Committee

• Martin Weale (Chair)
• Robert Heath (Deputy Chair)
• David Caplan
• Ian McCafferty
• Paul Mizen
• Rebecca Riley
• Mairi Spowage
• Nick Vaughan

Apologies

• Thomas Viegas

Additional attendees

• Chris Davies (ONS)
• Grant Fitzner (ONS)
• Perry Francis (Bank of England)
• Richard Heys (ONS)
• Craig McLaren (ONS)
• Tom Orford (HM Treasury)
• Rebecca Richmond (ONS)
• Nicola Shearman (ONS)
• Cliodhna Taylor (ONS)
• Philip Wales (NISRA)

Secretariat

• Jonny Mudge
• Simon Rigby
• Kate Beeslee

1. Approval of minutes from previous meeting and declarations of interest

1. The Chair welcomed the Committee. He asked members for comments and/or suggestions on the minutes of the previous meeting.
2. Rebecca Riley wished to make a clarification point to the July meeting minutes. The Chair asked if it was possible to edit the minutes; the Secretariat confirmed this was possible. The Chair asked Rebecca to forward her clarification to the Secretariat who would make the changes.
3. The Chair noted that his proposal for SNA Chapter 18, to be discussed later in the meeting, is based on work he completed twenty years ago. Given the importance of “impact” in the university Research Excellence Framework there was the risk that this might be seen as a possible conflict of interest. He stated that the work was not completed under his current institution and would therefore not be eligible as research with an impact in any submission from King’s College. His co-author, however, was still working where he had carried out the research, and any impact flowing from the work relevant to Chapter 18 might form part of an impact case study from there.
4. The Chair asked for permission to use Co-Pilot for the meeting. He informed members that this was an AI tool that could assist with minute taking by accurately recording decisions and actions items. This was part of a three-month government pilot that the ONS was partaking in.
5. David Caplan expressed concern that the quality of the minutes would be compromised. Jonny Mudge assured the Committee that it would largely be used for taking actions and summarising discussions and that the Secretariat would write the minutes using notes and the recording. Nicola Shearman added that the Secretariat would be interested in the Committee’s feedback. David thanked Jonny and Nicola for their assurances but emphasised the importance of the quality of the minutes, especially as they were published.

2. Overview and status of actions from last Committee meeting

1. The Chair invited the Committee to comment on actions from the previous Committee meeting.
2. David suggested editing the decisions document that recorded the Committee’s recommendations to the National Statistician. He noted it should clarify that on NACE, the Committee emphasised the importance of international comparability, and comparability over time, respectfully.
3. Robert Heath noted that when the ONS would bring the paper on emissions permits to the Committee it should also cover carbon offset permits. He observed that the ONS raised the latter in their comments to the SNA so it would be useful to include both issues in the same paper.
4. Secondly, Robert asked that his request from the July meeting, that the SNA implementation paper included the expected role of NSCASE, be added to the action log.
5. Robert reported that, at the Economic Expert Working Group (EEWG) meeting, the ONS had presented a paper on SNA implementation, which included a categorisation of must, should, could, would and already compliant. He asked what the role of NSCASE would be in this if the ONS was already making decisions.
6. Cliodhna Taylor responded that there were discussions taking place within the ONS. The team looked at the proposed changes and mapped the actions that would need to be taken in ONS systems to implement these. She noted that they prioritised what was in the core accounting, citing that data as an asset was a fundamental change which was a must as it impacted GDP. The group looked at the resource requirements for changes to inform the spending review, which would be submitted to Treasury. The ONS has started these discussions to maximise time to consider this before the bid needed to be submitted to Treasury. She added that NSCASE advice was vital to provide conceptual advice of where the ONS could deviate from the SNA, which could be translated into the spending review bid.
7. Robert thanked Cliodhna but was still concerned. He asked that the EEWG paper be circulated to NSCASE so they were aware of what progress is being made. He hoped that by bringing the implementation paper to the committee, ONS would include how it foresaw the role of NSCASE. He suggested the paper should come after the UN Statistical Commission meeting in March, when the new SNA was expected to be adopted, ideally at the April meeting. 
8. The Chair agreed. The SNA agenda dominated the timetable for the October and January meetings. He noted it should be included as an action to include this in the April meeting. He also agreed that the paper should be circulated, and asked ONS colleagues if that was possible.
9. Grant Fitzner noted that the EEWG does not provide conceptual advice and has not made decisions or recommendations on the System of National Accounts. He added that outside the requirements in the core accounts, the ONS would be able to certify the other tiers once the budget settlement was finalised. He added that the ONS were working to create a tier system as there were probably going to be things that the ONS would like to deliver in 2025-26 but could not, due to funding.
10. Grant added that the first year would be likely to focus on the classification revision of business surveys, and system changes to platforms to ensure the ONS could collect the data that was needed for SNA2025 to comply with implementation by 2029. He added that the UK was moving from ESA10 to SNA2025, not from SNA2008. Therefore, there would need to be decisions about how to deviate from SNA2025, where necessary, which would come back to ONS.
11. Nick Vaughan agreed with Robert’s point and understood that the ONS position was to adopt SNA2025 and deviate by exception, he noted it would be interesting to know what the exceptions might be.
12. Grant emphasised that this was part of the core work of the ONS and that they would continue to talk to Treasury, the Bank of England and other government departments.
13. The Chair concluded the discussion, asking that the paper was circulated to NSCASE to ensure the Committee felt aware of what was going on.

Action:

EEWG Paper to be circulated to NSCASE.

