These are no figures of fun

WINSTON Smith, hero of 1984, knew a thing or two about dodgy official figures.

At one point in the novel, George Orwell's main character reflects on his work 'correcting' (ie falsifying) government data at the Ministry of Truth: 'Statistics were just as much a fantasy in their original version as in their rectified version. A great deal of the time you were expected to make them up out of your head.'

Things are not quite that bad today, though last week's huge revisions to a number of key economic figures will have had conspiracy theorists twitching like mad.

Particularly suspicious was the news that growth in the first half of this year was twice as fast as had been thought, making it highly probable that Gordon Brown's previously derided forecast will actually be met. Jolly convenient, what?

True, the Chancellor has form in terms of statistical jiggery-pokery. In February last year he bullied the Office for National Statistics into counting all his tax credits not as welfare benefits (which is what they are), but as 'negative taxation', whatever that may be.

But too many people were involved in collating the national accounts - the 'blue book' published by the ONS on Tuesday - for those revisions to have been the result of grand-scale finagling.

Furthermore, the revisions were not all good news for the Treasury. Public sector inflation in the year to the end of June had been gauged at about 4.4%. The revised figure is 7.9%.

Nor is there any reason to doubt the ONS's rationale for the changes, namely that superior techniques have been developed for measuring growth and inflation.

So in the absence of any real evidence of fiddling, what can we learn from the blue book affair?

The first lesson is that the balance of payments is in an even worse state than had previously been imagined, with much of the deterioration caused by falling overseas investment income. For years, this income has helped keep the country afloat, leading to the complacent assumption that the British make consistently better investment decisions than foreigners.

An alternative explanation, that we have been making more risky investments than foreigners and that those risks can go bad at any time, has been brushed aside. Now we can see this explanation was the more realistic of the two and that our luck has been running out.

Linked to this is the second lesson: that excess demand in the economy is alive and well, whatever the Retail Prices Index might say. Along with the yawning trade gap, the blue book identified higher inflation in the household sector than had been previously detected.

But the third and most important lesson relates to the whole official statistical apparatus. The ONS does not have limitless resources, and it is vital that those resources be concentrated on getting right the key economic and social data essential for sound policymaking.

Alas, a glance at the ONS website gives little reason for confidence. Too much money and effort is spent collecting esoteric figures of dubious utility.

Examples from recent weeks include data for internet access, for patients ready to be discharged from Scottish hospitals, for national amputee numbers, for cervical screening, for drug education in Scottish schools and for 'contraception and sexual health 2002'.

These and many like them are the statistical equivalent of all those public sector non-jobs that are being created at an alarming rate. Indeed, such demand as there is for figures like this will come from Labour's mercenary army of co-ordinators, counsellors and outreachers.

The ONS should do less and do it better.

Is Brown history?

CONFUSED after the Labour Party conference? You ought to be.

On Monday, the Chancellor, we were told, was practically moving next door to Number 10.

By Wednesday morning, we learned that Gordon Brown's hopes had been dashed and he was doomed to spend the rest of his life toiling in the Treasury salt mines.

Financial Mail takes no side in this, but, in an impartial spirit, offers two pointers from history.

First, just four of the 11 post-war Prime Ministers have served as Chancellor.

One of these (Winston Churchill) was by common consent the worst Chancellor of the first half of the 20th Century. Another, John Major, was quite possibly the worst of the second half.

Harold Macmillan was not in the Treasury long enough to do much damage, while James Callaghan presided over sterling's devaluation in 1967.

Second, during the past quarter century, one Chancellor has been sacked (Norman Lamont), one has resigned (Nigel Lawson), one resigned from a different job (Geoffrey Howe) and two (Denis Healey and Kenneth Clarke) were sacked by the electorate.

Just one career had a happy ending - that of John Major. Funnily enough, he became Prime Minister.