National Statistician’s Committee for Advice on Standards for Economic Statistics – Minutes 22 January 2024

Attendees

Committee

Martin Weale (Chair)
Robert Heath (Deputy Chair)
David Caplan
Ian McCafferty
Paul Mizen
Mairi Spowage
Nick Vaughan
Thomas Viegas

Apologies

Rebecca Riley

Office for National Statistics (ONS)

Paul Dunstan
Grant Fitzner
Richard Heys
Richard McCrae
Deborah Prestwood
Matt Rogers
Cliodhna Taylor
Sara Zella

Office for Statistics Regulation (OSR)

Ed Humpherson
Marianthi Dunn
Rob Kent-Smith

Bank of England

Perry Francis
Michael Lyon

UK Statistics Authority NSCASE Secretariat

Rosie Maslin
Kate Beeslee
Simon Rigby

Minutes

1. Approval of minutes from previous meeting and Declarations of Interest

Committee members approved the minutes, and no interests were declared.

2. Overview and status of actions from last committee meeting

Robert Heath asked what the status of the emissions permits was. He acknowledged that the ONS participated in the December meeting with the IMF on this topic and asked when the January meeting would take place and what was the ONS’s position at the meeting in terms of methodology.
Rosie Maslin informed Robert that the meeting was happening tomorrow (23^rd January). She and Katherine Mills (ONS public sector division) would attend the meeting. Paul Dunstan added that Adam Dutton (ONS natural capital team) would provide an update on emissions permits in the April meeting of NSCASE.
Richard Heys explained that the ONS was still trying to understand better the detail of some of the options presented. He noted that having talked to others there was not a commonality in the interpretation of the options available. The January meeting would be used as an opportunity to establish that, ahead of finalising the UK’s position.
Robert offered to circulate a paper he produced that he had circulated to ONS and IMF staff on this topic for NSCASE’s information. The Chair noted that this could be circulated in April when ONS update on the topic.
David Caplan asked about the potential of building bilateral relationships to understand non-EU G7 compliance with the SNA / international manuals.
Richard explained that there has been outreach from Canada and Australia who are asking themselves similar questions. There is a desire to look at the pace of adoption and key areas that can be prioritised for implementation while more contentious areas are given the time they need to work through. Richard also noted that the ONS has seen that Eurostat has commissioned an invitation to tender for delivery of their ESA draft following on from the 2025 SNA. It looks as though their design takes ESA 10 as a base and then enhances the structure to keep it in line with the SNA.
Following this discussion, Paul D suggested revisiting this action to provide an update on the discussions with non-EU countries on their divergence from international manuals.

Action: Secretariat to revise action on research into the compliance of non-EU G7 countries into an update on discussions had with non-EU countries on their divergence from international manuals.
Action: Robert to send his emission permits paper to the Secretariat as a contribution to a discussion on emission permits at the April meeting.

3. National Statistician Decision on recent recommendations

The Chair noted that the National Statistician had accepted all recent recommendations the Committee had made to him and that this included the first disputed item around non-monetary gold. He noted that the National Statistician was provided with an account of Robert’s argument and so was well aware of the differences of opinion on the subject.
Robert thanked the Chair for sharing his view with the National Statistician when he was presented with NSCASE’s recommendation. Robert continued to be concerned with the position taken, not least because it excluded significant transactions from the national accounts.

