civil Superannuationat www.civilservice-pensions.gov.uk.

Notes to the Accounts

66

Notes to the Accounts

2. Grant in aid

31-Mar-06 31-Mar-05

£ £

Grant receivable from Request for Resources 1 1,342,496 1,594,651

Transfer to government grant reserve in respectof fixed asset additions (3,677) (261,655)

1,338,819 1,332,996

3. Other operating income

31-Mar-06 31-Mar-05

£ £

Transfer from government grant reserve in respect of depreciation charge 57,656 63,246

Transfer from government grant reserve in respect of deficits on revaluation 2,421 100

Transfer from government grant reserve in respect of deficit on disposal of fixed assets - 73,349

Bank interest on current account 1,149 -

61,226 136,695

4. Staff costs

31-Mar-06 31-Mar-05

a) Staff costs for the year comprised: £ £

Wages and salaries (staff on secondment) 483,018 447,833

Wages and salaries (temporary staff ) 4,956 -

Social security costs 45,062 42,020

Other pension costs 93,462 64,188

626,498 554,041

67

Salaries include gross salaries, performancebonuses payable, reserved rights to LondonWeighting or London allowances, recruit-ment and retention allowances, privateoffice allowances and the monetary value ofbenefits in kind.

b. Average number of staff

The average number of persons contractedto work for the Commission during the yearwas as follows:

31-Mar-06 31-Mar-05

Number Number

Senior staff on secondment 1 1

Other staff on secondment 10 10

Temporary staff - -

Total 11 11

5. Commissioners’ fees

For details of fees paid to individual Commissioners see the Remuneration Report.

Total fees for the year were as follows; 31-Mar-06 31-Mar-05

£ £

Total Commissioner fees 73,646 67,187

In addition, expenses amounting to £7,793(2004-05: £3,755) were reimbursed to the Commissioners.

Notes to the Accounts

Staff costs continued

68

6. Other administration costs

31-Mar-06 31-Mar-05

£ £

Rent, rates and service charges 136,371 362,295

Research costs 192,407 268,430

IT current 41,813 45,816

Consultants and professionals 10,239 20,060

HM Treasury notional costs - 13,940

Training 9,036 12,391

Printing and stationery 13,497 16,907

Internal audit 7,873 10,300

Recruitment 7,776 13,033

External auditors’ fees 7,344 7,050

Commissioners’ expenses 17,603 7,952

Cleaning 5,298 6,308

Relocation expenses 423 5,002

Telephones 5,879 4,679

Photocopying 3,003 3,601

Postage 4,574 5,436

Publicity 6,215 5,317

Travel 9,781 3,847

Other costs (eg bank charges, electricity, health and safety, etc) 12,449 6,158

491,581 818,522

Other costs include £2,421 (2004-05: £100) for the downward revaluation of tangible fixed assets.

Notes to the Accounts69

Notes to the Accounts

7. Tangible fixed assets

IT Office Furniture Leasehold &Equipment Equipment & Fittings Improvements Total

£ £ £ £ £Valuation

At 1 April 2005 45,953 3,579 66,151 186,411 302,094Additions 3,677 - - - 3,677Disposals - - - - - Revaluation (6,154) - 345 2,761 (3,048)

At 31 March 2006 43,476 3,579 66,496 189,172 302,723

Depreciation

At 1 April 2005 22,720 3,579 32,406 37,282 95,987Charge for year 11,192 - 8,630 37,834 57,656Withdrawn - - - - -Revaluation (3,733) - 139 1,113 (2,481)

At 31 March 2006 30,179 3,579 41,175 76,229 151,162

Net book value

At 31 March 2006 13,297 - 25,321 112,943 151,561

At 31 March 2005 23,233 - 33,745 149,129 206,107

8) Debtors 31-Mar-06 31-Mar-05

£ £

Accrued income – Grant in aid (see Note 1c) 189,697 717,893

Prepayments 55,018 16,686

Other debtors 1,860 1,860

246,575 736,439

70

Notes to the Accounts

9. Cash at bank and in hand

31-Mar-06 31-Mar-05

£ £

At 1 April 2,169 9,987

Increase/(decrease) in cash in the year 17,996 (7,818)

At 31 March 20,165 2,169

Bank account at Office of Paymaster General - 2,169

Commercial bank account 20,165 -

20,165 2,169

10. Creditors: Amounts falling due within one year

31-Mar-06 31-Mar-05

£ £

Amount payable to HM Treasury 93,852 605,202

Trade creditors 44,615 130,111

Other creditors 10,666 10,666

Accruals 82,085 107,771

231,218 853,750

11. Creditors: Amounts falling due after more than one year

31-Mar-06 31-Mar-05

£ £

Other creditors 4,062 4,062

Other creditors relate to the operating lease incentive for a rent-free period.This amount will be released to the Income and Expenditure account as follows:

