Committee

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

Apologies

  • Mairi Spowage
  • Thomas Viegas

Office for National Statistics (ONS)

  • Paul Dunstan
  • Richard Heys
  • Cliodhna Taylor
  • Janine Jenkins
  • Katherine Mills
  • Jessica Barnaby
  • David Beckett

UK Statistics Authority NSCASE Secretariat

  • Rosie Maslin
  • Simon Rigby
  • Kate Beeslee

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

  1. The Chair invited members to approve the minutes from the seventh meeting which had been circulated to the committee and posted on the website. He also asked them to declare any interests.
  2. No Interests were declared, and the minutes of the seventh meeting were approved by the committee.

2. Overview and status of actions from last Committee meeting

  1. The Chair drew the committee’s attention to the action tracker from the last meeting.
  2. On the issue of divergence from international manuals, Richard Heys noted that under the communications strand of the SNA proposals there was a proposal for countries to itemise and detail better where they might diverge from the SNA to make it easier for data users to understand the differences. While ONS had a lot of instances where they saw differences in NSIs practices from the SNA. Richard noted that it would become clearer in the future when the chapters had all gone through the approval process.
  3. Robert Heath noted that many divergences were probably minor and suggested that ONS focus their divergence analysis on issues of most relevance to the UK.
  4. Paul Mizen asked about the external research that had been conducted on behalf of the ONS that had been discussed during previous meeting and asked whether it was still up to date and relevant.
  5. Cliodhna Taylor confirmed that the ONS had not been able to look at this for the April meeting but would pursue the matter.
  6. The Chair suggested marking the action as pending rather than in progress and requested that the Committee be kept up to date with developments.
  7. The Chair noted the action for Robert to send his emission permits paper to the Secretariat as a contribution to a discussion on emission permits. The paper was part of the supplementary reading pack for the meeting.
  8. A revised version of the 2025 SNA adoption principles paper had been completed and SNA chapter 34 had been circulated to the committee.
  9. Robert explained that he had followed up with Perry Francis after the previous meeting on the 2025 SNA text concerning Islamic investment funds and FISIM. Perry had come back to him with proposed revised wording. Robert also followed up with Michael Lyon around whether the wording of the paragraph should be reviewed more broadly. He was satisfied with Perry’s suggested edit. He offered to share the edit with the secretariat.
  10. The Chair requested that Robert do this so the action could be marked as completed.
  11. Richard added that on depletion, a handbook from the OECD supporting the SNA was expected within the next couple of months. The UK had fed into preparation of this.
  12. Nick Vaughan asked if the SNA and BPM were used as the UK’s default position and if there was alignment between the two.
  13. The Chair explained that they were designed to be aligned but that if there were any instances of tension between the two it would be up to the Committee to advise on which to follow.

Action: Secretariat to edit the action tracker in line with Committee’s suggestions. Secretariat to investigate external international research.

3. National Statistician Decision on recent recommendations

  1. The Chair reported to the Committee that the National Statistician had approved the recent recommendations.
  2. The Committee were asked to accept BPM7 as the base methodology alongside SNA2025. The Chair asked that a short formal note be delivered at the July meeting so that the issue could be considered in the light of this.
  3. The Committee briefly discussed the importance of an implementation strategy for SNA and BPM, including NSCASE’s role in advising on the adoption or not of specific guidance in the new global manuals. ONS agreed to present some initial thinking for the January 2025 meeting.

Action: Formal note on adopting BPM7 as base methodology to be brought in July meeting.
Action: An initial implementation strategy paper to be brought in January 2025.

