On Tuesday 5 September, Professor Sir Ian Diamond, National Statistician gave evidence to the Public Administration and Constitutional Affairs Committee’s inquiry on the on transforming the UK’s evidence base.
A transcript of which has been published on the UK Parliament website.
Dear Ms Baldwin,
Thank you for your letter of 8 June 2023 regarding insurance industry inflation. To take your questions in turn:
Our data sources and methods are publicly available on our website, and you may find our Consumer Prices Indices Technical Manual helpful. As a general point, our inflation measures are designed to capture inflationary pressures only, thus we follow a fixed basket approach. This means we compare like for like each month, and any changes that affect the quality of a good or service are adjusted out. So, for example, in the case of insurance, if a consumer amends a policy to (for example) remove an optional extra then this would be treated as a change in quality, rather than a change in price. This is consistent with international best practice.
The manual explains that the Office for National Statistics (ONS) measures two major types of insurance: home contents insurance and car insurance. The car insurance price index is a combination of two separate indices, one for fully comprehensive insurance and the other for third party, fire, and theft insurance.
Each of these is split further into unpublished price indices for specific car insurance companies. Expenditure data is used to weight these indices together and to ensure that a representative sample of insurers is selected. Each index is constructed from actual insurance price quotes for new policies provided by a third-party company. These quotes are returned for a database of customer profiles. For car insurance, the customers in question cover a wide range of ages, driving experience, regions, and vehicles. For the home contents insurance index customer profiles cover a wide range of regions, the material used for the construction of their house or flat, the number of rooms, the number of occupants and many other attributes.
We strive to continuously improve our statistics and are undertaking a programme of transformation by identifying new data sources, improving our methods, and developing our systems to ensure CPI and CPIH are of the highest possible quality. We are currently working on an ambitious programme to improve prices for used cars, rents and groceries using new, more comprehensive data sources.
Insurance data is one of several areas we are considering for inclusion in future development work. We are in discussions with the Association of British Insurers (ABI) who have provided historical aggregate data. This data is a simple average price of all policies. While the data is more comprehensive as it covers all policies (both new policies and renewals) it does not control for changes in the mix of products bought over time, which means we cannot determine if changes in the average price reflect true price changes or changes in the level/type of cover. This may explain some of the differences between ONS and ABI data and is an area we are looking to explore further.
The ONS insurance inflation is based on quotes. The international guidance explains that it would be ideal for transacted prices to be used while acknowledging that this is not always possible, meaning that using the advertised prices of products offered for sale is often admissible. As such, it is not uncommon for the ONS to collect advertised prices, in fact we use prices listed on shop shelves, websites or quoted in a call for a wide array of goods and services. The use of price quotes should only distort measures of inflation if the relationship between quotes and prices changes significantly; even if quotes are typically higher or lower then final prices paid, there would be no effect on inflation as long as that level difference was consistent over time. We are not aware of any evidence that the relationship between quotes and prices has changed.
An additional consideration for us is the necessity to have timely prices in order for us to be able to calculate monthly indices. Consumer price indices are published within a month of the reference period and are not revised so this places a high bar on timeliness for potential data sources. We have so far been unable to source timely insurance data using prices paid. We are working with the ABI to identify whether there are timely data sources that we could use to calculate CPI .
Both the ABI and ONS data have advantages and disadvantages. While our methodology controls for changes in the quality or type of product bought in a way that the ABI data does not. Whereas the ABI data covers renewals – a segment of the market not covered by the ONS sample. It’s possible that prices in this part of the sector may have fallen following regulatory intervention in 2022, meaning our insurance index may have overstated inflation at the time the change was made. This is less likely to explain divergences in more recent data for 2023. More recent differences between the ABI and ONS measure may reflect changes in the type of insurance products bought by households (where the ONS methodology would give a clearer steer on underlying price changes). However, we cannot draw any firm conclusions at this stage and are seeking more granular data from ABI to help provide us with further insights.
