Select Committee on Treasury Written Evidence

Supplementary memorandum submitted by the Statistics Commission


  The Sub-Committee requested a note on any classification type issues that had been raised with the Statistics Commission, and where an announcement is still outstanding. We have interpreted this quite widely to cover any instances where we have been made aware of a prospective change in measurement and/or definition that is expected to have a significant impact on key economic statistics—but where details of the timing and magnitude have not yet been announced. We have identified three examples. In such cases, we would expect an announcement from ONS of the change, with estimates of its effects, a couple of months in advance of the change being implemented in the published statistics.

  On 20 May 2005, ONS issued a news release concerning PFI estimates in the public finances. This confirmed that work was in progress in respect of the treatment of PFI schemes in the public finances, but that no decisions had yet been taken. The main outstanding issue is the treatment of imputed loans on PFI finance leases in the measurement of public sector debt. This imputed borrowing is currently not scored in public sector debt measures. The ONS news release explained that conceptually it should be included but reliable estimates were not yet available. ONS said that it would take some time to undertake the detailed analysis required and then complete the quality assurance procedures needed before revisions can be made to the published statistics. We are not aware of any further announcement from ONS on these issues since the news release in May.

  In February 2005, ONS announced some forthcoming revisions to the measurement of depreciation on the roads network, which would have an impact on the public sector current balance—a key fiscal aggregate used in the Government's fiscal rules. The revisions were required to correct for double counting, and were made for the public finances dataset with the monthly Public Sector Finances first release on 18 March. These revisions should also be carried through to the estimates of public sector capital consumption in the National Accounts. This has not yet been done. Revisions to National Accounts of this kind are usually made at the time of release of the annual National Income Blue Book in the summer.

  The Atkinson Review of Measurement of Government Output and Productivity for National Accounts published its final report on 31 January 2005. The report recommended a substantial number of detailed changes to the measurement of government output in National Accounts in the four areas that work for the review had focussed on—health, education, public order and safety, and social protection. Implementation of the Atkinson Review recommendations involves a substantial work programme; ONS have set up, within the department, the UK Centre for Measurement of Government Activity (UK CeGMA) to take this work forward.

  A number of changes to measurement of government output, following on from recommendations in the Atkinson Review, were introduced into National Accounts with release of the Blue Book dataset on 30 June. However the collective impact of these changes on GDP was small. UK CeGMA published an article on productivity in education on 31 October; more publications can be expected.

  The end result from this work programme is likely to be a substantial number of changes to the measurement of output for some individual public services. But these changes seem likely to be spread over a number of years. ONS are committed to providing an opportunity for extensive public scrutiny and debate of any proposals that involve fundamental changes to methodology, before taking forward their implementation in National Accounts.

4 November 2005

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