4. Briefing: Outcomes of the United Nations Statistics Commission, 2024 New York

  1. Richard delivered a verbal update on the work of the United Nations Statistics Commission (UNSC). He informed the Committee that National Accounts were the most substantive item and that there were active discussions on these. He noted that many EU countries had submitted written documentation that agreed with the proposed Eurostat position. Richard added that there was a need to consider the core set of questions to understand what degree of modelling and implementation countries would be comfortable with when focused on new and forthcoming issues in the modern economy such as the treatment of intangibles, goods and services with no market price, and the environment. Conversely, if these data were used for setting budget allocations and contributions to a shared budget within the EU, having a set of assumptions which effectively allowed countries to dial up or down their GNI number was viewed as deeply challenging. This came to a head around the treatment of branding and marketing assets. Richard added that differential treatment of branding assets, as a form of intellectual property that moved across boundaries and could be accommodated in different places could exacerbate trade asymmetries.
  2. The final resolution was that the SNA recommendations were accepted in totality by UNSC, except for branding and marketing assets which were left for the next iteration of SNA. The UK had been measuring branding assets experimentally to produce measurements of investment and deflators and calculation of stocks and volumes. There was a perception that more research was needed into those areas and that a generic set of assumptions should be applied.
  3. The Chair asked why it would be an easier to decide on branding in the next iteration of SNA. Richard answered that, based on the ONS’ experience in measuring branding assets and participation in work parties, they believed there was more research needed in those areas. The main question was whether there should be guidance on what generic assumptions countries should use. This would make it more immediately visible where a country has deviated from the norm. Richard added that this fitted with the Eurostat approach towards capital stocks more generally. They have been trying to impose greater commonality in the assumptions used to calculated capital stocks.
  4. Nick asked whether Eurostat proposed to have a GNI excluding branding or if they were playing for time. Richard informed the Committee that Eurostat had committed to the same chapter structure and length as ESA10 for the new ESA. In order to add something, something had to be removed. Eurostat’s intention was to ensure that the updated ESA was a direct descendant of ESA10, informed by the SNA2025. He added that there were regulations and a legal process to consider.
  5. Robert asked hypothetically if Eurostat would stay in line with SNA2008 guidance on marketing given the decision of the UNSC. Richard thought Robert was correct. Richard added that, as he raised at the Commission, the UK had carried out significant testing in this area.
  6. Richard updated the Committee on the second recommendation related to the SNA process. The IMF have established an informal working group looking at the frequency and rapidity of SNA revisions. The group brought together relevant bodies to consider whether the fifteen-year revision cycle was meeting the needs of nations. He said there were arguments for five-year revisions that had merit and a lot of general support. However, with the SNA, countries often wanted to focus on the biggest and most important issues, and this would become difficult with a five-year cycle. He also pointed out that if the ONS looked to 2029 or 2030 for full implementation, this option would give almost no time to implement SNA 2025 before changing again. There were also questions of how users would feel with more frequent change.
  7. Robert noted that similar discussions on changing the frequency of updates had occurred following the finalisation of SNA 2008. He expressed that frequent updates were even more difficult for those National Statistical Institutes (NSIs) that lacked the statistical capacity of countries like the UK.
  8. Richard made a final point on environmental accounts. The System of Environmental Economic Accounts (SEEA) covers elements of environmental accounts that are not present in the SNA but there is descoping in this area to focus on environmental resourcing. He stated it was clear that the market equivalent exchange valuations being put on them meant they were a relatively small component. He added that users therefore questioned whether the UK was looking at the true cost of environmental resources. At the end of the current 15-year revision cycle, if there was minimal impact on the accounts, there would be significant presentational questions.
  9. The Chair referred to the Dasgupta report and suggested that large numbers for environmental impacts were expected. He agreed that a small impact would cause a credibility issue and the SNA needed to clarify what it was omitting.
  10. Robert mentioned that the BPM was putting more emphasis on the other flow data, that is flows beyond transactions. He asked if this was evident in the SNA process. Richard answered that it was likely to be in the Prices and Volume chapter that had not yet been released and he could not say how much space would be given to the topic. Robert asked whether there could be misalignment if BPM7 gave emphasis to other flow data, but SNA did not.