3. Brief on work and discussions with other NSIs

1. The Chair invited Nicola to speak on the international engagement that the ONS undertook on its proposal to separate the core accounts and other accounts of the SNA.
2. Nicola updated the Committee that the ONS has engaged with a range of other NSIs on the state of the SNA draft. She informed NSCASE that there was a general sentiment that no one was entirely happy with the SNA, but some institutions would rather see it completed quickly and move on to the implementation stage.
3. She emphasised that NSCASE’s advice would be vital to feed into the UKs position at the upcoming the Statistical Commission.
4. Robert made a distinction between issues and drafting, noting that the proposition to split the document addressed the drafting and consistency issues given the size of the manual. He noted that conversations around reopening issues could gather a negative reaction at this late stage in the process. He stressed that the SNA2025 would be in place for the next fifteen years, requiring a need for it to be in the best possible state.
5. Nicola agreed that the ONS would need to choose specific areas to address concerns where the most impact could be made. She noted that if there were red lines on some issues, they were not averse to starting conversations but recognised that there needed to be a real possibility of changing the outcome.
6. David asked at what strategic level Sir Ian wanted the Committee to position their advice. He observed that Sir Ian operated at a strategic level but much of the discussion had been around inconsistencies in the document.
7. Nicola noted that the UK’s position at UNSC should be focused on what parts of the SNA need clarification and highlight where opportunities had been missed and there was still work to do. She noted that they accepted it would not be possible to add things to the SNA2025 at this point. On inconsistencies, Nicola noted that this would be included in discussions in the sidelines, so advice was needed at both a strategic and a working level.
8. Robert suggested that conversations at the UNSC should centre around how an intervention would help the whole international community rather than UK bias. A dual track approach would encourage countries who might have difficulty implementing elements of the guidance to focus on the core framework.
9. Cliodhna noted that the inconsistencies between chapters and grammatical errors would be rectified in the editing.

4. System of National Accounts 2025: Chapter 18: Measuring Prices, Volume and Productivity

1. The Chair and Nick Vaughan led the discussion on this paper.
2. The Chair invited Cliodhna introduce the chapter.
3. Cliodhna informed the Committee that the ONS were broadly happy with chapter 18. One of the key areas where ONS provided feedback was on the measurement of real income and analysis of real income using a consumption-based deflator but generally, the ONS was happy with the changes. She outlined some of the changes to the chapter, which included more additional detailed information about hedonic measures of price changes and discussion of depletion of natural capital. She added that natural capital was a cross-cutting issue that was relevant across many chapters, but here was specifically related to its volume measure. The chapter included additional information about implicit financial services on loans and deposits, a discussion of owner-occupied dwellings, and the deflation of those, as well as education and health services.
4. She highlighted that this chapter included more discussion on productivity measures compared to the previous SNA, which the ONS perceived as helpful. However, they did provide feedback on Chapter 16: Labour Accounts. The ONS would have liked to have seen labour accounts and productivity accounts discussed more closely as one of the main benefits of labour accounts was to facilitate productivity measures. The chapter also discussed changing measurement of the central bank output.
5. The Chair expressed that he expected the chapter to include a section on new products and disappearing products as suggested in paragraph 18.4; however, this did not exist. He noted he would have preferred clear guidance on this issue as economists have completed significant work on this. He recognised that this was also omitted from the SNA2008 so appreciated it would be a challenge to have this included now.
6. Cliodhna thanked the Chair for these comments and invited NSCASE’s comments on such topics to inform wider ONS work on implementation and economic standards. She noted this would be likely to be relevant again in the digitalisation chapter.
7. The Chair invited Nick to add his comments and thoughts on the chapter.
8. Nick pointed the Committee’s attention to the information on volume measures of taxes and subsidies. He noted that the ONS historically had measures of GDP and GVA growth rates that would be different. Then, it was pointed out that taxes and subsidies cannot change quantities so the ONS had constrained GVA and GDP to grow at the same rate. He was unaware if things had changed again. He appreciated the inclusion of double deflation but believed it was covered in passing and countries should be more explicitly encouraged to implement this.
9. He agreed with the Chair’s comments on the numeraire. He believed the point on how income measure could not be put into volume terms could be strengthened and that the chapter neglected the issue of GDP at factor costs. The chapter did not cover taxes and subsidies on production but only discussed products. Generally, he did not identify any major areas of contention where the ONS might be advised to deviate.
10. The Chair thanked Nick for his points. He suggested that it could be useful if the Committee forwarded their annotated drafts to the Secretariat so the ONS could view all comments. Cliodhna noted these would be welcomed.
11. David asked how much the ONS used hedonics in price indices.
12. Grant answered that the ONS used hedonics models for house prices, private rents and a handful of items on the CPI/H. He noted they would feed into National Accounts indirectly when used for deflation but ONS did not use hedonic methods for commercial real estate estimates.
13. Robert added that he believed the lack of discussion on real estate price indices to be a gap in the chapter. He noted that there had been tremendous progress on residential and commercial real estate price methodology in the international community since 2008. He added that section 7 of the chapter discussed stocks of fixed assets, and was surprised that there was no discussion of real estate prices here.
14. Cliodhna highlighted that the chapter did provide extra information on the measurement of prices for the services of owner-occupied dwellings. In particular it discussed the use of market rental rates for similar properties with similar characteristics as way of deriving local imputed rent. She asked Robert to clarify whether he was referring to something separate in terms of measurement of house prices for assets.
15. Robert stated he was. He noted that section 7 was titled ‘volume and prices for stocks of fixed assets’. The section stated buildings were fixed assets but did not discuss real estate price indices when measuring asset prices.
16. The Chair argued that equation 9 in paragraph 18.32 should be represented in logarithmic form for clarity. He also raised a drafting issue that the references seemed to go round in circles, which should be easily rectified in the editing process.
17. Nick also noted that the chapter could be strengthened if it referred to progress made in other prices manuals, such as the 2016 Eurostat manual, which was mentioned in the chapter. He added that the chapter did not sufficiently cover prices for second hand capital. He highlighted that investment goods, such as lorries, trucks, diggers, and planes tended to be resold and questioned why the emphasis remained on the price of new capital.
18. Mairi Spowage raised that many of the draft chapters they were discussing had been published in June and asked how different the final draft would be at this late stage. She highlighted the comments submitted by other NSIs and questioned how far the AEG could have taken these on board.
19. Cliodhna answered that communication from the UN indicated that the majority of changes resolved inconsistencies between chapters, and that there was likely to be little to no change to the conceptual issues. She highlighted that the 2024 UNSC involved a vote on the outlines of changes to the SNA and the only element that was rejected was branding assets. Thus, this was presumed to be an endorsement of the conceptual changes as they were.
20. Robert replied to Mairi’s point, that the UN had published the papers for the AEG meeting at the end of October which synthesised the global comments to each chapter. On chapter 18, he noted the UN indicated only one substantive issue was raised which recommended that the volume indicators be tested with the aid of experts in the domain prior to their incorporation into the international accounts and referenced specific paragraph numbers for discussion at the meeting. Robert suggested that this paper would be of interest to NSCASE, as it would provide insight into what AEG discussed in response to the global consultation. 
21. Philip Wales noted that the information on productivity was welcomed but had questions on implementation. Firstly, he asked if the ONS had a view on if any of the changes implied anything on measurement of government output, especially in the COVID years, where a number of large products emerged and disappeared rapidly. Secondly, he recollected that Eurostat guidance on hedonics was narrower than what was covered in this chapter. He considered whether, depending on how the UK retained elements of ESA10, adopting this framework would lead the UK to more use of hedonics. He asked whether this was perceived, from an implementation perspective, as a large change or a small change. 
22. Cliodhna noted that on his first point, the issue of quality adjustment of public services was taken to NSCASE previously and advice was given that public services should be measured with a quality adjustment. This was a break from ESA. When discussions came up about public services and measuring of outputs, the ONS would appreciate NSCASE’s thoughts on if the SNA update would affect their decision on that matter. She added that though the ONS had not looked at this from a COVID perspective, the public service output figures had adjustments and covered the Track and Trace programme, for example. She was unaware of anybody that believed the guidance would change ONS’ current position on that but noted this was part of Steve Drew’s work on categorisation of the SNA changes. On Philip’s second point, Cliodhna answered that hedonics were not her area of expertise and was not aware that ONS was looking at them in that light.
23. The Chair added that he believed chapter 18 was consistent with NSCASE’s previous advice on public service quality adjustment. David added a caveat that their previous discussion agreed that the issue of collective services was not dealt with well in the SNA. The Chair noted that he understood the potential value of reopening the folding measures of the various health services during the pandemic. He questioned whether there was guidance on how to handle goods that disappeared once no longer needed and suspected that things were done quickly and in difficult circumstances. He noted that if the ONS felt inclined, the Committee could review this.
24. Nick asked Robert to circulate the link to the AEG paper that he had referred to. The Chair asked that the Secretariat circulate via email any papers mentioned during the meeting. The Secretariat agreed to do this.