4. 2025 SNA Adoption: Principles for NSCASE

Richard provided an overview of the paper explaining that it broadly followed the terms of reference. He explained that the implementation of recommendations could be long, complex and require significant investment from across the office. Conversations had taken place in the office to plan the work and spending reviews. He drew NSCASE’s attention to paragraph fifteen where the broad question being asked was, recognising the role and briefing of NSCASE to provide recommendations on (i) whether the UK should seek direct adherence to SNA draft; (ii) direct adherence to ESA 27 Draft (iii) or a combination of the two. He also set out the plans to bring SNA chapters to NSCASE for its consideration which he recognised would be a substantial undertaking and needed to be done in a timely fashion.
Richard also noted that is important that economic decisions made by NSCASE reflect the economic reality of the UK whilst retaining international comparability across statistics.
The Chair asked what the likely timescales were for the UK to produce national accounts that adhere to the SNA 2025.
Richard explained that a key consideration was the exit agreement from the EU, which required the UK to keep GNI against ESA 10. The outer limits of which would be 2028. He explained that the UK would not be able to make full delivery on the SNA until 2029 at the earliest due to a number of changes to the core sequence of accounts. Natural resource depletion and the intricacies around crypto assets and other complexities were likely to take longer.
Nicola agreed with Richard regarding the EU requiring GNI data until 2028. She added that another complexity was a potential change of government and spending review. She noted that there was nothing in the withdrawal agreement that would require the UK to change to another reporting standard such as ESA 2027.
The Chair noted that it seemed unlikely that the ESA 2027 would be a complete rewrite of the SNA 2025, but asked if the ONS would be comfortable if there were minor changes.
Richard explained that the UK had seen the drafting of ESA 27 and it asked for a draft that is based off ESA 10 and made as compatible as possible with SNA 2025.
Grant Fitzner added that the Treasury would probably not be re-assured if a decision on accepting ESA27 or SNA 2025 was delayed by two years.
Nick Vaughan highlighted the difference between guidance and choice between SNA and ESA. He added that it seemed unlikely the EU would demand the UK adhere to the 2028 GNI.
Nicola explained that the UK was remaining in contact with EU to discuss positions. This would ensure the ONS were aware of any major divergences ahead of time.
Robert asked if we were making an implicit assumption that should be made explicit that the SNA should be used as the base methodology.
The Chair explained that NSCASE was deciding whether to make the SNA the default methodology. He agreed that it was a big decision but noted it was an internationally agreed standard and it might be strange if the UK didn’t use it in the future.
Paul explained his understanding that the SNA would be the international standard that the UK would adhere to, but that NSCASE had already made recommendations to deviate from it. He assumed NSCASE would not be reversing those decisions and might make further recommendations.
The Chair agreed that once the base methodology was established NSCASE could then discuss whether it wished to deviate from it at certain points. He gave non-monetary gold as an example of deviation and that he did not believe that such deviations would be excluded by saying the SNA would be the base methodology used by the UK.
The Chair asked NSCASE if they should recommend adopting the SNA as the standard and base methodology from which the UK can deviate from if appropriate.
David noted that the goal of producing internationally comparable statistics was desirable but that there would always be issues arising from economic structures and production boundaries. He was sceptical on some elements of the ESA, particularly those relating to public sector output which were influenced by political issues. He believed the SNA should be the base methodology, but that NSCASE needed to recognise that the UK would deviate in some circumstances.
The Chair asked whether that NSCASE was happy to record the decision that they would recommend the use of SNA as the base methodology and default standard from which deviations could be made where appropriate. The Committee agreed.
The Chair asked the Committee if they agreed with the principles set out in paragraphs four to nine of the paper NSCASE (24)01.
Ian stated that there was little that could be disagreed with as the principles followed the terms of reference very closely and he would support them.
Robert noted that while the SNA supported comparability it couldn’t guarantee it.
The Chair asked the Committee to consider paragraphs eleven to fourteen of NSCASE (24)01.
Robert agreed with the concept in paragraph fourteen of taking account of international comparability but thought it would be hard to implement in practice as other countries would be making decisions on and implementing the new SNA at the same time as the UK. He believed international comparability, or lack of it, would become apparent over time as counties adopted the SNA.
The Chair suggested a wording change to “international comparability assuming other countries adopt the SNA.”
Cliodhna Taylor asked the Committee whether they would want to consider areas where the international community would be deviating from the SNA. This could help the UK to maintain international comparability. For example, the UK’s proposed quality adjustment of public services was likely following the new SNA but hinder international comparability.
The Chair noted that on paragraph 14 there could be a point F that adoption of SNA 2025 may, in the short term reduce international comparability. Nick Vaughan noted that the UK had chosen to be non-comparable in GDP which is a fundamental statistic. The Chair pointed out that the UK was leading the way.
The Chair asked if Richard Heys could circulate the revised paper to the committee with a table of changes.
Paul D suggested promoting the visibility of the decision to adopt the SNA as the base methodology and default standard on the NSCASE website.
The Chair asked if the NSCASE website could be updated to reflect the committee’s decision with the wording the Committee has decided to use SNA 2025 as its base methodology and default standard and would make recommendations for deviation from that where it appeared to be appropriate.
Robert asked about the timing of when the Committee should discuss specific issues that arose from the new SNA. He suggested that the Committee wait until the documents were final before making a decision, rather than considering issues in the draft chapters.
Ian asked if it would be possible to influence the chapters ahead of time to influence the final draft ahead of agreement.
Paul D noted that there was an issue of timing and there was typically only two weeks to provide comment on the draft chapters. Rosie Maslin added that it was possible for Committee members to add comments to the chapters as independent experts but there would not be time to bring the all the draft chapters to NSCASE for comment.
Richard noted that the final chapters would be brought to NSCASE would be if there were significant changes from the original draft and a material impact on the accounts.
Nick suggested that NSCASE should be happy to review draft chapters and agreed with Richard’s solution.
Robert asked what was happening with regard to issues arising from the new Balance of Payments Manual.
Richard explained that there were several duplicated chapters on the BPM and suggested they should be approved only once. Those BPM chapters which are not SNA chapters would also be submitted to NSCASE for advice.