5. Advice: System of National Accounts 2025 Chapter 34: Measuring Well-Being

  1. Cliodhna presented the SNA chapter on measuring well-being.
  2. She drew attention to how the paper aligned with the other chapters on wellbeing such as chapter two, which was brought to the committee in January.
  3. Cliodhna outlined that the ONS position was that the chapter did not go into enough detail on several aspects of well-being and that the UK was already doing more than what the guidance was asking countries for. The UK did, however, support the well-being framework that was included in the chapter which highlighted how SNA sat in the centre of the framework and extended out to distributional accounts and extended accounts (non-market household satellite accounts).
  4. Cliodhna highlighted that it was not clear that a wellbeing framework should be made up of components which all link back to the SNA (as is proposed in this chapter) rather than linking with each other. Cliodhna used the example of human capital, which when being researched in a wellbeing context might have benefited from being integrated into a framework which contained components beyond the SNA (e.g. unpaid household work).
  5. The chapter did not provide any concrete examples on what the elaborated accounts would look like. While the UK welcomed the chapter, they were worried about how the tactical approach might provide countries with an impression that once the suggestions in this chapter were completed, their well-being statistics would also be complete. Cliodhna reiterated that whilst the chapter provided useful introductions to well-being, the UK had already gone beyond the chapter requirements and would not wish to take steps backwards to fulfil the recommended guidance.
  6. The Chair invited comments from the committee.
  7. Paul M understood the ONS’s reservations and asked to what extent was the chapter holding the UK back. He asked if there was a way the UK could continue to be a pioneer.
  8. Richard added that whilst the UK could lead the way, it would require other countries to follow suit to not be an outlier. He added that if the chapter sent the signal that it was good enough, then the UK would not have countries to compare data to which could limit the UK’s work. Cliodhna added that the chapter was vague on whether the guidance was mandatory. The UK were interpreting it as guidance in areas where the UK had gone further.
  9. Paul M asked to what extent the UK were concerned that well-being was being put to one side and whether enough attention was being paid to climate and well-being.
  10. Richard noted that the changes to the core accounts on depletion would stretch the ONS but that the UN well-being chapter was not setting a challenging bar. He added that, from his perspective, the chapter was under-ambitious but recognised that some countries may struggle to follow the guidance.
  11. Robert agreed with paragraph 23 of the ONS paper that noted the tension in the chapter between the development of tables which primarily speak to the national accounts and those that primarily speak to well-being. National accounts data are primarily developed for macro-economic policy purposes, including the use of capital (physical, intellectual, and natural capital), and, in his opinion, human capital, while more social-focused well-being statistics are primarily developed for other policy purposes. The chapter does not bring out this distinction: tables 34.2-3 disaggregate national accounts data, while 34.4-34.9 are more well-being oriented but include a human capital table that is not consistent with the national accounts framework. Robert recommended that the ONS kept working on human capital and also on distributional data which were important for the IMF Data Gaps Initiative (DGI). He also asked whether the tables 34.4-34.9 were drawing on some existing internationally developed tables or were completely new.
  12. Cliodhna mentioned that the ONS did not compile in those formats but that the ONS had data and research on all the topics as they published distributional accounts and human capital but had a separate publication on employment. The data could be tweaked to fit the tables.
  13. Rebecca Riley noted that it may not be desirable for the UK to be a pioneer and that it would be better if the UK could work collectively with other NSIs. Richard mentioned that there was a group of research orientated NSIs conducting work through United Nations Network of Economic Statisticians (UNNES). They had spoken to the UN to note that research was happening at pace. They recognised that it could take time to aggregate but that the research risked becoming outdated quickly because of the pace of the work. He added that the chapter said some concepts were not achievable when the UK had shown they were.
  14. Nick said that he also thought the chapter was unhelpful and that the UK shouldn’t feel constrained by it. He was curious about the global responses and wondered what Eurostat’s position was.
  15. Richard noted that the chapter was towards the back of the SNA whereas chapter 2 was at the forefront. He believed that most countries had left significant comments in the chapter 2 consultation. Chapter 34 was viewed as a more technical chapter, and he believed countries had found it more difficult to engage with. Cliodhna mentioned that the inclusion of well-being was symbolic, and users were supportive of it. She added that when the UK were communicating with users, they would be clear about what the chapter doesn’t do.
  16. Ian McCafferty agreed with paragraph 15 of the paper that the chapter could benefit from re-scoping. He expressed worry for the casual user as the relationship between the tables was not made clear.
  17. The Chair added that the chapter did not explain how to measure well-being. He mentioned that the chapter should provide guidelines. He asked if any other countries took the same stance as the UK.
  18. Richard mentioned that the United Nations Statistics Commission commissioned an expert group to work together to provide more guidance on bringing environment, social, and economic pillars together. The group would start working in September.
  19. Nick questioned how the Sustainable Development Goals (SDGs) were being considered. Richard noted that the SDGs run until 2030 and were a large complex set of measures which could tell a good story.
  20. The Chair wondered if a paper proposing possible indicators of wellbeing could be a way to influence the international debate.
  21. Cliodhna added that there was a programme of work to draw together ‘beyond GDP’ and inclusive sustainability which could be worked into one framework. She added that the ONS could investigate adding that to the NSCASE research agenda so the Committee wouldn’t just be considering deviation from the well-being chapters.
  22. Nick asked if there was anything the UK wouldn’t want to produce from the SNA tables. Cliodhna added that they would just consider moving beyond the SNA guidance.
  23. Cliodhna added that on human capital accounting, the paper included the option to create data on education and training. The UK had leapfrogged this proposal, instead having now undertaken research to provide a full breakdown of human capital stocks into the high-level capital flow categories from SNA (capital formation, capital consumption, revaluations, and other changes in volumes) as well as research into what rewiring’s at a more detailed level would be needed to be incorporated into a national accounts’ framework.  The ONS was not in disagreement with SNA but would have to re-prioritise to take a step back to produce that table. Richard added that the particular area was not constraining the ONS.
  24. The Chair noted that the Committee would also want to offer guidance on areas where UK could go beyond the SNA. Robert agreed and said considerations should include distinguishing indicators and frameworks between those whose primary purpose was National Accounts and those aimed at well-being.
  25. The Chair asked if it was possible to have a timetable for a short paper that addressed the issue of measuring wellbeing. He asked if the ONS would consider asking other NSIs to feed into the paper with the idea that it would increase traction internationally.