We are currently sponsoring research to provide robust confidence intervals for consumer prices inflation. This work is still ongoing, but early analysis indicates that the standard deviation for annual inflation for ‘miscellaneous goods and services’, which includes insurance, is a few tenths of a percentage point. However, this is early partial analysis that may understate the true confidence intervals for these statistics.
Please do not hesitate to contact us if there are any further questions.
Yours sincerely,
Mike Keoghan
Deputy National Statistician for Economic, Social and Environmental Statistics
Dear Lord Bridges,
When giving evidence to you and your Committee on 18 April, Grant and I promised to follow-up on a number of points with various members of the Committee.
Firstly, we promised to send the Office for National Statistics (ONS) and OECD joint study, International comparisons of the measurement of non-market output during the COVID-19 pandemic, which compared methodologies used by national statistical institutes; and Lord King also asked if we could share our Public service productivity, healthcare, England bulletin.
You asked if we were able to conduct a comparison of other countries that do use the direct measurement approach for healthcare and how they fared during the pandemic. The following charts relate to international comparisons of countries that use the direct volume output measurement approach to healthcare: the use of activity data.
International comparisons of healthcare specifically are limited partly as many countries do not publish data by individual industries such as healthcare. Figure 1 shows the Gross Value Added (GVA) of a broader group of industries: human health, education and public administration. This industry grouping is reported to the OECD and so available for a wider group of countries. Only countries that measure health care on a direct volume output basis are included in Figure 1.
Figure 1 shows a greater fall in the UK than other countries in these three industries combined. This will partly be due to differences in the measurement and output of education services over the pandemic, but healthcare will also be a factor. Gross value added for healthcare for the UK is in part supressed because of the large increase in intermediate consumption – the goods and services used as inputs, such as personal protective equipment. While the GVA of healthcare is now lower than it was before the pandemic, the ONS measures of the volume output of government in healthcare show this to be higher than before the pandemic.
Figure 1: Gross value added from health care, education and public administration combined for countries that use the direct volume output method for health care
Source: Office for National Statistics For a more accessible version, please visit our accessibility policy.
Figure 2 shows the output of government services provided to individuals (such as healthcare and education) unadjusted for intermediate consumption. Again, this measure is an imperfect comparison, particularly as the proportion of healthcare that is government-funded varies greatly between countries. However, for the UK, the coverage of this measure and the three industries included in Figure 1 substantially overlap. Figure 2 shows less of a difference between the UK and other countries, with the total output of government-funded services at a similar level to before the pandemic for the UK.
Figure 2: Individual consumption expenditure of general government, chained volume estimates for countries that use the direct volume output method for health care
Source: Office for National Statistics For a more accessible version, please visit our accessibility policy.
In addition, while discussing healthcare, Lord Davies asked if we ensure that the two sets of figures between private and public provision make sense. For healthcare, we have separate data sources for public and private provision, and for private provision we collect data via a survey where respondents can add comments. For example, during the recent nurses’ strike, there were stronger numbers for the private healthcare section which made reference to increased numbers of people deciding to attend private healthcare. Ultimately, if public healthcare provision is doing well, with good outcomes and short waiting lists, then people have less incentive to use private provision and there is only a finite amount of healthcare needed so the two will offset each other to some degree.
Lord Rooker discussed life expectancy, specifically if has stalled for the first time in 120 years and whether this has had an impact on business (particularly the funeral industry). We agree that in the most recent period of 2018-20, compared with 2015-17, male life expectancy at birth was 7 weeks shorter and for females there was almost no change. Since 2010-12 life expectancy has grown by 0.3 years for males and females, compared with an increase of 2.5 years for males and 1.7 years for females between 2000-02 and 2008-10.
In terms of the impact on the funeral industry, funeral care is included within a more general heading of ‘other personal care’, so the data are not separately identified. As this industry includes hairdressers (who were severely impacted by the pandemic) we did not see large growth overall.