5. System of National Accounts 2025 – Chapter 7: Production Account

1. David and Robert led the discussion on this paper.
2. Cliodhna introduced the chapter. She informed the Committee that the ONS were broadly happy with the chapter but disagreed with the position that depreciation models were to be used in capital, which advocated that geometric would be the first point of call for capital. The chapter also touched on crypto but she observed that crypto was discussed more in the guidance notes; she reinforced that the UK argued against the UN position which classified crypto assets without liabilities as non-produced, non-financial assets. She highlighted that the largest change to the chapter was the recording of depletion as a cost of production. She added that the chapter was impacted by the inclusion of natural capital in the accounts alongside the appreciation of capital stock depletion of natural resources. Other minor changes included clarification on the role of solar panels in heat generation and subletting for household production and its inclusion within the production boundary. There was clarification on free products, and the SNA would include advice on the construction of the extended accounts for the recording of free products. There was also information on the measurement of output of central banks, including a change in the methodology, and clarification on the measurement of financial services and the role of crypto assets without liability and their non-impact on output.
3. David raised a comment on paragraph 7.9 that recognised that countries would ideally use measures net of depletion and depreciation but as countries had always used gross measures, the guidance would be presented in gross terms. He argued that the manual should not advise using gross only because it was what had been done historically. He emphasised that countries were aware that gross measures, without taking account of depletion, could lead to distorted results and could have a negative effect on policy. He suggested a change to the drafting to give greater emphasis to net measures over gross measures, and noted that it could be a stepping-stone for the user community towards net measures which in some senses, better reflected economic reality than gross measures.
4. Robert raised that this point was discussed at the EEWG meeting in terms of implementation and agreed with David’s point. He added that ONS currently produced net measures only on an annual basis.
5. Cliodhna added that the ONS had lots of discussions about the practicality of net measures, especially with the user community. She highlighted that this would feed into a broader cultural shift outside of headline net measures that would be picked up by journalists and users in economic modelling. She noted that if there was to be a move towards net measures, this needed to be done in lockstep as an international community. As a result, she stated that the ONS position was that if the SNA would advocate net measures as the headline measures, the ONS would push strongly for international co-ordination of the change. She understood from the introductory chapters that the SNA regarded them as equally important but expected that countries would be likely to headline gross measures.
6. David thanked Cliodhna for this information and agreed that an internationally coordinated push was necessary. He suggested also advocating further explanation of the issues around gross measures and benefits of net measures in representing economic reality.
7. Robert noted that the SNA would only provided guidance, not recommendations. To encourage compilation of net measures he suggested that getting recommendations through the AEG and Statistical Commission may be a better route to influencing the international community. He also noted changes in the IMF’s SDDS to give more emphasis to the net measures would support their compilation.
8. Robert raised a concern over the new terminology that changed ‘resources’ to ‘revenues’ in paragraph 7.6. He considered economic activity to be about resources and their use. He also highlighted that the chapter’s discussion of solar panels as household production of energy.  He highlighted that solar panels classified as producing electricity output from the household sector would presumably be classified as gross fixed capital investment of households instead of durable goods. In 7.127, the SNA suggested that if a building used solar panels but was rented out, the rental value would be divided up between housing services and purchase of electricity. He questioned how the ONS would deal with this compilation challenge as it applied to multiple contexts; he believed it would be challenging to measure household activity if split between production of energy for a third party and consumption for own use but understood the economic point for the proposed recording guidance.
9. David agreed that this would be a significant measurement challenge.
10. Cliodhna noted that the ONS perceived this as a clarification and less so a conceptual change. She informed the Committee that the ONS would consider a materiality test and consider how it would affect other measures. If it was not a large area, it would not take priority for development of their accounts. She was unable to comment on what the ONS’ current approach was.
11. Paul questioned how the ONS determined whether something was consumed or used in production. He noted that during the COVID pandemic, there was a large transition towards home working, where people who had internet connections for leisure purposes began using them for production purposes as well.
12. Cliodhna suggested it would be determined by whether the company or individual paid the expenses.
13. Nick believed this was retrograde as he considered expenditures to be monetary transactions but part of the emphasis of the SNA was about depletion, depreciation and wider measures. He believed maintaining the terminology of ‘uses’ instead of ‘expenditures’ would be clearer and more consistent with the direction the SNA was going in, and suggested it was odd that the SNA placed more emphasis on non-monetary measures or imputation of wider transactions.
14. The Chair referred to paragraph 7.186 and raised a question on maturity structures. He asked if the ONS used the same reference interest rate for deposit account or short-term loans as they did for 30-year mortgages. Paul added that the reference rate should be the risk-free rate at the same maturity. The Chair noted that if the ONS was not doing this then there would be a case for divergence from the SNA.
15. The Chair also believed the information on when equipment was immediate consumption and when it was capital goods was not clear. David added that the ESA had a monetary limit to divide capital items and suggested that was a pragmatic way to handle the divide.
16. David believed that the argument in paragraph 7.29 against including own account production of domestic services in the accounts was weak and did not consider evidence from time-use surveys which indicated that people valued domestic services quite highly. He referred to paragraph 7.141 on non-market output. The paragraph included a return to non-financial assets used in production. He asked if the ONS had considered the implications of this change and questioned how they would calculate the implicit return of a financial asset employed by a non-market producer.