Action: ONS to produce a short timetable. ONS to produce paper ideally with other NSIs, to answer the question of how to measure well-being.  

6. Advice: System of National Accounts 2025 Chapter 38: Thematic Accounts

  1. Paul Dunstan presented Chapter 38 of the 2025 SNA. He explained that it was a replacement for Chapter 29 of the 2008 SNA. The chapter explained the role of thematic accounts and extended accounts in providing complementary information and provided guidelines for developing these accounts. He noted the difference between this chapter and 2008 version removing the functional classifications. After the research conducted in 2008, there was a belief more could have been said in the chapter, but there was an emphasis on aligning the chapter with thematic accounts from other statistical frameworks.
  2. The ONS had suggested extensive reworking of the chapter to match the core accounts or to incorporate it into chapter 34 and 35. These chapters contained more content but could benefit from the addition of chapter 34’s material. The chapter would also be improved if the example focused on a recognised account like tourism.
  3. There was ambiguity as to whether the chapter was calling the SEEA an extended account or a source of data for an extended account. The chapter also included a reference to bridging tables which were a key component in aiding explanation of the outputs.
  4. The Chair remarked that it was not clear what the purpose of the chapter was and how the user needs were identified.
  5. Robert agreed with integrating the chapter into chapter 34 and 35 or merging it into the 2008 SNA chapter 29. There was some very helpful material such as the description of functional classifications, that was present in SNA2007 chapter 29. He asked what had happened to this material. He also noted that the chapter referred to a section E on tourism that appeared to be missing from the chapter entirely.
  6. Richard explained that there had been a comprehensive mapping project with a large table showing where information cross populated and where information that was previously in chapter 29 had gone. He added that it could become clearer as additional chapters were published. He acknowledged that it was a fairly thin chapter that gave little technical advice. He noted that due to the substantive changes to the chapter from SNA 2008, it was important to give the committee sight of the chapter.
  7. Cliodhna explained a reason for the change was in response to criticism of having a core account and a satellite account with strong delineation between the two. Moving to having the sequence of accounts and extended accounts or thematic accounts would move away from a two-tiered system. This could help inform users about different approaches to what were previously put together into satellite accounts. The Committee could choose to deviate from the use of these terms if it wished. The Chair asked if the ONS should continue to use the term Satellite Accounts or whether the committee should recommend the move to the use of thematic and extended accounts.
  8. Ian clarified that the decision would be for internal use. He noted that in relation to the chapter specifically, the differences were more about conceptual drafting and the chapter had already been submitted with the UK’s comments.
  9. Paul D clarified the difference between the terminologies. Thematic accounts looked within the core accounts and focused on a particular theme whereas the extended account stretched the core accounts. The term satellite suggested something separate. Paul D also noted that some of the material missing from the previous chapter 29 could be found in annex 2.
  10. The Chair asked if the Committee agreed in recommending the use of the new terms, thematic and extended accounts, as described in the chapter.
  11. The Committee agreed.