Action: A revised version of the paper to be circulated with a table of changes.

5. 2025 SNA Chapter 2: National Accounts and Measures of Wellbeing and Sustainability foreword

Paul D presented a paper on the 2025 SNA Chapter 2: National accounts and measures of wellbeing and sustainability. The Chapter was selected as an example of one that would require heavy editing. He explained that ONS would provide a short synopsis on the chapter.
The Chair noted that the chapter did not provide a clear definition of sustainability. He observed that the ONS made references to welfare prices; he agreed the text on these was not helpful. There was the observation that an increase in GDP might be used to finance extra defensive expenditures and not lead to a rise in well-being. The Chair said that he would have liked more detail on the connection between NDP and national income- a theoretically better welfare indicator.
Cliodhna Taylor noted that the chapter was one of three on well-being and sustainability. She added that the overview would be followed by chapter thirty-four which would focus on wellbeing. There would then be a further chapter thirty-five on sustainability which hadn’t been published.
Cliodhna explained that the ONS were pleased to hear the SNA would be developing chapters on wellbeing and sustainability as it was an area in which the organisation was very interested. A lot of work had been carried out internationally on the beyond GDP agenda particularly through the UN network of statisticians. She explained that there were concerns that the chapters so far represented something of a halfway house where the authors talked about issues of wellbeing and sustainability in a summary fashion but did not delve into their complexity as interdisciplinary topics. The ONS would either rather see the SNA specifically address wellbeing and sustainability as something the SNA could speak to, but which was dealt with in another framework, or that it made wellbeing and sustainability a larger part that could be addressed in more than three chapters.
Richard agreed noting that the issue had probably arisen from the mandate that they had been given to refer to wellbeing and sustainability but not write a standard for the subjects. He explained that there was a gap in international guidance landscape which ONS was working with other countries to fill. He noted that there was a paper going to UNSC recommending work in this space.
Paul M asked what kind of document the SNA authors were trying to write. He asked if it was attempting to set up a common standard that countries could aim to implement or were they thinking about more ambitious standards that some countries would reach but others would not, within the scheme of the SNA. He also noted there were a range of concepts about what was meant by wellbeing and asked if they were attempting to recognise many or were trying to be normative around one.
Cliodhna explained that these were the types of questions that the ONS would be taking back to the editorial team. In chapter thirty-four, they discussed whether the wellbeing work was mandatory.
Richard added that he believed they were attempting to draw distinction between the core sequence of economic accounts and a sequence of enhanced accounts, thematic accounts, and supplementary tables that were more discretionary. He gave the example that if the UK were to be fully compliant with SNA 25, they would be talking about the core sequencing of accounts rather than every table. The core would still be based in market price economic fundamentals not human capital, natural capital, or other “beyond GDP” staples.
Robert explained that the SNA was not mandatory and was written for use by countries as a guide to compilation. Chapter 2 did not provide any guidance on how to compile statistics. In his view the SNA should not discourage progress by leading economies. Further, distributional effects of income and wealth had been part of G -20 Data Gaps Initiative since 2009 with considerable work subsequently undertaken, not least led by the OECD, but the chapter provided no guidance arising from what had been done.
Nick noted that the chapter read like a commentary, and he did not think a more encompassing approach would be right. He agreed with Robert’s points since welfare measures could not be separated from distribution. There was no attribution of government outputs and discussions on wellbeing.
The Chair believed the paper’s reference to measures of wealth was back to front and that there should be something about the appropriateness of different deflators – an issue that the UN had found difficult to offer advice on in the last twenty years.
Ian McCafferty noted a slight disconnect in deriving wellbeing in the national accounts. He believed indicators of sustainability and wellbeing leave out quite a lot. He asked if the chapter was in danger of overpromising.
Richard Heys explained that the SNA had not been commissioned to develop a framework on inclusive and sustainable wellbeing and chapter thirty-four may do a better job at proposing what countries should do.
The Chair asked whether Chapter thirty-four would be brought to NSCASE in April and whether it might be better to wait until chapter thirty-five was published so they could be reviewed together.
Cliodhna explained that while they did not know when chapter thirty-five would be published, if it was made available with time ahead of the April meeting, the two chapters could be brought to NSCASE together.
Nick Vaughan did not think that there was a need to wait for chapter thirty-five but if it was published ahead of the April meeting it would make sense to review them together.
The Chair asked the NSCASE research team to circulate chapter thirty-four ahead of the usual circulation of papers.