17. Cliodhna noted the ONS was supportive of this on the practical point of having the price of capital be comparable between market and non-market production. There has been some initial work to look at where the ONS would draw the data from and what the mark up would be but they had not confirmed what the methodology would be.
18. Tom Orford asked if the ONS expected the SNA to include more guidance on the methodology. Cliodhna stated the information would be useful.
19. The Chair asked what sorts of capital would be excluded under 7.41 which stated city parks and historical monuments would be excluded. He believed this was a narrow and vague definition. Cliodhna answered that when there was a consultation on returns on non-financial assets in the public sector, countries highlighted the same point. She agreed a more specific definition of what would be excluded would be needed for the ONS to take this on. The Chair suggested there should be a separate category with some examples. David asked if any countries had given examples about the potential impact of this in the consultation. Cliodhna agreed to review the consultation.
20. Nick observed that this was a huge ask and questioned if the SNA suggested imputing a return on schools, hospitals, motorways and the entire general government capital stock. He suggested, notwithstanding the narrow set of exclusions, if every general government non-financial asset would be in scope. Cliodhna confirmed this was what the SNA suggested.
21. David noted this was a good example of where an assessment was needed on the implications on the accounts prior to the Committee recommending whether to adhere or deviate. The Chair agreed and added that it would be useful to understand what other countries planned to do.
22. David expressed concern that they would be applying an uncertain number (rate of return) to an uncertain number (value of the underlying asset). Cliodhna recognised this concern and anticipated there would be greater clarity in the revised version of the chapter. The Chair added that this would affect government historical statistics.
23. Cliodhna replied that there were discussions around the issue of inconsistency of when a piece of capital moved from being owned by the private sector to the general government as the private sector would have had the return to capital included in its output, but under general government ownership it would be excluded.
24. Ian McCafferty added that there was a risk of inconsistency between this chapter and Chapter 14: Balance Sheet. David emphasised that it would be helpful to see it fully articulated in the accounts.
25. Paul raised concerns around the measurement of pensions and insurance. He believed current practice was to add the fee incomes of the institutions and the claims they paid, but he noted there was a significant time gap between those two activities. He stated that what was done with the fee income while the claims materialised was a significant component in the earnings of both pensions and insurance companies and this needed to be taken into account. He highlighted that liabilities of pension funds could be affected by small movements in interest rates; he cited the USS pension fund which went from huge deficits to moderately good surplus in a relatively short time, and emphasised that it was not as simple as adding up the in-and-out flows. The Chair highlighted that there was a category of income which was the income accruing to general insurance companies on the policyholders’ money that they look after.
26. David also raised a question on crypto miners as producers of validation services. Cliodhna noted that the UK did not convey its position on the classification of crypto assets without corresponding liabilities as they had conveyed this consistently throughout the consultation process and in other multilateral fora.
27. David noted that the chapter (paragraph 7.231) stated that research and development undertaken by government universities was non-market production and was valued on the basis of total production costs. He argued that universities were, for the most part, market producers of research and asked Committee members if they were happy that the value of the research could be equated with the costs of production of the research. He noted that if research spun out it could earn quite a lot of money for the institution.
28. Paul proposed that Google was a counter example; he suggested it presumably was not expensive to come up with the idea of Google but that its value was in its intellectual property (IP).
29. David questioned whether the distinction between depletion and depreciation was clear enough in Section H. Cliodhna noted, from her understanding, that the distinction depended on which category it referred to but highlighted that the issue had been raised by multiple countries thus indicating it was unclear. The Chair had a question on mineral exploration and evaluation expenditures which were not treated as intermediate consumption. As they were needed to acquire new reserves, they were classified as gross fixed capital formation. He asked how they would be depreciated. He suggested they were more like an intermediate input as they had a life of less than one year. He believed guidance should be added to the chapter on how to depreciate them.
30. Nick commented that the lack of clarity between depreciation, depletion and a range of natural assets was raised as a concern across multiple chapters and thus was a structural issue the editorial team needed to address.
31. Robert criticised the drafting in paragraphs 7.40 – 7.46 which was vague from a national accounting perspective. He highlighted inconsistencies across chapters and argued that other sentences were unclear. He took issue with the statement that creating content for leisure purposes was outside the SNA production boundary and argued that this concept could exclude a significant amount of production. He criticised the changes to paragraphs 7.167 – 7.169 on supervision services. He believed this change implied that financial institutions paid fees to supervisory authorities as a current transfer to, instead of a payment for services from, supervisory authorities. There was some discussion about whether this should be a tax on production; the Committee agreed it would be tax as it was compulsory. Tom noted the ONS’ recent decision on various bank levies. Perry Francis confirmed that the recent review concluded that the Bank of England levy was a tax on production and was a mandatory payment of a collective nature and not fully requited. The PRA levy and FMI fees were deemed to be proportionate to the service so were considered payment for a service whereas the Bank levy was deemed to be a tax on production.
32. Robert asked Perry if he was happy with the changes to paragraphs 7.167 – 7.169. Perry stated he was primarily focused on the BPM but from his understanding he was happy with the changes.
33. Robert asked for the ONS’ view on how the SNA revisions would affect how the ONS recorded FISIM. Cliodhna added that the ONS were still considering how the revisions would require changes to systems but that they had not flagged the issue as a conceptual challenge.