7. Advice: System of National Accounts 2025 Chapter 22: Digitalisation

  1. Paul D presented Chapter 22 of the 2025 SNA which summarised the conceptual and measurement issues that had arisen because of digitalisation. The digitalisation chapter was split into 5 components: digital products, digital platforms, digitalisation and the financial system, challenges presented by digital products for the measurement of prices and volumes and analytical tools to increase the visibility of digitalisation. The chapter introduced a lot of new variables into the SNA and generally the ONS was happy with the standard of the Chapter. There was a need for more explanation on crypto assets as there were some inconsistencies. For example, cloud computing companies may own data farms in multiple jurisdictions which created the potential for subcontracting arrangements or contract manufacturing. The ONS felt the chapter should include the sale of cloud data or databases as a means of delivering economic benefit for data. It asked for clarity on whether subscription based digital platforms were included and how they should be tackled when a single platform had multiple sources of funding. The ONS also suggested reconsideration of the sentence involving stable coins if the coin aimed to maintain a stable value relative to a specified asset.
  2. Paul M thought that the chapter was very usable but noted that as digitalisation became increasingly for general purpose and pervasive, the value of a separate chapter might be lost.
  3. The Chair added that Diane Coyle observed that separate statistics are not produced for the electric economy due to it being all encompassing and this was already also largely true of digitisation.
  4. David noted that the digital delivery model allowed for the creation of new products and potentially assets. He had concerns that the SNA covered various examples but did not set out what the underlying principals were. He believed a principle-based approach should be developed which would help mitigate changes in the future.
  5. Cliodhna used the example of NFTs as an area that would benefit from established principals. The chapter provided a definition based on the potential promise of NFTs. How they worked in practice was different; it would have been useful for principles to be established and to understand how they would apply to the case of NFTs. Cliodhna believed that the lack of clarity would lead to NSIs having to make these decisions themselves.
  6. Robert agreed and felt that the chapter was written about how things appeared in the present context and that principles and definitions were needed. He noted a lack of clarity in the definition of a data product as it was defined twice, in slightly different ways. He drew attention to the section on AI which didn’t mention or explain AI services.
  7. Ian added that more detail was required on how items were valued. The items were valued at cost of production which can be very distorting in certain cases.
  8. Robert asked how the ONS planned to differentiate between non-financial intermediation platforms and financial intermediation platforms as both seemed to intermediate payments.
  9. Cliodhna explained that the UK had provided feedback. The UK raised issues that some categories and definitions were not mutually exclusive. It was expected that some changes to the chapter would be made before final publication.
  10. Richard explained that there was a desire to maintain legacy differentiation between financial Digital Intermediation Platforms (DIPs) and non-financial DIPs. He noted that digital financial exchanges should be embedded within the financial accounts. Across many of the non-financial DIPs there was the potential to add up charges to develop various financial derivatives based around trades that were happening. This could make differentiation harder. He noted that one of the major arguments around the supply use tables was that it set in stone a group of industries that were affected by digitisation. He explained the difficulty of separating out what could be classed as a digital sale or ecommerce.  This meant that two companies could operate in the same way but might be classified differently depending on how they were historically operating before digitalising.
  11. Nick asked how digital products were defined and asked whether the definition would include databases and software. Paul also questioned whether the data was an asset or whether it was the transmission of data that created the asset.
  12. Cliodhna explained that the chapter used the OECD definition for digital products which had definitions that included traditional ICT products and included data, databases, and cloud services. Having pointers that were specific to digitalisation was helpful particularly in emerging areas such as NFTs. Secondly, there were users who were asking to measure the digital economy. They would find certain definitions very useful.