Action: NSCASE team to circulate Chapter thirty-four as soon as possible.

6. 2025 SNA Joint Chapter 26 and BPM7 Chapter 17 on Islamic Finance

Perry Francis and Michael Lyon from the Bank of England gave an update on the SNA and BPM joint chapter on Islamic Finance.
Perry explained that as a member of the Balance of Payments Committee, he was tasked with looking at the Shariah-compliant financial instruments to see how they would best align to fit in with the National Accounts and Balance of Payments. He noted that a ‘slotting-in’ approach was taken to best align the Shariah-compliant instruments with existing loans, equity securities, and debt securities. Perry informed NSCASE that they tried to include some guidance about how new instruments should be classified, though could not provide an exhaustive list. The guidance indicated what lay at the heart of such transactions to provide a steer.
He added that other task team members looked at returns on investment as interest as a concept did not exist in Shariah-compliant financial instruments but was a measure shown in the account. ‘Interest and similar returns’ was adopted as the term, which gave countries the option to show as an income on Shariah-compliant instruments.
Perry explained that the task team also looked at financial intermediation services indirectly measured (FISIM) as part of the work on how and what alternatives could exist to calculate FISIM. The Bank were not involved in this workstream.
He concluded his presentation noting that ONS and the Bank’s comments on the draft chapter were generally supportive.
Robert commented that he focused more on the production side of the chapter. He believed the wording around Central Bank and FISIM should be strengthened and referred to SNA 2008 paragraph number 156 which provides the present guidance on the topic. He emphasised that the wording for Islamic Central Banks should be consistent with that for non-Islamic Central Banks in the new SNA. Secondly, he commented that the SNA08 gave guidance to compilers on what reference rate to use when calculating FISIM, so suggested that some such guidance be provided in this chapter on Islamic Finance. Thirdly, he was surprised that paragraph 26.41 of the chapter stated that Islamic investment funds could generate FISIM. He asked why FISIM was introduced for Islamic investment funds, and whether this had implications for the whole SNA or if it was related specifically to Islamic investment funds.
Perry assured Robert that it was not yet finalised and agreed that it should tie up with the SNA. Perry added that he had been looking in to FISIM generated by trusts and believed that output sector S.127 could generate FISIM. He added that he believed the ONS calculated FISIM for some non-bank financial corporations. On the reference rate, he noted that the work was going on and said he would follow it up with the chapter leads. He agreed with Robert that there was some uncertainty.
The Chair asked Richard McCrae for his thoughts FISIM. Richard M stated he would have to check output sector S.127 but that his team processed overseas bank deposits for non-bank sectors with foreign banks and likewise UK sectors other than banks. He added that the loans taken out with foreign banks were included in deposits and loans.
Perry added that the Bank provided data to the ONS on OFI FISIM which Perry assumed was on overseas financial intermediaries. Richard M suggested that could be UK to UK rather than cross border.
Robert asked that paragraph 26.41 on generating FISIM be reviewed and checked before finalisation. Perry agreed to take on this action.
The Chair asked if there were any issues arising from the interface between Islamic financial institutions. He considered a situation where an Islamic bank might have a branch in the UK or conversely a British bank had a branch in an Islamic country.
Perry answered that some banks operating in the UK provide Islamic finance. The reporting requirements for these banks were no different from other banks that did not provide Shariah-compliant facilities. He stated that he could not comment on the requirements for banks in other jurisdictions outside the UK. He added that more jurisdictions are providing Shariah-compliant facilities, and the update of the manual recognised the increased demand for Islamic finance.
The Chair asked for confirmation that the chapter had no direct implications on UK statistics because Shariah-compliant organisations produced their data to the standard UK framework. Perry confirmed.
Robert observed that in previous work he undertook in the Gulf region he had not seen any issues with implementing the basic principles, but the larger question was that of classification.
Michael Lyon added that the area was quite decentralised, and that the chapter’s main philosophy was that its contents could be accommodated within the SNA. However, he noted that the implementation in different economies could pose a challenge to consistency in the future.
The Chair thanked Perry and Michael and noted that no recommendation was necessary.