While discussing measurement of the digital economy, you asked how other countries gather statistics on how people spend their time. The UK is particularly active in the UN-led process around updating the System of National Accounts (SNA) in the area of digitalisation and the treatment of free digital products as described by Lord King in his example. UK officials led, with the US Bureau of Economic Analysis, the development of guidance on how to treat free digital products in a satellite account, potentially as part of the unpaid work satellite account and were recently asked to take on the lead editorship of a manual providing guidance to national statistics institutes on the correct treatment of these products, recognising that the production costs and income derived from their production is already included in the national accounts.
The UK also chairs the development of guidance on the treatment of unpaid household service work with the SNA. Within those guidance notes recommendations is a proposition to include the time spent in paid work, unpaid work and leisure time within a supplementary table. This would then allow users to better consider factors like leisure time which have an impact on personal well-being when also evaluating changes in the value of the economy, while including or excluding the value of unpaid household services in their appraisals. We hope that the next SNA will therefore allow a better understanding of how households are experiencing their time, while also complementing existing measures of GDP with more complete measures of output including more traditional unpaid household services, and those which are digitally mediated, as captured by the new UK Time Use Survey.
The ONS ran a pilot online Time Use Survey in March 2020 which has since evolved over five successive surveys, with the latest undertaken in March 2023. The survey not only records all the activities carried out in a respondent’s day, but also captures how much they enjoyed the activities and the extent to which they were using smart devices to engage in them.
As a result of the Covid-19 pandemic, time use analyses produced by the ONS throughout 2020 to 2022 were focused on meeting policy interests in how the public were spending their time and changing behaviours during periods of lockdown and periods where restrictions were eased.
However, moving on from the pandemic, we are now refocused on using this source in measuring the digital economy, and are reviewing existing methodologies for the measurement of unpaid household production activities (as outlined in the UNECE Guide on Valuing Unpaid Household Service Work), including those used in compiling the UK Household Satellite Accounts, last published in 2018. We endeavour to produce new estimates up to 2020 during summer 2023 and then aim to start developing new methods utilising the time use data collected since 2020 for more recent years immediately afterwards.
From 2023/24 onwards, the Time Use Survey will be run twice per year as part of the Economic Statistics Centre of Excellence (ESCoE), and we will be collaborating with academic experts in producing new experimental estimates of unpaid household production work, with an ambition to produce quarterly estimates in the future which would coincide with quarterly GDP estimates.
Finally, Lord Turnbull asked for information directly after the session on a) what proportion of health and education sector are non-market outputs, and b) how treated GPs, including those working in the NHS – i.e. private sector or non-market healthcare output, and c) likewise for dentists. In the Blue Book 2022, we provide rounded figures of the splits for health, social care and education: health is split 85/15 public/private, social care is 50/50 public/private (we publish human health and social care) and education is 69/8/23 public/private/other (this includes higher and further education). If there is market activity (i.e. private sector activity within our health data) we treat this as a P11 transaction, which is classed as market output and is deducted from our final consumption exemption figure for Government output. This would apply for GPs and dentists.
Please do let us know if any other questions, and if we can help the Committee further on either this topic or any of its other inquiries.
Yours sincerely,
Mike Keoghan
Deputy National Statistician for Economic, Social and Environmental Statistics
On Tuesday 23 May, Sir Robert Chote, Chair of the UK Statistics Authority, Sir Ian Diamond, National Statistician and Ed Humpherson, Director General for Regulation, gave evidence to the Public Administration and Constitutional Affairs Committee’s inquiry on the work of the UK Statistics Authority.
A transcript of which has been published on the UK Parliament website.
On Tuesday 18 April, Mike Keoghan, Deputy National Statistician for Economic, Social and Environmental Statistics and Grant Fitzner, Chief Economist and Director for Macroeconomic and Environment Statistics and Analysis at the Office for National Statistics, gave evidence to the Lords Economic Affairs Committee for a one-off session on growth and productivity: statistical growth.
A transcript of which has been published on the UK Parliament website.