6. System of National Accounts 2025 – Chapter 11: Capital Account

1. Paul and David led the discussion on this paper.
2. Cliodhna informed the Committee that the ONS was broadly happy with this chapter but identified two main areas of concern. In the consultation, the ONS raised the resource rent approach concerning the value of renewable resources. This was partially based on the practical results of countries’ experiences measuring renewable resources, such as wind. She noted some countries found zero or negative values for the wind as the resource; she suggested that this contradicted the purpose of including it in the SNA. The chapter referred to crypto assets and Cliodhna reinforced this was not aligned with ONS’ preferred classification of crypto assets without corresponding liabilities.
3. She highlighted that the paper included responses from other countries, which raised that the information on natural capital was still not completely clear, and specifically the distinction between produced and non-produced assets still applied to natural capital.
4. She outlined some of the main changes to the chapter. This included the introduction of natural capital as a new category, which brought together cultivated and non-cultivated biological resources. It also introduced data as an asset, which was grouped with data sets. She noted the ONS were supportive of this change. The chapter made several updates, including terminology changes and a new split asset approach to natural capital. It clarified the treatment of household durables for market production and revised the use of terminal costs to prevent negative value assets. Additionally, it distinguished between software as a service and packaged software with updates.
5. Richard Heys added issues arising in the financial markets around crypto lending and that there could be a further paper submitted to AEG that tackled this question. He therefore expected clarificatory information to be released, which could affect the passages of the chapter related to crypto assets.
6. Paul stated paragraph 11.13 defined fixed assets as structures, machinery, and equipment but also IP products. He agreed conceptually that IP products were fixed assets because they were long-lived and used beyond one year, therefore, were not immediate consumption. However, he highlighted that they were subject to depreciation in different ways and considered if separate categories would be needed to distinguish fixed assets that depreciated in different ways.
7. Paul also highlighted where drafting revisions were needed to clarify categories of non-produced assets. He said the paragraph should distinguish where contracts, leases and licences refer to financial or non-financial assets and noted that categories could include physical assets alongside natural resources. He agreed with comments already made about natural capital and referred to Eurostat’s comment that it was not easy to distinguish between produced and non-produced assets in this context. He also agreed with Eurostat’s argument that it would be better to divide between which assets were produced, non-produced and natural.
8. He had a comment on depreciation, obsolescence, and depletion, which he noted was covered during the discussion on chapter 7. The chapter stated that many of the fixed assets depreciated in the usual way but some were subject to obsolescence and other natural resources were subject to depletion. He noted clarity on this would be welcomed. Paragraph 11.224 also referred to this concept and he believed the inclusion of obsolescence here would be beneficial.
9. He noted that some assets were used for both consumption and for production and he believed extra guidance for compilers on how to apportion the asset to production or to auto-consumption would be helpful. He argued there were a number of examples available for this but that it would not necessarily be accurate to consider assets based on what they were purchased for as transitions could happen quite regularly.
10. He acknowledged the ONS’s concern about undervaluation of natural resources, highlighting this as an issue arising from the current valuation methods. He suggested that further exploratory work could be beneficial in addressing this problem.
11. Richard said that the point on loans on non-financial assets fed into the discussions around crypto lending. He stated that in their current classification as non-financial non-produced assets, lending of crypto assets would be a lease as they were not a financial instrument.
12. Nick agreed that the manual as a whole was not clear on depletion and depreciation; he noted that chapter 7 also referred to degradation.
13. Paul recommended that the editorial team targeted section E to resolve this issue. He suggested that the section covered depreciation, degradation, obsolescence and depletion.
14. Cliodhna thanked Paul for his comments, especially on capital purchased by households and their usage. She agreed the original purpose of the item was not necessarily the best way to classify it and agreed that transitions occurred. She noted that the implication of the capital transitioning between household and production usage would be that it would have to include some household consumption if the good was sold on to buy up the ‘company’ capital and use the good for personal purposes. She clarified that this referred to unincorporated businesses owned by households, not corporations.
15. David agreed that the distinction between asset classes was not clear for cultivated assets. He argued that heat pumps and solar panels should be capitalised for households as they generated power that was now inside the production boundary. He raised concern with paragraph 11.100 around bundled software which could be included in the price of capital assets but would not in itself have a lifetime of over one year. He expressed concern that the chapter suggested the cost of the database software should be included in the value of the data that had been built up. He believed there was an element of intermediate consumption for databases built in the cloud. He questioned how to separate the different costs to build a database.
16. He highlighted that paragraph 11.126 discussed price rises and changes in the price of stocks. He noted that it should include holding losses as well as holding gains. He noted the section on terminal costs was not clear and raised that he personally disagreed with the capitalisation of weapons systems.
17. Robert questioned how the ONS would deal with the involvement of households in production. He referred to paragraphs 11.121-11.122 which discussed user-generated content on digital platforms as being within the production boundary if advertising or subscription revenue were generated. Those assets used in such production could be valued at the net-present value of the benefits expected to be generated. He asked how the ONS would capture increased gross fixed capital investment of households and acknowledged the challenge of measuring this.
18. Cliodhna answered that the ONS would complete initial research to understand the scale of this and understand if it surpassed a materiality threshold. The ONS would consider how far these data were captured under data of self-employed micro businesses. Richard added that the ONS had been very involved in the data as an asset approach to ensure the UK was happy with the final approach. He noted that he foresaw a large amount of development work to get the UK to an appropriate end point because of the way the world was changing but that the framework was helpful to tackle these issues. He appreciated that this SNA recognised these developments whereas the SNA2008 was pre-digital and it was difficult to accommodate smaller firms into traditional structures. Craig McLaren added that the ONS could return to NSCASE to consider where they felt it necessary to deviate.
19. Paul asked how people who worked from home and used capital assets would be accounted for. Richard answered that the challenge lay in what was where; he noted they may need additional data from household surveys but highlighted that the value was very small and only significant once aggregated across all households.
20. Nick raised that platform sharing had been discussed in a previous Committee meeting and again highlighted the potential intermediation of household-to-household transactions through digital platforms. David agreed and suggested it was another example of a split asset. He highlighted that the measurement problems associated were significant and that there were boundary issues as working and home lives were merging, for example. He noted it was difficult to know where they should be reflected in the economic accounts. Paul agreed and argued it was challenging to know how to allocate the assets that were used, in consumption or production.
21. The Chair asked Richard and Cliodhna whether other NSIs had considered this; he cited that working from home was not only a UK phenomenon.
22. Richard mentioned that the Americans had done research around Airbnb. He noted that in larger cities, it could have a significant impact on both the housing and tourism markets. He recognised that there were challenges here around splitting the asset and if a different deflator was needed because it was not a traditional hotel service. He expected that different countries’ regional or subnational accounts would determine if there was demand for producing more data at an aggregate level.
23. Cliodhna commented that the economic ownership of household capital that could be determined by who bore the risks or benefits.

