“Deep seated” issues must be addressed before the UK’s official statistics agency can “rebuild its reputation”, according to a highly critical government review.

Repeated problems with Office for National Statistics (ONS) data, which are used to make decisions affecting millions of people, led the government to set up a review of the organisation and its leadership.

The review said that most of these problems result from “inadequacies” in the way the agency plans and makes decisions.

The ONS welcomed the report and “fully acknowledged” the issues highlighted as it set out its plans to restore the quality of the economic data it produces.

The ONS supplies the data used by government bodies to make policy decisions, such as setting increases in state benefits, planning housing schemes, and making decisions on migration and crime.

The Bank of England relies on the ONS when weighing up whether to raise or cut interest rates, which in turn affects interest rates on things including mortgage repayments, credit cards and other loans.

In April, the government asked a former top civil servant, Sir Robert Devereux, to conduct an independent investigation into the agency after a series of issues.

Sir Robert concluded that “most of the well-publicised problems with core economic statistics are the consequence of ONS’s own performance”, in particular “choices made at the top of ONS, over several years.”

He cited an “interest in the new” that took attention from “less exciting but crucial task” of delivering core economic data that were good enough to guide quality decisions.

His report also highlighted that there was a reluctance, at senior levels, to hear and act on difficult news.

The ONS had come under fire from its own regulator for “defensiveness” when responding to criticism of its new analysis of gender identity.

Repeated upward revisions to its migration figures also led to questions about the population data it produces.

And the Bank of England repeatedly criticised the statistics agency for the reliability of its job market data.

Midway through the review, head of the ONS, national statistician Sir Ian Diamond, stepped down with immediate effect for health reasons.

The ONS has struggled, as have many statistical bodies, with tight budgets and with the problem of getting people to fill in the questionnaires needed for their data.

Sir Robert said there was a need for a swift resolution to the standoff between management and staff on the return to working in the office, and pointed out that relatively low pay for analysts made it difficult to recruit and retain staff.

In summary, he said he was “not surprised that so many, experienced, senior leaders have chosen to leave”.

Since many of these issues were about running an organisation rather than about technical statistics, he recommended that the top job of National Statistician be split into two.

He suggested that a senior civil servant be recruited to take on running the organisation, while a senior statistician would provide technical advice and leadership for the government and for staff.

Responding to the review, Acting National Statistician Emma Rourke said she welcomed the report and “fully acknowledges the issues he has highlighted”.

The ONS also set out plans to improve its core economic statistics.

These plans will be paid for by ending development of its data linking programme – which ties together different government data sets – and by making management changes. It hopes to save around £10m from these changes which it can then use to improve itself.

Overall, the ONS will continue to face tight budgets.

The recent spending review gave the UK’s statistical system extra money to prepare for a census in 2031, but the rest of its funding will not keep up with rising prices.