The ONS was criticised for last year's fiasco over average earnings figures. The Bank of England and Treasury ordered an inquiry into the reason for two sets of dramatic revisions to the figures, which could have swayed the Bank's interest-rate decisions. A report from the House of Commons Treasury Committee in December did not criticise Dr Holt. It said the ONS, a semi-autonomous government agency formed from the Central Statistical Office, was underfunded and poorly structured. It said, however: "In view of the many challenges facing the ONS, strong leadership, both from its director and ministers, is vital."This year Patricia Hewitt, the Treasury minister responsible for official statistics, ordered a shake-up of ONS management. This followed a KPMG report identifying pounds 20m in savings.Ms Hewitt said Mr Holt's decision would allow a smooth transition to the new arrangements under a new director. A Green Paper last year set out four options for the new agency, of varying degrees of independence..

BANKS AND building societies yesterday resisted pressure to cut mortgage interest rates by the full quarter point announced by the Bank of England's Money Policy Committee. The Halifax said it would not drop its headline standard variable rate from 6.85 per cent, declining to comment on its plans for savings rates. Nationwide made no cut, saying only that it was reviewing its rates. Abbey National dropped its standard variable rate mortgage by 0.1 per cent to 6.85 per cent from 1 July, promising that savings rates would not fall further than this.It is the second time in a row that most lenders have declined to pass on the Bank of England's cut, depriving the average borrower of pounds 25 a month.However, a string of recently launched "direct" mortgage banks did follow the Bank's cut. Norwich Union's tracker mortgage, which promises to follow base rate cuts, dropped from 6.1 to 5.85 per cent Virgin Direct cut its rate by 0.25 points to 6.2 per cent. And Standard Life Bank cut its rate by 0.17 points to 5.88 per cent.Consumer groups and housing market experts said most banks were defending their profits at the expense of their customers.Mick McAteer, senior policy officer at the Consumers' Association, said: "There is always this sting in the tail in interest rates and it highlights the need for a vibrant building society sector. The listed banks simply have to maintain their margins to keep their shareholders happy."John Wrigglesworth, a housing market expert, warned that lenders would suffer a drop in income even if they kept mortgage and savings rates the same. The lower base rate meant they made less interest on their reserves."Lenders are caught between the rock of bad publicity and the hard place of reduced income.

What I fear is that some banks may try to make up the loss by introducing fees and charges on their accounts," Mr Wrigglesworth said.A spokesman for Abbey National insisted that the full cut could not be passed on because savings rates had to be maintained."Deposit rates are getting to the point where you might as well stash your savings under the mattress," the spokesman said.. AIRTOURS has vowed to press on with its attempt to persuade the European regulators to clear its pounds 852m bid for rival First Choice Holidays, even though it confirmed yesterday it would allow its bid to lapse. Airtours said it was still confident its deal would be cleared after the four-month investigation by Brussels, and that it would then be able to rebid. However, it decided to lapse its bid as it had been unable to satisfy the European Commission that the takeover would not lead to an oligopoly in the UK package holiday market that could work against the public interest.Under Takeover Panel rules, Airtours is prevented from bidding for First Choice again within 12 months. But Airtours is hoping the Panel will consent to a change enabling Airtours to come back with another offer when the EU investigation is completed in October.In the meantime, First Choice has 21 days to persuade shareholders to support its preferred option of a pounds 1.5bn merger with Kuoni. Airtours said yesterday it had no intention of bidding for the combined Kuoni-First Choice if the merger goes through.One institutional shareholder in First Choice said: "We will do nothing until the Takeover Panel decision. We always said the Kuoni deal was fine, but the Airtours offer was better." First Choice shares fell 24p to 181p, below the 188p value implied by the merger with Kuoni. Airtours shares dipped 2p to 517p.Mr Crossland expressed disappointment at the prospect of missing out on First Choice for a second time after failing with a bid in 1993 But he added: "This is a deal I would have liked to do.