7. System of National Accounts 2025 – Chapter 14: Balance Sheet

1. Ian and Robert led the discussion on this paper.
2. Richard provided an overview of the chapter noting that the chapter had not previously been circulated. He explained that the ONS’s comments on the chapter were light touch and broadly in line with those submitted by other countries. These included generating negative recourse resource rent values for wind power and comments around repair and maintenance. He also noted issues of phraseology of natural capital.
3. Ian noted the lack of cross-referencing between stock information in this chapter, and the flows in chapter 7 and elsewhere. He felt the explanations in the chapter were insufficient, necessitating backtracking for critical information. He suggested adding more of this information to avoid duplication. He highlighted paragraphs 14.5, 14.6, and 14.13 as good examples of where cross referencing would be beneficial.
4. Robert raised that in paragraph 14.3, the treatment of ownership of a resource lease had changed from the legal owner to a split between the economic owner and the legal owner based on the estimated appropriation of future resource rents.
5. Richard explained that this was to try to capture natural recourses that were held by a government but extracted by a private firm. The chapter tried to introduce a split asset where the ownership remained with the government, but the economic value was extracted by a company.
6. Robert believed that the increased move to splitting assets in this and other chapters, could create problems for compilers even if that made sense from an economical viewpoint.
7. Robert questioned the use of language in paragraph 14.11 and the sentence, “natural resources typically do not give rise to an international transaction if owned by non-residents because non notional resident units are generally identified.” He could not think of why this would not always be the case.
8. Richard believed that this was to accommodate migrating assets.
9. Ian noted that in paragraph 14.32 there was little coverage on the measurement of business fixed assets, and he believed there should be more detail here about depreciation. Additionally, he could find no mention of the treatment of intangible assets.
10. Richard believed that the SNA tried to make headline guidance and that supporting manuals, such as the prices and volumes handbook did cover these areas in more detail. He noted that the document went into further detail on newer topics such as natural capital because the corresponding supplemental detail did not exist. This led to an inconsistency throughout the document between established and new topics.
11. Ian believed that this could have been mitigated by cross-referencing back to definitions in earlier chapters.
12. The Chair highlighted that the treatment of extraction rights in paragraphs 14.56 to 14.58 was not symmetric with emissions rights. He believed that emission was negative extraction and as such should be treated equally and symmetrically.
13. Ian raised that paragraph 14.82 described the first valuation method of unlisted corporations as the book value method. He believed listing this first seemed to suggest it was preferable to the other methods.
14. The Chair agreed and believed that the order should be changed and there should perhaps be a note suggesting book value only be used as a last resort.
15. Robert thought that the sequencing may have been based on the Balance of Payments Foreign Direct Investment Survey.
16. Perry believed that it had been as a pragmatic approach to measuring as a good approximation to the market value.
17. Robert raised a point on paragraph 14.101 on emission permits being valued at a nominal value rather than at the market value. The deviation from the market price principle is not justified in the text, nor an explanation provided as to how to record differences between the market value and the nominal value if the permit is traded.