  13. Richard acknowledged that a real challenge in measuring the cloud service sector was knowing where the workload was taking place. A transaction could move between different countries based on the efficiency decisions of an algorithm several times during the transaction.
  14. Ian noted another conceptual issue that products and services renumerated through advertising was covered in the chapter, but products and services renumerated through the provision of users did not seem to appear. He asked how those products and services could be valued to the same degree.
  15. Cliodhna explained that as part of the inclusion of data as an asset it would be measured by a sum of costs, specifically the cost associated with structuring the database and the cost of gathering the data from the user. Where data had been gathered through the provision of a service, the cost associated with providing that service to the user was the necessary cost of building the data asset.
  16. Richard added that in instances such as Google search, the function simultaneously provided what a user was searching for and used the information to build a big data base of what the user was interested in to target advertising. There was a challenge in how to split Google’s software spending between acquiring data and providing capital services to users. The compromise that was reached was around the differentiation between observable phenomena and data: data only comes into being when an institution utilises resources to create a digital record. However, the fraction of the costs to be allocated to data creation versus delivery of services was still open for debate.
  17. Cliodhna added that an issue had arisen around the tendency towards monopoly based on the increasing returns in the value of large data sets. The value associated with one particular unit of data was incredibly small but when put alongside lots of other data was where it acquired its value. This would make the calculation of some mark ups difficult because companies like Google had the advantage of holding very large very diverse data that could be linked together in order to target advertising. This provided its value.
  18. Robert noted that the chapter did not seem to cover fintech. Richard explained that fintech would be covered in the financial chapter when the chapter was released.
  19. Cliodhna mentioned that ONS worked alongside BEA as part of the Digital Economy Task Team to produce a guidance note on the measurement of unpaid digital services, where it was proposed that the ideal place to capture the full economic value of free digital services would be as part of an extended household account. The guidance note proposed a framework for the valuation of free digital services, based on an implied barter transaction of free digital services for the household giving the business access to its observable phenomenon. Observable phenomenon here are observable facts about the world which can become the content of data items, including information about the user of the free digital product or about their actions when using the free digital product. She used the example of a messaging app which would collect data on the user in exchange for providing messaging services. The satellite account would record this transaction, including the production of the messaging service as output.
  20. Richard had asked Eurostat and BEA to help put a paper together on the satellite account. He added that a digitalisation account should show the existing SNA transactions which the chapter did not discuss.
  21. Rebecca asked if the UK were involved in writing the chapter. Richard noted that the UK sat on the Task Team for the development of the guidance notes but were not involved in pulling those guidance notes together into the chapter.
  22. Nick suggested that the UK had produced good work on how to delineate the platforms. Richard agreed but added that it did not come out as the dominant way to measure this area. He suggested that reflecting non-market services in the measurement (e.g home production of free sophisticated economic blogs) may be helpful.
  23. The Committee thought that it was appropriate to go beyond what the chapter was suggesting in an extended household account.
  24. Richard agreed to circulate a paper on how to measure digitalisation in the extended account which should help the Committee make a recommendation to the National Statistician. While this would not influence the content of the SNA, it would enable advice to be provided to ONS on next steps.
  25. Robert asked if it was possible to have a discussion on definitions and principles of digital products and a supplementary paper to that regard.
  26. Cliodhna highlighted that a decision could be made when the final paper was released as the content could change. She anticipated revisions and suggested the ONS review whether any progress was made on definitions.

