Supplementary memorandum submitted by
the Statistics Commission
CLASSIFICATION AND MEASUREMENT CHANGES TO
ECONOMIC STATISTICS
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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