David Massey
Secretary, Low Pay Commission
Old Admiralty Buildings
7 March 2025
Dear David,
Thank you for your recent Annual Report and for highlighting the importance of high-quality labour market data in supporting evidence-based decision-making. We appreciate the feedback provided about the ONS and we welcome the opportunity to address the points raised in the report regarding the changes to the 2024 Annual Survey of Hours and Earnings (ASHE) methodology, their impact, and the approach to stakeholder engagement.
The ONS is governed by the Code of Practice for Statistics (‘the Code’), which ensure that statistical producers focus on providing high quality statistics, enhancing public value, and demonstrating trustworthiness. Our overall approach towards ASHE has been based on the Code’s principles, to ensure that the best quality data, using the best available methods, is available for our users at the earliest opportunity.
Rationale for Methodology Changes in 2024
As mentioned in your report, the ONS is aware that, since the pandemic, ASHE has shown a different pattern of wage growth compared with other data sources (Average Weekly Earnings and HMRC Real Time Information). Institute for Fiscal Studies research published in May 2024 highlighted specific issues with ASHE estimates of higher earners’ pay. Both the methodological changes to address these issues and the most up-to-date weighting information from the Labour Force Survey were introduced as quickly as feasible during the 2024 ASHE production cycle.
Impact and timing of Methodology Changes
We acknowledge the impact these methodological changes have had on reported pay estimates, including those relevant to minimum wage policy considerations. Once a robust method to address the quality challenges was identified, we decided to proceed with its implementation to publish the best quality estimates for ASHE 2023 (final) and 2024 (provisional) at the earliest opportunity, as also required by the Code.
The report raises the reasonable question as to why, given the wider methodology review, the ONS did not wait until its completion to make the changes. It is a fair challenge. However, our view is that the outcome of such a review is necessarily uncertain at this point, while the deficiencies of the existing methods are already both understood and rectifiable. Delay would mean the Office issuing statistics that were known to be incorrect, and that cannot be in the interests of users including the LPC, or ultimate recipients of the National Minimum Wage or their employers.
ONS approach to stakeholders’ and users’ engagement
The ASHE cycle is the quickest and most challenging of any ONS annual surveys. As you know, this is a function of the overall timetable for implementation and recommendations of the National Minimum Wage levels. The survey has to be in the field in April and micro-data made available to LPC and DBT in September of the same year.
This inevitably compresses time for stakeholders’ and users’ engagement. Nonetheless, working level contacts in key government departments (including LPC and DBT) were informed of our plans to introduce methodological changes in July 2024. An impact assessment was also shared nine working days following ASHE 2024 collection closing on 23 August.
Supporting our users is important. Whilst this year’s timeline for development and implementation of methods changes was inevitable due to the overall schedule of the survey, we continue to be committed to providing users with as much advance notice as possible on methods and wider survey changes. Alongside working level meetings with key stakeholders, we have now implemented a new quarterly Earnings User Group which first met in January 2025 and was well attended with over 50 participants from 18 different government departments. The ONS is also co-organising an Earnings Symposium on 29 April to engage with an even wider user base, including outside government. We also run a Labour Market Advisory Panel on which the LPC is represented alongside the Bank, HMT and the OBR. We remain committed to refining our approach and welcome any further suggestions from LPC on how we can best engage with you to support your work.
Yours sincerely
Mike Keoghan
Deputy National Statistician and Director General for Economic, Social and Environmental Statistics