Action: Richard Heys to share paper on measuring digitalisation.

8. Briefing: UK Standard Industrial Classification: Summary of Public Consultation

  1. Janine Jenkins presented the outcomes of the consultation on the UK Standard Industrial Classification. An options paper would follow in July. Janine reminded the committee that the consultation followed the UK’s exit from the EU as there remained no legal obligation to follow either NACE (Nomenclature of Economic Activities) or ISIC (International Standard Industrial Classification of All Economic Activities). Janine stressed the importance of maintaining international comparability and that the ONS had asked responders what the impact of revising UK SIC would be on end users.
  2. 31 out of 48 respondents opted for option B (NACE) and there was a clear preference for the 5th digit subclass level to remain in use.
  3. The ONS opted to maintain flexibility with the approach.
  4. David Beckett from the ONS economic division provided further insight on the flexibility that the division planned to apply. David provided some examples where having flexibility between using ISIC or NACE and creating a bespoke classification would be beneficial to the UK. He mentioned the way the UK economy manufactured motor vehicles with both electric and combustion engines. He described the benefits of being able to expand the classification at the 4th digit level for users. David and Janine highlighted that the final decision for specific changes to UK SIC would be discussed and decided upon as part of the UK SIC revision exercise which would follow once a decision had been made on the consultation outcome.
  5. David Caplan sought clarity on what the preferred option was for the UK and asked if the idea was for it to be an extension. He asked what the cost of such an approach would be based on increased granularity and asked if there was comparability at 4th digit level.
  6. The Chair asked why the classification size would need to be changed. David Beckett mentioned that the classes already exist.
  7. Nick asked why the 5th digit level couldn’t be used. He was satisfied by the 4th digit explanation and supported the flexibility as long as comparability was maintained with NACE and ISIC. He asked what the weighting of the consultation response was in ONS and asked if the economic statistics team view was the ONS view.  Janine mentioned that they had received responses from survey teams and methodology. The Classifications Unit shared the ESEG response with all internal departments that responded. As ESEG were the main user of the classification, their response was proposed as the “one ONS” response.  Conversations took place with internal stakeholders who wished to discuss the conclusion. There were no objections to the “one ONS” response. Nick added that he thought methodology and surveys should produce the ultimate outcome.
  8. The Chair asked if clear examples could be provided on how the flexibility would work in practice.
  9. Richard noted that there might be some tension in productivity figures for construction as productivity savings had been made by taking construction off site, raising questions of the boundary between manufacturing an construction. He added that construction was distinct from erection.
  10. Janine noted that it was important to consider the methodology.
  11. Robert asked for clarification on the timetable. He asked if Companies House had responded to the survey and whether the ONS would consider capturing video games, given the growing importance of this industry, as part of the greater flexibility. At present they fall under an all-encompassing code (62.01) under the heading of Computer programming activities at the 4-digit level. The UK SIC 2007 disaggregates this to two 5-digit sub class levels: 62.01/1 ready-made interactive leisure and entertainment software development and 62.01/2 business and domestic software development.
  12. Janine mentioned that the reference in the report to the gaming industry was provided by a trade body representing the UK gamesand interactive entertainment industry (UKIE). The gaming trade body was looking to capture a high-level reflection of video-gaming as it contributes a significant amount of money to the UK economy. Janine noted that comments from UKIE were communicated to UNSD through the ISIC task team that the UK are members of.  However, this was not reflected in the NACE revision.  In this instance, the revised ISIC is more granular than the revised NACE companies house responded and supported NACE.
  13. The committee looked forward to the options paper in July.