8. System of National Accounts 2025 – Chapter 12: Financial Account

1. Mairi and the Chair led the discussion on this paper.
2. Richard informed the Committee that the ONS comments raised that there was significant repetition between Chapter 12 and Chapter 25: Selected issues in financial instruments. He suggested the repetition could be resolved through cross-referencing or merging the chapters. The chapter also confronted crypto assets, it stated that stable coins and other crypto currencies which were backed by real currency were classified in the financial account. However, not all stable coins were fully backed by their currency of denomination and he noted there was potential for a stable coin to be part backed by a real currency and part backed by Bitcoin. He questioned how the accounts would classify this. ONS also responded that the general presence of financial codes would have improved the usability for compilers in this area. Paragraph 12.45 also caused confusion around gold. Richard added that the consultation process had been difficult as they had not had full sight of the tables that were to be included.
3. Mairi observed that the editors were spreading the supplementary items throughout all of the separate financial instruments which was different from other chapters. She noted there was a significant amount of choice and optional items in the chapter for countries to adopt based on what was most relevant. She agreed with Richard’s point on repetition and saw the value in an argument to merge the chapters, especially if there was a need for specification of all the different supplementary items. She noted the chapter covered a lot about the risk attached to certain types of financial assets and questioned whether trying to help countries understand their financial stability was within the scope of the SNA. She questioned whether this might be better placed in an IMF-type handbook.
4. She asked whether the next edition would include the tables. Cliodhna agreed it should. She also raised, on innovation around crypto, how the SNA would be fit for purpose for the next 15 years when crypto assets were not novel. Similarly, on the final supplementary item on the green economy and ESG, she noted that green finance or the terminology around green finance might not be relevant and suitable long-term.
5. The Chair added that the chapter would benefit from clarification that gold coin, even if legal tender, was not monetary gold. Secondly, he said that the chapter noted gold as the only financial asset without a corresponding liability. The Chair suggested that paper currency also did not have a matching liability.
6. Robert noted that, on paper currency, there would be a claim on the central bank if one exchanged local for foreign currency. Also, a non-resident could exchange the currency for a resource in the economy, such as goods and services; therefore a liability would be involved. The Chair argued that if a commercial bank was prepared to trade in currency, that did not equate to a corresponding liability as they were also prepared to trade in gold, for example. 
7. The Chair also expressed concerns that there was no reference to share buy-backs. He questioned when something was a financial transaction and when was it property income. He asked whether there was any interest in reclassifying regular transactions as current rather than capital; thus regular buy-backs would be reclassified as dividends. Robert suggested this would be an exchange of a financial assets, which was why it would not be a dividend. The Chair responded that if it were a repeated transaction, it would be akin to making a transfer of property income.
8. Nick asked how the ONS currently score share buybacks.
9. Perry answered that they were in the financial account and the Bank received information from the London Stock Exchange on share buybacks, which were treated as disposal of equity.
10. The Chair asked if Perry was aware of any companies that received buybacks on a regular pattern. Perry answered that a lot of the largest oil companies did.
11. Mairi asked if Perry wanted to raise any other concerns on this chapter.
12. Perry noted that gold was a contentious issue that has circulated frequently and there was confusion over allocated and unallocated accounts. He suggested that there has been interpretation of a claim of unallocated accounts; he did not think there was a physical asset that was unallocated gold but it could give a claim on potential delivery, but this was only an interpretation. He stated he did not have major concerns.
13. Paul raised comments on section 5 on consolidation. The SNA discouraged consolidation and netting but thought the language should be stronger. He appreciated that as a guidance document, it should set standards. Mairi agreed and noted that ONS points raised the same concern.
14. Robert disagreed with paragraph 12.5 on shares and other equities. It said the liability was established when one unit was obliged under specific circumstances to provide payments and this included shares. He noted there was no obligation under shares to provide payment so the sentence should be deleted but he understood that this impacted the definition of financial assets in which equity was assumed as a liability. He argued that the BPM6 defined it better.
15. Robert highlighted that paragraph 12.70 emphasised medium of exchange but this phrase was not defined. He stressed his view that crypto without a liability should be classed as a financial instrument within the capital account, as a financial valuable. He suggested that gold, traded between financial institutions, could be classified in the same way. He pointed out that paragraph 12.87 stated if a factor bought an account payable or receivable then it would be reclassified as a loan but it was unclear how the debtor would know it was reclassified. This could lead to inconsistency between the debtor and the factor creditor. On 12.107 on investment funds, Robert questioned why the text removed real estate as a possible asset underlying an investment fund.
16. Robert also referred to Mairi’s point on financial stability. He stated that most of the statistics had been developed for macroeconomic policy making rather than financial stability purposes.
17. Richard thanked the Committee for their comments. He added, on Robert’s points on real estate, that he thought the SNA tried to include real estate and other things into ‘certain non-financial assets’ but in fact it made it less clear. He added, on emissions permits, that the UK wanted to treat them as a non-financial asset but because they were a tax they should be treated slightly differently.
18. Rebecca Richmond added that comments on real estate investment trusts were also picked up by other countries.

9. System of National Accounts 2025 – Chapter 17: Capital Services

1. Rebecca Riley led the discussion on this paper.
2. Richard introduced the chapter. The chapter differed from the others discussed so far and that there was clear interest from Europe in standardisation in this area. He explained the main comment from the UK on the chapter was that different assets had different depreciation profiles, particularly when looking at tangible assets verses intangible assets. This would require a tailored solution to fit with the real characteristics of products on the market. He explained Europe were more in favour of using a standard geometric depreciation rate.
3. Rebecca agreed that the chapter was different and that it was trying to link the national accounts to productivity studies to help triangulate data and improve quality. The chapter suggested a table would be produced to illustrate the linkages more clearly. She noted it was surprising how little had changed from the previous version given the changes that had occurred in the other chapters, to which it cross-referred. She further noted that the chapter did not highlight the complications that arise in analysis of capital services measurement when intangibles were brought in.
4. The Chair believed this chapter was less of a core chapter than the others discussed as it was not crucial to the flow of funds from production to the financial sector.
5. The Chair asked if the ONS would regard the production of table 17.1 as something it would want to do in the early stages of implementation.
6. Richard believed that within the Multi Factor Productivity (MFP) system, this was already being produced though not in this precise template.
7. Nick thought that the UK seemed to be isolated in its position against geometric depreciation and that if the decision was made to use geomatic depreciation in the creation of these tables, the UK would have to follow on or deviate from the SNA.
8. Richard explained that the ONS used a mix of geometric and hyperbolic depreciation to produce these data.
9. David believed that the SNA should not constrain NSIs on a strategic level by a method given. It should be up to the countries to choose what was appropriate given the data that was available.
10. Cliodhna added that the ONS currently published its code on GitHub and that this table could be reconstructed.
11. Richard added that the ONS was most interested in bringing together the capital services and capital stocks data in order to confirm that the two sets of data were internally consistent. There was less urgency in ensuring that this was completed in precisely the method stated or with the precise geometric depreciation in every instance.

