Committee

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

Office for National Statistics (ONS)

• Cliodhna Taylor
• Janine Jenkins (online)
• Matt Rogers
• Chris Davies
• Keith Miller (online)
• Grant Fitzner
• Sir Ian Diamond
• Steve Drew (online)
• Nicola Shearman

UK Statistics Authority NSCASE Secretariat

• Rosie Maslin (online)
• Simon Rigby
• Kate Beeslee

1. Welcome address

1. The Chair welcomed Sir Ian Diamond to the room and invited him to give an address to the Committee.
2. Sir Ian thanked the Committee for all their work and emphasised that he believed the UK should have the highest global standards of statistics. He stressed that the UK should either be establishing best practice or at the cutting edge and he referred to the Committee’s expertise in helping achieve this.
3. He noted that he regularly spoke to the Chair and thanked the Secretariat for facilitating the meetings.
4. He said this was a very important time for statistics, referring to the update of the System of National Accounts (SNA). He noted he spoke with other National Statisticians in Geneva, and they agreed there was lots to do, especially considering the consultation that was currently live. He had been assured by UN colleagues that input was very important and that it was a critical time to influence the manual to ensure it was a sufficient standard.
5. He also stated there was lots to be done in the public sector and emphasised that where the ONS looked to differ from international practice, the Committee would be consulted. He stressed that the Committee served a scrutiny function and welcomed being challenged.
6. He emphasised that he did not want the Committee simply to provide him with advice to accept the chapters but to provide advice and expertise. He added that although he could choose not to take NSCASE’s advice, in such cases, a clear reason would be given. He therefore recognised the importance of detailed minutes that ensured transparency.
7. He acknowledged that the work on SNA 2025 was enormous and highlighted that the Committee were central to this and provided an excellent opportunity for the UK to be at the cutting edge of global statistical standards.
8. The Chair thanked Sir Ian for his words, Sir Ian noted he was happy to take questions.
9. Robert Heath stated there were a number of important manuals being released and adopted in forthcoming years, namely the Government Finance Statistics Manual (GFSM). He asked how Sir Ian saw the Committee’s role in advising him on this.
10. Sir Ian replied that the Committee would be consulted for advice, and he would consequently make a decision. He emphasised the Committee’s skills and their expertise to provide the highest quality advice.
11. David Caplan asked how far Sir Ian prioritised international comparability in these standards.
12. Sir Ian answered that international comparability was very important, but also that divergence was necessary where it was possible to provide the best clarity for UK statistics.

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

1. The Chair asked the Committee for comments and/or suggestions on the minutes of the previous meeting.
2. The Committee had no comments.

3. Overview and status of actions from last Committee meeting

1. The Chair directed the Committee’s attention to the action log.
2. Robert noted that on the SNA implementation paper, he asked that the role of NSCASE be included so it could be discussed when the paper came to the Committee.
3. Robert also questioned whether the digitalisation paper had been circulated, as the action log suggested it was completed. The secretariat agreed to recirculate the paper.
4. The Chair had a question following the information Katherine Mills provided on emissions permits following the April meeting. Her response stated that the recording of payments in respect of permission to extract oil and gas, as rent received by government, was consistent with option 1 described in the Emissions Permits paper provided to NSCASE in April 2024. This was to be consistent with the option endorsed by the UK within the SNA 2025 consultation phase, but not consistent with the option chosen in the draft SNA 2025 Chapter 27. He expressed concern that there could be inconsistency between treatment of emissions permits, negative extraction of resources, and positive extraction of resources. He asked whether the extraction of resources was going to be included under option 4a and if ONS had considered this inconsistency. He asked whether ONS would suggest to NSCASE that they should use option 1 (non-produced, non-financial assets) despite the international guidance to follow option 4a.
5. The Chair invited Robert Heath to speak on his meetings with the IMF on the development of international manuals.
6. Robert met with a number of senior staff in the IMF during a visit to Washington. He had expressed NSCASE’s reservations on the wellbeing and digitalisation chapters of the SNA. He also noted that the work of the GFSM update had started and that work on the Monetary and Financial Statistics Manual (MFSM) was soon to get underway. In forthcoming Committee meetings he wanted to discuss the UK position on these manuals with the objective of maximising the potential to influence the final versions.
7. The SNA 2008 research agenda had not been actively pursued, but Robert understood, during his visit to Washington, there were plans to action the SNA 2025 research agenda more purposefully, which prioritised research topics. If so, the Committee could take an active role in advising the ONS as topics, relevant to the UK, are discussed internationally.
8. Sir Ian thanked Robert for the briefing and stated that international National Statisticians would agree, repeating the international concern on the well-being chapter and division to environmental issues.
9. The Chair noted that the Committee had asked the ONS to produce a paper to answer the questions of how to measure well-being. Ideally that would be produced in tandem with another NSI but he asked that the paper would be brought to the Committee even if international collaboration was not possible.