9. Update: Emissions Permits

  1. Katherine Mills delivered an update on the proposed treatment of emission trading permits within the updated SNA and associated manuals. She informed the Committee that agreement had not yet been recached on the proposed treatment of these permits, but the most popular options were (1) to be treated as a non-financial non-produced asset, and (4a) to be treated as a financial asset until surrendered, at which point they would be treated as a tax on production.
  2. She stated that the UK advocated option 1, but various international bodies supported option 4a. She highlighted that both options carried practical difficulties that would be encountered across the world. These were discussed at a workshop in January.
  3. The UK were still waiting for a decision on how this item would be classified in the SNA2025. Once that decision was confirmed, the UK planned to complete further research to establish whether the UK should deviate from SNA 2025 or comply. She informed the Committee that HM Treasury had been consulted and supported option 1 but wanted further scrutiny by use of an illustrative example. HM Treasury also wanted to be involved in the process and would be consulted before the ONS approached the Committee again.
  4. Robert thanked Katherine for her presentation and was pleased that the ONS agreed with the position outlined in his paper.
  5. The Chair asked if the government sold someone the right to extract minerals, whether that would be treated as a non-produced non-financial asset or as a financial asset and a subsidy; he saw mineral rights as very similar to pollution permit. Katherine could not answer specifically, but mentioned that the 3G, 4G, 5G radio spectra charges were treated as rent on a non-produced non-financial asset. Katherine agreed to clarify this point via correspondence.
  6. Nick asked what the AEG’s reasons were for supporting option 4a. Katherine stated she was not party to all discussions and emphasised that a variety of opinions had been expressed. She highlighted that Eurostat and some European countries supported option 4a due to the international nature of the European Emissions Trading Scheme as these permits were already being traded in a financial context before being surrendered. She also noted that this presented a challenge for Balance of Payments statistics; this was conveyed during the workshop in January.
  7. Robert added that his understanding was that the arguments in favour of 4(a) were the need for comparability between taxing emissions and selling a permit, and second, the argument around the permit as a cost of production in some form.
  8. Katherine stated that the next steps were to await the draft chapter of the SNA and consequently the ONS would evaluate whether the UK position was in line with international guidance. She stated that they would return to the Committee at that point but could not confirm when the draft chapter was expected. The Chair agreed that the Committee would want to make a formal recommendation on whether the UK should comply with or diverge from the SNA.

Action: Katherine Mills to clarify treatment of mineral extraction.

10. NSCASE Workplan

  1. The Chair stated that as the Committee was two years old in July, he would like to learn what the National Statistician, the Committee and ONS Staff thought had gone well and what could be improved.
  2. Rosie stated there was a formal process to assess this. The secretariat would forward a form to the National Statistician, to Committee members and to relevant ONS staff to complete to allow a summary paper to be prepared for discussion at the July meeting.
  3. Robert asked if an annual report was going to be produced. Rosie confirmed that as in 2023, a paragraph was planned to be included in the National Statistician’s report to the UK Statistics Authority Board. It would include the advice the Committee has provided to the National Statistician.
  4. The Chair asked for a short paper on BPM7 be presented to the Committee in July. Robert noted that the agenda was already busy for July with a number of SNA chapters. Paul D clarified that these papers would be brought together with the changes highlighted. Cliodhna added that these chapters required less discussion as there were few changes from the SNA08.

Action: Secretariat to organise feedback survey.

11. Any other business

  1. The Committee decided to move the date of the October meeting to the 21st October.
  2. The Committee thanked Paul D for his work on NSCASE research and offered its best wishes for his new role.
  3. The Chair thanked the Committee and closed the meeting.

The papers that informed this Committee meeting are attached as a PDF document for transparency. If you would like an accessible version of the attached papers, please contact us at nscase@statistics.gov.uk