Dear Mr Jones,
I write in response to the Business, Energy and Industrial Strategy Committee with an update of some key labour market statistics for the inquiry, ‘post-pandemic economic growth: UK labour markets”.
The Office for National Statistics (ONS) was asked to provide an update to the analysis supplied to the Committee in our written and oral evidence in July 2022. This letter provides an overview of the labour market in the UK, as well as a more focussed look at the impact of an ageing population, long-term sickness and long COVID. We have also included analysis of skills in the current labour market, which sectors are experiencing shortages in workers, and changes to working patterns.
I hope this evidence is useful to the Inquiry. Please let us know if there is anything further we can provide.
Yours sincerely,
Mike Keoghan
Dear Mr Brine,
I noted the Health and Social Care Committee’s inquiry, ‘Assisted dying/assisted suicide’ and wanted to highlight analysis the Office for National Statistics (ONS) published in April 2022, ‘Suicides among people diagnosed with severe or life-threatening conditions, England, 2017 to 2020’. This analysis looked at the risk of suicide in people with severe health conditions.
In April 2021, then-Secretary of State for Health and Social Care Matt Hancock MP wrote to the National Statistician expressing concerns about a lack of data on suicides where the person had been diagnosed with a terminal illness. He asked if the ONS would publish the appropriate data. The ONS agreed to assess the possibility of completing such analysis and to work with colleagues in the Department for Health and Social Care to do so.
ONS mortality records do not include medical conditions on the death certificate. However, the development of the Public Health Data Asset (PDHA), which links mortality records to the 2011 Census and Hospital Episode Statistics (HES), allows us to analyse wider medical circumstances of individuals before death. The study population consisted of all persons, alive on 1 January 2017, who were resident in England, and enumerated at the 2011 Census. People who travelled abroad for the purpose of assisted suicide would not appear as having died in our data.
We used HES records to identify individuals that were diagnosed or receiving first treatment for the following three health conditions:
These health conditions were chosen as in most cases patients with these conditions have a progressive condition which cannot be reversed by treatment and there is a substantial risk of death in those who are diagnosed. In many instances, people diagnosed with these conditions would meet the definition of having a terminal illness.
Our primary outcome was time to death due to suicide from the date of diagnosis which was restricted to between 1 January 2017 and 31 March 2020. The rate of suicide for patients with these conditions were then compared to rates for matched controls who were not diagnosed with these conditions. For each health condition, patients were matched on socio-demographic factors to ensure a reliable comparison.
There were 17,195 people who died due to suicide in the study period (1 January 2017 to 31 March 2020). Of these deaths, 455 (2.6%) were in patients diagnosed with COPD, 465 (2.7%) in patients with chronic ischemic heart conditions, and 58 (0.3%) were suicides in low survival cancer patients.
A diagnosis or first treatment for the selected health conditions is associated with an elevated rate of death due to suicide when compared with study participants with similar socio-demographic characteristics; participants known as matched controls. Matching is performed to assess whether the rate of suicide in people diagnosed with severe health conditions differs from that of people with a similar socio-demographic profile but not diagnosed with a severe condition.
Figure 1 shows that one year after diagnosis for low survival cancers, the suicide rate for patients (22.2 deaths per 100,000 people) was 2.4 times higher than the suicide rate for the matched controls (9.1 deaths per 100,000 people).
Figure 1: Suicide rate per 100,000 people, comparing patients who were diagnosed with severe health conditions with matched controls who have similar socio-demographic characteristics as patients but were not diagnosed with severe health conditions, England, Hospital Episode Statistics diagnosis, and deaths occurred between 1 January 2017 and 31 March 2020[1],[2]
Source: Office for National Statistics – Public Health Data Asset For a more accessible version, please visit our accessibility policy.
Source: Office for National Statistics – Public Health Data Asset
One year after diagnosis for COPD, the suicide rate for patients (23.6 deaths per 100,000 people) was 2.4 times higher than the suicide rate for the matched controls (9.7 deaths per 100,000 people).