Action: Robert to follow up with Perry on the text concerning Islamic investment funds and FISIM.

7. Updates January 2024: OSR review of GDP statistics and economic statistics

Ed Humpherson introduced the item. as the Office for Statistical Regulation (OSR) had completed this review following criticisms of ONS Blue Book revisions in Autumn 2023. He highlighted that the Blue Book was a core component of economic statistics, and that he was keen to maintain the dialogue between NSCASE and OSR.
Marianthi Dunn outlined the ONS revisions to the Blue Book and the reasons OSR had undertaken the review. It was evident that users sought more context and information on the revised numbers than ONS had provided. The OSR recommended that ONS increased efforts to gain access to all possible data sources to avoid having to revise published statistics. The OSR agreed to provide support to ONS on this.
The OSR recommended that the ONS used enhanced data sources, undertook more quality assurance and communicated uncertainty better.
David thanked Marianthi for her presentation. He identified similarities between the review, and other reviews from the 1980s. He asked what work would be implemented following the review, and what improvements users should expect to see in the short-term available data.
Richard said that the ONS were satisfied with the report, and that some issues were perennial and that other countries faced similar issues. He conveyed to NSCASE that the ONS was taking the report very seriously, and GDP was one of the six priority statistics for the coming year. The office had undertaken various steps and costings to ensure a high standard was delivered as the review had requested. Richard appreciated that the report did not shy away from the importance of data sources needed to produce high quality statistics and agreed that there would be more focus on finding new data sources and evaluating relationships with data providers. He reassured NSCASE that the ONS was focused on consistently delivering the process production and gave users confidence that the data produced by ONS were consistent and coherent.
Mairi asked how the UK Statistics Authority planned to persuade other government departments to share data with the ONS.
Marianthi acknowledged that ONS had worked with other government departments, but that the process was generally quite slow due to security issues, necessary enhancements to systems and a lack of appetite from other government departments whose statistics were not their priority. She noted that some countries compiled quarterly supply use tables which enabled them to take information from other parts of the economy, predominantly expenditure and income. Ireland particularly was very strong on the income approach, and in their case, this had led to very large revisions.
Ed added that he spoke with Mike Keoghan, Deputy National Statistician, and offered to attend meetings with government departments which may be slow to provide data.
Robert noted that in the Covid period of significant uncertainty about economic activity, the ONS had introduced new short-term indicators, such as the BICS survey. He asked was this a positive lesson to take and would the OSR encourage such an ONS response in other such circumstances.
Marianthi answered that the short-term indicators were well received from users, with support for how ONS communicated the quarterly estimates. She highlighted that users would have appreciated more clarity when the annual data came in. Richard added that bringing in less timely data sources raised quality but led to revisions to the data. Although this was a reflection of continuously improving datasets it was interpreted negatively by some of the media.
Paul M questioned whether the ONS could make use of higher frequency data, particularly transactions data and credit/debit card data to give some indication of spending.
Nick said that he was cautious of going down the income approach, but asked whether it was possible to estimate intermediate consumption using VAT data. He was cautious about Gross Operating Surplus (GOS) being used as the balancing item for GDP and he questioned whether quarterly supply-use balancing was possible.
Marianthi referred to a recent report completed by OSR on GOS being used as the balancing item. She clarified that the quarterly series were produced in this way because ONS had suspended the quarterly profits inquiry without replacing it with an alternative data source but that annual data from HMRC were used. On intermediate consumption, the main revisions were from the purchases survey. Trade margins and health were the main contributors to the revisions to GDP. Instead of suggesting they enhanced the survey, the review looked at the best place to collect data on household expenditure. She stressed the importance of looking beyond traditional survey approaches as spending habits changed.