Action:

Katherine Mills for further clarity on emission permits and licences to extract.

4. System of National Accounts 2025 Chapter 25: Selected issues in financial instruments

1. The Chair invited Chris to present on the item.
2. Chris stated that Chapter 25 was a new chapter of the SNA, which was a supplement to Chapter 17 in SNA 2008. The chapter covered three specific financial instruments, credit derivatives, standardised guarantees and employee stock options. Chris expressed that this work took place in 2008 and the ONS had made significant strides in being able to measure these instruments in 2009 and 2010. Chris added that the ONS supported the chapter.
3. Chris asked the Committee for its views on the contents of the paper and whether they identified any further risk with the concepts in Chapter 25.
4. The Chair thanked Chris for the presentation of the paper and welcomed comments from the Committee.
5. Robert noted the draft chapter did not provide anything that was fundamentally new but identified significant issues in the drafting, including: different guidance for the same activity – “standard guarantee” in chapter 25 (25.30) and “insurance-type” in chapter 8 (8.84) with regard to deposit insurance; repeated the same text not only between chapters 12 and 25 but even within the same paragraph (25.128); lacked any discussion of recording flows in traded emission permits; included a slightly different definition of currency in 25.142 from Chapter 12.54; had differences in terminology with the draft BPM7 – “initial margin” in 25.81, “repayable margin (the better term for statisticians) in BPM7 5.94; and used language that was difficult to understand (“protection and payment legs” sentence in 25.73) or close to unintelligible (“cryptography” sentence in 25.64). The authors need to be aware of the needs of economic statisticians not least in emerging and developing nations for clarity and consistency of language, and in terms of translation. It would also help compilers if definitions were highlighted, as in SNA 2008.
6. Nick Vaughan agreed that the drafting of the chapter was also not satisfactory and asked to what level of involvement was the Bank of England in UK responses made in UN consultations. The Secretariat confirmed that Bank of England was involved in the UK consultation responses.
7. Cliodhna Taylor addressed the comments made on inconsistencies within the chapter and explained that it was a draft version. At the next meeting, the Committee would be presented with completed chapters. She added that the level of review toward inconsistencies would be specifically welcomed under areas of digitalisation.
8. The Chair summarised by explaining that the Committee would express concerns to the United Nations that there was concern on the inconsistencies within the draft chapters of SNA 2025. The Chair added that inconsistencies would put international comparability at risk and the Committee would expect relevant changes to be made.

