The business - Patrick Hosking on lies, damn lies and statistics

So growth is twice as high as forecast earlier this year. But this is not the first time that offici

It may not much matter whether Alastair Campbell and his successor, David Hill, dissemble or distort or suppress or gloss. That's their job. We're grown-ups. We know not to trust them. It is much more disquieting if government statisticians, public servants with hitherto irreproachable reputations for probity and accuracy, become tarred with the same brush.

The other day, the Office for National Statistics (ONS) announced that, er, ahem, the British economy has actually been growing twice as fast as it originally claimed. GDP growth was 0.6 per cent in the second quarter, not the 0.3 per cent estimated.

That is a huge revision, a rewriting of history redolent of Pravda. Suddenly, Gordon Brown's sunny economic claims - uttered 24 hours earlier in his barnstorming performance at the Labour conference - didn't seem so bonkers after all.

It was all marvellously convenient for Brown. Do I believe something sinister is going on? No. The official explanation is that the Department of Trade and Industry, which feeds numbers to the ONS, decided that the construction sector had grown four and a half times faster than it estimated a few months earlier. It is far more probable that the accident-prone, inefficient DTI was guilty of an almighty cock-up than that a sinister Ed Balls figure was demanding favours in Victoria Street.

Anyway, the ONS would surely have come up with a much less bizarre explanation if this really were a conspiracy. But there is little doubt that figures produced by government departments and the central number-crunchers, the ONS, are coming under more scrutiny than before. The real shocker was the ONS decision last year to exclude £21bn of borrowing by Network Rail, the successor body to Railtrack, from the national debt. Despite the unpalatable truth that the debt is underwritten by taxpayers, the ONS meekly accepted the ploy, which made Brown's finances appear more solid than they were.

Michael Howard, the shadow chancellor, was right to call this "Enron-style accounting". There is nothing intrinsically different between that accounting scam and the off-balance-sheet accounting which is sending Enron executives to jail.

The ONS has been guilty of other errors that flattered the public accounts or put the government in a good light. It

grossly inflated its figure for contributions

by workers into public sector pension funds. It also seriously underestimated the immigration figures for 2001.

Voters, consumers and businesses are being misled. The danger is that no one believes the basic data any more. This has already happened with the health service and education. Who, these days, puts any faith in the numbers on waiting lists or in exam pass rates? It may soon be that GDP, inflation, budget deficit and other hard financial numbers are greeted with the same suspicion.

In a sense, this may not be a bad thing. Consumers, workers and shareholders all rely too much on numbers. They have a spurious reliability and accuracy that bears no relation to the haphazard and flawed way in which they are inevitably gathered, crunched and presented. They cannot possibly give the whole picture. "We are capable of shutting off the sun and stars because they pay no dividend," Keynes once lamented.

But for all their weaknesses, economic statistics are better than nothing. They help to shape policy, business and investment decisions. They give us some kind of yardstick to judge policy-makers.

Sometimes they can make a real difference. The economist J K Galbraith argued that the establishment of national accounts in Britain (by Keynes, again) during the Second World War was as important in defeating Hitler as the cracking of the Nazis' enigma codes or the Americans' development of the atomic bomb.

Statistics today are facing a credibility crisis. It does not help that the entire apparatus of data-gathering is controlled by the Chancellor, whose other title is Minister for National Statistics.

The ONS is bankrolled by the Treasury, and its director, Len Cook, was appointed by Downing Street in conjunction with the Chancellor. The regulator, the Statistics Commission, a body that claims to be "independent", also has to rely on the Treasury for its £1.4m budget. Its seven commissioners are appointed by - guess who? - the Chancellor.

The crowning achievement of Gordon Brown's first one and a half terms as Chancellor was his decision to give the Bank of England independence to set interest rates. Perhaps he should now consider putting the official statisticians at similar arm's length.

Patrick Hosking is deputy City editor of the London Evening Standard

This article first appeared in the 13 October 2003 issue of the New Statesman, The awakening of liberal England