Ian asked whether there was a tendency for the initial estimates to over or underestimate changes to GDP and whether the OSR identified any patterns in that with regards to the economic cycle.
Marianthi answered that they had identified some reference to bias in a previous ONS article, but that in this review it was not possible to follow this up due to time constraints.
Paul M welcomed the report and suggested that it may be valuable for the OSR to consider recommending that the ONS made more use of ESCoE He informed NSCASE that research on a number of relevant programmes was underway and that there would be an opportunity to shape a new set of work packages under a second phase of the current ESCoE contract from 2025. Marianthi agreed and stated this was a recommendation.
Mairi asked about transactions data and acknowledged that the ONS is looking into different sorts of transaction data and if it can be used as a data source in the core accounts. She highlighted that she was working on a feasibility study with the ONS of prices and one of the significant barriers was the investment to investigate these sources properly with areas to see if they could be used. She informed NSCASE that Scotland produced quarterly supply-use tables. She continued that the Lievesley review was expected to be published shortly and hoped that it would address barriers to accessing new and innovative data sources.
The Chair noted that Adrian Smith had suggested that the ONS use the language of ‘updates’ instead of ‘revisions’ as a better way of representing why estimates changed

8. Updates January 2024: Crypto-Assets without Corresponding Liability

Richard provided a short update on the current position of crypto assets. He noted there continued to be a strong range of opinions on how to treat crypto assets without liabilities (CAWL). He outlined that some considered them problematic from a financial asset perspective, while others considered them problematic from a produced, non-financial asset perspective, and there was also the concern that they could introduce a lot of noise in GDP. He stated that the current compromised position was to treat them as non-produced, non-financial assets. The UN’s Advisory Expert Group on National Accounts (AEG) reserved the right to revise the decision if there were substantive movement to the regulatory environment. He highlighted that the US Securities and Exchange Commission was expressing a more open approach to regulating ETFs denominated in crypto currencies. Richard noted their interest could stimulate the AEG to return to this topic.
He noted that if CAWL were classified as non-produced, non-financial assets, there were questions around the labour, capital and energy which was required to produce them. The current position was that the “miners” would be accounted as producing algorithm solving services, and then paid for these services using the non-produced asset. He noted the SNA would need to clarify how to deal with barter transactions dealing with service production and then trading that for a non-produced asset.
Richard informed NSCASE that, without the intervention of a large regulator, the UK should be prepared for a non-produced, non-financial classification but that the SNA should include the treatment of production and how that was awarded. Richard noted the potential impact of the classification, as historically, barter transactions have been kept to a minimum in developed economies and markets that the UK participates in.
Robert highlighted that the paper referenced the inconsistency of classifications between crypto assets without liabilities, non-monetary gold, and tradable emissions permits. Robert had provided three papers to the ONS on each that together provided a consistent classifications framework. On non-monetary gold between financial institutions, crypto assets without liability and tradable emissions permits, Robert’s position was that all three should be classified in the capital account but outside of produced assets, the first two as “financial valuables.” He agreed with the paper and mentioned that he believed the ONS should advocate the classification of tradable emissions permits as non-produced, non-financial assets at the IMF workshops on the topic. Richard agreed.
The Chair thanked Richard for the update.