10. NSCASE Self-Review

1. The Chair thanked the Committee for the substantial discussion on SNA chapters and invited Jonny to introduce the NSCASE Self-Review paper.
2. Jonny informed the Committee that the Chair commissioned this review earlier in the year and the objective was to ensure the Committee operated in line with good governance practice. He thanked Committee members and ONS colleagues for completing the questionnaire, and noted the questions covered governance, performance, skills and culture, and timing and quality of the papers and Secretariat. He highlighted some comments from the ONS which recognised the depth of knowledge from the Committee and high-quality discussions but that more variety of diverse expertise would be welcomed. Both members and ONS colleagues raised that clarification of the scope of the Committee would be helpful. Members also raised that the Chair facilitated a supportive and welcoming environment.
3. Jonny invited NSCASE members and ONS colleagues to voice further comments on the effectiveness of NSCASE.
4. The Chair noted he would have preferred if more ONS colleagues had commented, but appreciated the comment also made by the National Statistician. The Chair asked whether the Committee could provide support to more of the ONS, and how best it might help those who did not currently interact with it. He hoped other areas of ONS would also feel they could benefit from the Committee’s advice, despite the primary objective being to advise the National Statistician.
5. The Chair also raised that members commented that it was difficult to influence the international agenda, as demonstrated by this meeting. He assured the Committee that the post-SNA workplan would consider how the Committee could influence international discussions.
6. Ian asked if that was a timing issue. The Chair confirmed yes, he noted the UN consultation was open only for a short time, and if the Committee had been able to meet and review these papers while the consultation was open, the discussions could have fed into the UK response. The Chair noted it was outside the ONS’ control and attributed this challenge to how the UN ran the consultation. David added the process was orchestrated with the producer in mind.
7. Nicola added she agreed with the Chair and noted that international partners also would have preferred more time for user engagement and external consultation.
8. Paul stated that the NSIs and UN had to defend the document to the users. He argued it would be a smoother process if users had been engaged throughout the process and more time had been given for consultation.
9. Robert agreed and stated that the Committee should seize the opportunity to influence the upcoming GFSM and National Accounts Research Agenda.
10. Richard raised there were general conversations about the functionality of a 15-year revision cycle and acknowledged there were particular items and rising issues, which may have needed more frequent revision based on their speed of development. He suggested that a five-year cycle, where one or two items were addressed each time, would be a timely solution. He added that the ONS were very interested in the research agenda and advocated a transparent and county inclusive process. It was not yet being brought to countries and was dealt with at the AEG level.
11. Nick agreed with comments and wondered how the UN could eradicate some inconsistencies at an earlier point in the consultation process in the future.
12. Tom highlighted that he was Chair of the COFOG Task Team and recognised the user-producer dichotomy. For COFOG, they had completed a global consultation on the research agenda and were currently running another global consultation. He encouraged Committee members to engage and acknowledged the Committee’s frustrations.
13. The Chair said that there were differences in view on the scope of the Committee and invited senior managers to contact the Chair to resolve that issue.
14. Nicola agreed and suggested that the Chair discuss this with the National Statistician directly also.

11. NSCASE Forward Plan

1. The Chair brought the Committee’s attention to the forward workplan. He apologised that it did not provide a full agenda for three upcoming meetings.
2. He noted there was still an element of uncertainty for the January meeting before the ONS received its funding settlement and the consequential material implications for NSCASE. The Chair asked if this would be confirmed by the January meeting. Nicola stated that she hoped so, but it was outside her control. The Chair hoped that after January, a forward workplan could be devised and committed to.
3. Robert emphasised that the Committee should take the opportunity to influence GFSM. He added that it would be useful for the Treasury colleague involved in the IMF task force to attend a meeting and update the Committee. Tom informed Robert that Jim Ebdon (OBR) sat on the GFS Committee but as chair of the COFOG Task Team, Tom also attended the meetings.
4. Robert asked when the ONS planned to bring the Balance of Payments Manual to the Committee.
5. Nicola replied that there were conversations happening internally to finalise the ONS ask in this space and when it would come to the Committee. This would be communicated to the Chair as soon as possible.
6. Paul felt allocating chapters to pairs of Committee members worked well at this meeting and was an efficient method to ensure all chapters were covered without the work being overwhelming. He asked if the Secretariat planned to do this again for the January chapters and if there was scope for NSCASE members to express a preference for certain topics. The Chair agreed and asked the Secretariat to circulate the agenda for January and that Committee members informed the Chair and Secretariat of their preference.

Action:

Secretariat to circulate January chapters and Committee members to express a preference.

12. Any other business

1. The Chair asked Nicola to comment on the future of NSCASE. She highlighted that the National Statistician was keen for the Committee to continue but the ONS would provide an update at a future meeting when funding was clearer.
2. The Chair added that Committee members were reaching the end of their contracts. This would also need to be addressed. Nicola agreed and stated it would be helpful if Committee members could express to the Secretariat if they were interested in extending their contracts. The Chair agreed and encouraged Committee members to do so.
3. Nick expressed thanks to the ONS and expressed that he believed the advice NSCASE provided was value for money considering the risk posed if the ONS did not seek external advice. Nicola agreed that NSCASE supported ONS against high risk and high-cost exposures.
4. Rebecca highlighted recent public communications around improved collaboration between the ONS and Eurostat and asked if this presented any new opportunities for NSCASE.
5. Nicola gave a brief overview on the content and operationalisation of the Cooperation Agreement with Eurostat. In the first instance this covered the transmission of GDP data to Eurostat. This would be principally used for to calculate UK contributions to EU programs. Secondly, the Agreement agreed that both parties would try to avoid unconscious divergence of statistics and statistical methodology. The Agreement was structured in a way that retained the possibility to increase the scope of cooperation if both parties considered this to be in their mutual interest.
6. David asked if ONS staff would be able to take part in Eurostat working groups. Nicola answered that nothing has been agreed at this early stage, but it was possible if both parties agreed it was of mutual interest.
7. David asked that if GDP numbers were to be used for budget contributions, how would that impact NSCASE’s ability to recommend divergence from ESA on GDP. Nicola replied that the only difference was that instead of submitting GDP data to the OECD, the Arrangement established a formal process to submit it directly to Eurostat. She highlighted that the second annex on unconscious divergence committed the UK to explaining divergences in methodology and how to maintain comparability.
8. Nick stated this was a positive development and stated that if large multinational companies switched their reporting to a different country, it affected the statistics. He therefore argued for engaging large case units and to consider the cross-border implications, which could be a valuable area for cooperation.
9. Philip agreed with Nick and congratulated the ONS for finalising the Arrangement. He suggested that the wording of ‘unconscious divergence’ implied that the ONS and Eurostat acted in lockstep currently, which was not the case. He identified labour market statistics was an area of inconsistency, which could be targeted. He raised that work had been done on trade asymmetries and considered, from a Northern Ireland perspective, the challenge they had with having a land border with the EU. He suggested the potential to collaborate with the wider statistical system outside of ONS.
10. Nicola said that it would be Sir Ian and Mariana Kotzeva to agree on areas of cooperation but anticipated that in time some matters may be taken forward based on precedents being established.
11. On Nick’s point on large case units, she believed this opened the door for a formalised agreement related to working parties or substantial work. She invited business areas across the ONS to reach out to the International Relations Team, who could establish bilateral meetings and gather information on the work Eurostat were currently doing. She stated this was a priority for her team.
12. The Chair informed the Committee of the 2025 meeting dates. The 2025 meeting dates were 20^th January, 28^th April, 21^st July, 20^th
13. He thanked Committee members and ONS colleagues and closed the meeting.