One year after diagnosis for chronic ischemic heart conditions, the suicide rate for patients (16.4 deaths per 100,000 people) was nearly two times higher than the suicide rate for the matched controls (8.5 deaths per 100,000 people).
Regarding people who travel abroad for an assisted death, unfortunately the ONS does not have access to any directly relevant data. Deaths of residents or citizens which occur abroad are recorded in line with the law of the country concerned and are not required to be registered in England and Wales under current legislation. Although a death abroad can be registered by the Foreign, Commonwealth and Development Office (FCDO) this process is voluntary, covers only a proportion of the deaths taking place abroad, and does not result in a civil registration available to the ONS for statistical analysis. There is therefore a gap in the international availability of official data concerning such deaths. The ONS will continue to engage with other national statistics institutes to examine how this data gap can be add addressed.
We continue to engage with stakeholders to understand demand for similar analysis in the future. We will keep you updated of any progress, and any future publications will be announced on the ONS release calendar
Please let us know if you would like to discuss any of this further.
Yours sincerely,
Emma Rourke
[1] Figures are for persons aged 10 years and over.
[2] The 95% confidence intervals are measures of the statistical precision of an estimate and show the range of uncertainty around the estimated figure.
Dear Lord Bridges,
I write following the Economic Affairs Committee’s report, ‘Where have all the workers gone?’, particularly the conclusion that “more timely high-quality information on the wealth holdings of early retirees, such as that which will ultimately be available through the Wealth Assets Survey or the English Longitudinal Study of Ageing, would be very helpful in assessing the financial resilience of people who have recently retired. (Paragraph 84)”
As the Committee is aware, the Office for National Statistics (ONS) produces a range of statistics showing the income, spending and wealth of British households. These statistics are primarily based on three household surveys, through which 25,000 households are asked about the income they receive (including earnings from work and income from benefits), the money they spend and the assets they own, such as property and pensions. These statistics are a vital source of information for policymaker’s understanding people’s financial well-being, including the effects from the rising cost of living.
We believe that by combining the current surveys into a single survey in conjunction with alternative data sources it will be possible to deliver higher quality, more timely and in-depth analysis of households’ financial well-being. With this in mind, we are holding a consultation that seeks feedback from users on:
Depending on the outcome of the consultation, we plan to test and roll out the newly combined survey with its various modules over the next three years. Our aim is to ensure that the household financial statistics and analysis we produce continue to meet the evolving needs of policy makers, citizens and other data users, and your conclusion illustrates that we are right to consult on this topic. Our goal is that our statistics and analysis should provide inclusive, coherent, timely and granular insights into wide aspects of the financial wellbeing of households with improved coverage and accuracy.
We also have a longer-term aim to make much greater use of other existing UK Government data sources, known as administrative data. Our ambition is to put these at the heart of our income statistics, supported by data from our surveys, which continue to be fundamental for measuring aspects of household finances not covered in other sources. This proposed approach essentially constitutes a shift from predominantly survey-based estimates supported by administrative data to the converse position. This aligns with our broader plans and ambitions for population and social statistics and the Government Statistical Service (GSS) work programme on the coherence of income and earnings.
We would be happy to keep the Committee regularly updated on this work.
Yours sincerely,
Mike Keoghan
On Tuesday 7 February, Mike Keoghan, Deputy National Statistician for Economic, Social and Environmental Statistics, Office for National Statistics, gave evidence to the Business, Energy and Industrial Strategy Committee for their inquiry UK plc 2050.
A transcript of which has been published on the UK Parliament website.
On Wednesday 7 December, Mike Keoghan, Deputy National Statistician for Economic, Social and Environmental Statistics, Office for National Statistics, and Darren Morgan, Director for Economic Statistics Production and Analysis, Office for National Statistics, gave evidence to the Science and Technology Committee for their inquiry, ‘Research and Development Statistics’.
A transcript of which has been published on the UK Parliament website.