9. Updates January 2024: The Quality Adjustment of Public Services

The Chair invited Richard to present this item.
Richard introduced the item and introduced his colleagues Debra Prestwood and Sara Zella who were responsible for the operation management and methodology respectively. Since NSCASE recommended proceeding with the quality adjustment of public service settings, the ONS have been working to deliver the work required for this. He updated NSCASE that the Chancellor was interested in this work and had commissioned a review by the National Statistician to focus on public service productivity measures that allowed the ONS to leverage the methods development work to complete the landscape of quality adjustments that would be required for full integration into accounts.
He outlined that a spending review bid required approval to expand and complete this work to a high standard and to the objectives set by NSCASE.
The Chair asked if part of the work had been done to try and estimate underlying rates of productivity improvement or quality improvement service to facilitate the production of timely output data. He raised that though the output of the public services was most often measured on an annual basis, figures were needed for quarterly GDP.
Richard answered that the ONS currently produces a quarterly series which was based on non-quality adjusted output metrics. There was a challenge to get consistent data from the quarterly and annual basis.
Sara added that she worked on the nowcasting methodology with ONS’ methodology directorate to improve the nowcasting of public service productivity. It was raised that, following this, the team had a clear idea of the data between 1997 and 2020 because of the annual national statistics. She detailed that the nowcasting method used the entire series to estimate the data. The ONS completed the work for all service areas, though there was much more information available for areas such as healthcare, education, public order and safety. Within the public service productivity review, the ONS was working to improve the meter for the whole service areas, including smaller service areas which posed their own issues to address.
Mairi thanked the team for the paper and presentation on the good methodology work that will pave the way for the quality adjustments to be incorporated into GDP as recommended by NSCASE. She raised that there was confusion in the user community about the difference between what NSCASE recommended in April and the public sector productivity review. She suggested there may have been a communication issue as she noted that people in devolved administrations had heard snippets of what went on in the review but were not fully clear.
Mairi highlighted that it was disappointing that the review was only focused on England, despite the comments she raised in the April meeting, that the review should cover the whole of the UK where possible and England only by exception. Mairi expressed concern that an England-centric approach was problematic as building recommendations without considering other nations could be inefficient when it came to building public sector quality into GDP. She emphasised that when the initial recommendation was given to the National Statistician in April, it was done with the provision that all UK nations would be considered in the review.
Richard answered that he shared Mairi’s opinion that focus on the four nations needed to be maintained. He agreed that for National Accounts purposes, it was vital that the four nations could be brought together. He stated the later stages of the review would focus on ensuring a consistent and efficient delivery across the four nations. He acknowledged challenges around education qualifications and health systems which differ across the four nations. He recognised Mairi’s concerns and advocated a consistent and coherent result that supported all nations of the UK.
Debra added that the team looked to implement the review in a consistent way across the four nations. The team would identify data sources in Scotland, Wales and Northern Ireland that might need improvement and offered to share best practice. The team had established plans to work with the devolved administrations to identify where work needed to be done. Debra informed NSCASE she was going to attend the Devolved Economic Statistics Coordination Group to present the work and discuss how to ensure the four nations were joined up.
Sara agreed that the production team was equally concerned with involving all the nations. She noted the challenge that the pandemic posed to data availability. She informed NSCASE that the forthcoming article on public sector productivity and other social care was focusing on devolved nations.
Mairi thanked the ONS team for their comments and noted that she was reassured by their answers.
Robert enquired whether the ONS knew what the 2025 SNA would say on this topic given that a lot of countries were not in the position to make quality adjustments.
Richard answered that SNA08 permitted it, but no guidance notes for the 2025 SNA had been commissioned on the topic. He stated that if the paragraph was flagged for change, the ONS would push back on the basis that no research had been commissioned.
Robert then asked, in relation to the health and education outputs, in choosing the output measures how much account was taken of the incentive that staff will inevitably have to meet those measures. For instance, in health were preventative measures considered? Secondly, he asked how far quarterly estimates were effective for certain outputs, for example health gain from procedures or qualified teacher status, which he thought would be better encapsulated in an annual estimate.
On his first question, Richard replied that the ONS was working to find methods to incorporate prevention activity, particularly looking at alcohol, tobacco and drug cessation programs. Richard recognised the challenge to present prevention activity, especially for defence and the methodological challenges.
On Robert’s second question, Richard noted that some elements were inevitably slow moving and that some may be captured on a quarterly basis and others on an annual basis.
The Chair added, on the issue of prevention, that it could be beneficial to measure improvements in quality, which was an increase in prevention, as a proportion of existing prevention. He noted that the existing prevention depended entirely on where the boundary is drawn. He referenced the sewer system as impacting the health of the population but that it was difficult to precisely measure the factors behind increased health and life expectancy.
The Chair offered to circulate his draft paper on diabetes prevention which touched on the subject.
Nick questioned whether the implementation after 2028 referred to implementing this into GDP. Richard clarified that it would go into the Blue Book.
Nick reiterated that his understanding was that ONS would develop public sector productivity with a high bar for GVA.
Richard noted that there would be a compromise, and significant investment would be reflected in the quality of the statistics. He noted that conceptually, there was a slight difference, but it was an attempt to produce as close to GVA as possible.
Nick sought more information on defence.
Richard clarified that based on academic research and professional workstreams, defence could be considered as a form of insurance to demonstrate capability to prevent attacks. He noted that it would not be the output that was measured but the capability at any point in time to defend the country against a variety of potential attacks. As such the measure would create a basket of capabilities rather than a basket of services delivered. He acknowledged that there was a challenge around defence having some discontinuities around how they measure some of their capability through time.
Sara added that although some areas were more challenging than others to analyse, there was a significant benefit from having conversations with experts on different areas and with other government departments.
The Chair thanked the team and looked forward to future updates and progress in this space.