31-Mar-06 31-Mar-05

£ £

Within 1 to 2 years 4,062 4,062

71

Notes to the Accounts

12. Reserves

Government General TotalGrant Reserve Fund

£ £ £

At 1 April 2005 206,105 (119,202) 86,903

Surplus for the year - 145,978 145,978

HM Treasury notional costs - - -

Reversal of cost of capital - 4,686 4,686

Surplus on revaluation of fixed assets 1,854 - 1,854

Deficit on revaluation offixedassets (2,421) - (2,421)

Grant for fixed assets additions 3,677 - 3,677

Depreciation transferred to income and expenditure account (57,656) - (57,656)

At 31 March 2006 151,559 31,462 183,021

72

Notes to the Accounts

13. Reconciliation of operating surplus/(deficit) to net cash outflow from operating activities

31-Mar-06 31-Mar-05

£ £

Operating surplus/(deficit) 145,978 (108,917)

Adjustment for non-cash transactions:

Depreciation 57,656 63,246

Deficit on disposal of fixed assets - 73,349

Notional support costs - 13,940

Cost of capital 4,686 2,263

Deficit on revaluation of fixed assets 2,421 100

Release from government grant reserve (60,077) (136,695)

Adjustment for movements in working capital other than cash:

(Decrease)/increase in creditors (622,532) 358,682

Decrease/(increase) in debtors 489,864 (294,460)

Net cash inflow/(outflow) from operating activities 17,996 (28,492)

73

14. Commitments under operating leases

31-Mar- 06 31-Mar-05

£ £

The annual commitment under operating leases were as follows:

Land and buildings

Lease expiring within one year - -

Lease expiring after one year but not more than 5 years 106,661 106,661

106,661 106,661

The Statistics Commission had no contingent liabilities at 31 March 2006. (2005: None)

Notes to the Accounts

15. Contingent liabilities

16. Capital and other commitments

In August 2005 the Statistics Commissionappointed Matrix Research and Consultancyto carry out a review of Crime Statistics at atotal cost of £78,832 excluding VAT of which£62,000 excluding VAT was paid during2005-06.

The Statistics Commission had no capitalcommitments at 31 March 2006.

74

Notes to the Accounts

17. Related party transactions

During the year, HM Treasury provided totalgrant in aid of £1,342,496 (2004-05:£1,594,651).

Any costs incurred by the StatisticsCommission are disbursed by HM Treasuryon the Commission’s behalf. The StatisticsCommission reimburses HM Treasury forthese payments on a quarterly basis.

Until 31 October 2005 the StatisticsCommission received finance services fromHM Treasury, for which charges of £5,875were made. (2004-05: notional charge £13,940)

During the year, other than the receipt offees, expenses and salaries as disclosed inNotes 4 and 5, none of the Commissionmembers, senior managers or other relatedparties has undertaken any materialtransactions with the Statistics Commission.

75

18. Financial instruments

Financial Reporting Standard (FRS) 13,Derivatives and Other FinancialInstruments, requires disclosure of therole which financial instruments have hadduring the year in creating or changingthe risks an entity faces in undertaking itsactivities. As permitted by FRS 13, debtorsand creditors which mature or becomepayable within 12 months from thebalance sheet date have been omittedfrom these disclosures. Because of thelargely non-trading nature of its activitiesand the way it is financed, theCommission is not exposed to the degreeof financial risk faced by business entities.

Moreover, financial instruments play amuch more limited role in creating orchanging risk than would be typical ofthe listed companies to which FRS 13mainly applies. The Commission haslimited powers to borrow or invest funds,financial assets and liabilities aregenerated by day-to-day operationalactivities and are not held to change therisks facing the Commission inundertaking its activities.

Liquidity risk

The Commission’s net revenue resourcerequirements are largely funded by grantin aid from its sponsor department. Thecapital expenditure is also financedthrough grant in aid. The Commission istherefore not exposed to significantliquidity risks.

Interest rate risk

The Commission is not exposed to anyinterest rate risk.

Foreign currency risk

The Commission’s exposure to foreigncurrency risk is not currently significant.

19. Intra-government balances

Debtors: Creditors: Creditors:amounts falling amounts falling amounts falling

due within due within due after moreone year one year than one year

£ £ £

Balances with HM Treasury 189,697 93,852 -

Balances with other government departments - 102,256 -

Balances with bodies external to government 56,877 35,110 4,062

At 31 March 2006 246,574 231,218 4,062

Balances with HM Treasury 717,893 605,202 -

Balances with other government departments - 85,255 -

Balances with bodies external to government 18,546 163,293 4,062

At 31 March 2005 736,439 853,750 4,062

Printed in the UK for the Stationery Office limitedon behalf of the controller of Her Majesty’s Stationery Office

168572 07/06

76

Notes to the Accounts

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