Former BoE deputy governor to lift lid on UK statistics

By William Schomberg and David Milliken LONDON (Reuters) - An official investigation into Britain's economic statistics will seek ways to cast more light on the inner workings of companies to try to find solutions to a nagging productivity problem, the head of the review said. Charlie Bean, a former Bank of England deputy governor who heads the review launched on Wednesday, also told Reuters he wanted Britain to modernise the way it measures what is going on in its economy by using digital technology to capture more data and analyse it in greater detail. British finance minister George Osborne ordered the review last month as part of a push to tackle what he called the "great economic challenge" of weak productivity. British workers produce less per hour than they did before the financial crisis, posing a threat to long-term economic prospects. Bean recalled how, during his time at the central bank, BoE economists came up with more than a dozen hypotheses to try to explain why Britain was unable to get its productivity to grow significantly. "To do this you often have to start drilling down beneath the high-level aggregate data to look at what's happening in individual sectors, possibly in individual regions, in individual companies, by size or whatever it might be," he said. "That capability to interrogate data is something that I think is very important and there is a question about whether the ONS (Office for National Statistics) data make that as easy as it could be," he said. The ONS has faced criticism over the quality of some of its statistics, including from BoE Governor Mark Carney. "It may well be the case that the ONS has slipped a bit from being leader of the pack to being in the top half-dozen or whatever it might be," Bean said. He said the way Britain produced its official statistics still reflected the make-up of the country's economy in the wake of World War Two, when it was dominated by manufacturing, before its services sector grew to be the main driving force. "There are particular challenges with measuring services, such as financial services and how you measure value-added in that," he said. "More particularly and more recently you have the whole digital revolution which is leading to major change." The shift by consumers and companies to make purchases online might not be adequately captured by official statistics and there was also a wealth of data generated digitally which could give an alternative view of economic activity, Bean said. BoE rate-setters benefited from up-to-date tax revenue data gathered by the finance ministry which gave the central bank a clearer idea of the strength of consumer demand, he said. Bean said he would draw up a shortlist of economic indicators that should be the focus of the review. He also said the move of the ONS's main office from London to Newport in Wales, which began in 2007, had led to the loss of many experienced members of staff. The change in location has been cited by private sector economists as contributing to a decline in the quality of ONS statistics. "The key thing that experienced staff tend to bring is perhaps the ability to check if data passes the 'smell test', does it look sensible," Bean said. (Editing by Ruth Pitchford)