10. Information Only: Updates January 2024: The statistical recording of the Bank of England Asset Purchase Facility

The Chair brought NSCASE’s attention to the briefing paper on the statistical recording of the Bank of England Asset Purchase Facility. This item was for information only which provided an update following a substantial item on this topic in July 2023. The ONS was not seeking advice at the time.
Robert thanked the ONS team for providing an update. He highlighted that paragraph 32 in the paper stated that ONS aimed to introduce a statement on contingent liabilities with GFSM tables. He therefore asked that NSCASE be updated in around one year on progress.
Richard agreed to check with business areas if an update would be possible.

Action: An update on Contingent Liabilities will be provide in 2025 or when contingent liabilities are published.

11. NSCASE Work-Plan

Paul D outlined the agenda for the upcoming NSCASE meetings as shown in the forward work plan. He explained that SNA Chapter 21: Communicating and Disseminating Economic Statistics needed to be removed from the April meeting as it would not be released in time. It was communicated that it would be replaced with Chapter 34: Measuring Well-Being.
The Chair agreed with Paul that the agenda looked full and noted that it would be valuable to liaise with the Secretariat when creating the agenda to ensure each item was given sufficient time for discussion.

12. Any other business

The Chair informed NSCASE of the dates of the forthcoming meetings. There was some discussion over the April and October meeting and the Secretariat agreed to send a doodle poll to enquire which dates were the most suitable.
The Chair thanked everyone for their participation and concluded 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