5. System of National Accounts 2025 Chapter 29: Financial Corporations

1. The Chair invited Chris to present the item.
2. Chris noted that Chapter 29 was a new chapter in the SNA 2025 and that there was no change to the statistical principles underpinning the core accounts for financial corporations within the SNA 2008. Chris highlighted there was a large emphasis and strong advocacy of nationality statistics, which had been suggested by the Bank of International Settlements (BIS). Chris explained there was advocacy of improved measurement of money market and non-money market funds. The chapter also promoted improved measurement of non-bank financial intermediation, or what was known as the shadow banking industry, which had played a significant role in propagating the 2008 financial crisis. Chris explained that the ONS were comfortable with the chapter content, although there were some global concerns on the treatment of real estate funds, which aligned with global comments posted for Chapter 5.
3. Robert agreed with the comments of ONS. However, Robert expressed his discontent with the chapter, highlighting that there was too much overlap with Chapter 5 and questioned why the UN had not merged these chapters. Additionally, he conveyed that, in places, the Chapter did not offer enough compilation guidance, it read, at times, like a discussion document – such as it used phrases “a case can be made” (29.34), or it did not clearly present what was  trying to be measured – nationality statistics could be compiled using a number of different consolidation methods but none were outlined in the chapter. Furthermore, Robert identified that there was continual use of the phrase “financial stability”, yet there was a lack of clear definition for “financial stability” and a lack of clear guidance on the data that was needed (e.g., 29.80-81).  Chapter 29 also did not draw on current work in that field, such as the development of financial soundness indicators.
4. Robert also noted some differences in definitions between chapters 29 and 5: the definition of a central bank (5.155 and 29.39, fifth bullet; coverage of deposit takers, retail banks referenced in 29.47 but not 5.160; electronic money institutions had a qualifier in 5.160(f) but not 29.51; and peer-to-peer lending agencies were referenced within financial ancillaries in 29.69 but not 5.178.
5. Paul raised whether the way the chapter had been put together was the most useful way of combining different entities. He questioned whether combining S125 on securitisation, lending and leasing provides consistent categorisation since lending and leasing activities combine very different types of activities. Additionally, S126 held a mixture of activities combining CRAs and P2P lenders with crypto platforms and exchanges. Paul questioned whether credit rating agencies were financial corporations and argued that they were more likely to be a data provider. S127 includes pawn shops and moneylenders which seem more suitable for S125. He also noted that some categories of investment business had not been included, such as closed end investment companies. He concluded that such inconsistencies ran right through the Chapter.
6. Nick agreed that there were inconsistencies to the chapter and objected to the classification of real estate funds as a non-financial corporation. He argued that real estate funds should be a financial corporation. Nick asked the Committee if there was a case for the Committee to advise the UK to diverge from the chapter definition of real estate funds.
7. The Chair added that the Bank of England should be heavily involved in the response to the chapter. He continued to mention he had increased concern about the treatment of the central bank as a financial corporation, which could give the impression that it was aligned to the function of a commercial bank.
8. The Chair also wondered whether the existing framework, continued into SNA2025 made it easy for the public to obtain information on profits the central bank made from traditional central bank activities, such as the issue of currency.
9. Robert noted that the central bank sector was introduced in SNA 1993 replacing the monetary authority classification in the previous SNA; the UK objected to the change. Robert asked if there was a case for a monetary authority classification to consolidate borrowing, particularly for foreign currency and international reserves, with the central bank.
10. In response, the Chair raised the question of where consolidation took place and what was consolidated with the government and what was not. The Chair stated that, with the current definition in the SNA, there should ideally be reference to production of satellite accounts which could show a different aggregation, with the central bank treated as a part of general government. This might be helpful for those countries with state-owned central banks.
11. Nick added that he strongly agreed, and the UK was exemplar in consolidating the Bank England as a financial public sector corporation, whereas other countries may have risked misrepresenting central banks as commercial banks.
12. The Chair built on the point and mentioned the Bank of England must be included with “the government” to understand the public sector balance sheet.
13. Robert remarked that the chapter did not refer to electronic trading funds, a common type of investment fund. Additionally, he raised that ONS mentions in the response to the IMF consultation on GFSM that transactions between government and sovereign wealth funds were considered significantly important. He then mentioned that Chapter 29 did not include SWFs in the discussion of further institutional sector breakdowns (29.89), despite their importance and asked whether the ONS had considered putting forward a comment in line with the Santiago principles (principle 5).
14. The Chair highlighted that his points on Central Banks and disaggregation of the public sector might also apply to sovereign wealth funds.
15. The Chair asked for final thoughts from the Committee.
16. Matt Rogers highlighted to the Committee the ONS regularly liaised with Bank of England on consultations. The ONS took on the comments made by the Committee and intended to work with the Bank of England and ONS colleagues to ensure implementation.
17. Mairi Spowage asked what the reception has been to the comments made to the paper.
18. Matt responded and mentioned there had been some definitional changes and cross referencing to the chapter but there were no considerable conceptual changes. This was specifically referencing real estate funds and was not just for financial corporations.
19. Nick asked what sort of conceptual changes were expected.
20. Cliodhna replied that many countries, including the UK, had offered substantial conceptual critique and feedback on the Wellbeing, Sustainability and Digitalisation chapters. For example, the UK mentioned in its response that the Human Capital section would have benefited substantially from a discussion of human capital flows, but this was missing from the revised draft. Additionally, tightening of the language and clearer definitions were required, which was specific to digitalisation and NFTs as there was no clear guidance on the core principles for instruments such as crypto. While more minor, positive changes had been made, Cliodhna’s experience reading through these revised chapters indicated only minor changes rather than substantial changes were to be expected.
21. Robert asked the ONS for its views on the relative quality of the core as opposed to additional chapters in the draft SNA. He explained that perhaps there had been little to no change in the core first half of the draft (up to chapter 19), but in the second half chapters of the draft so far reviewed, the Committee was not finding the same level of clarity.
22. Cliodhna responded by addressing that it was worth mentioning that the SNA had tried to symbolise the importance of well-being by introducing the topic under Chapter 2.
23. Nick questioned if there were any conceptual changes in Chapter 29.
24. Matt explained that Chapter 29 was a new chapter, so concepts were largely in line with what was expected following events of 2008 and 2009. In the consultation, other countries also raised that there was a lack of guidance on how to compile them and there had not been additional information added that NSIs wanted to see following the revisions. Matt mentioned that the core principles were the same as 2008 but did not go far enough.
25. The Chair expressed the need for effective cross referencing.
26. Matt added that the final draft of the SNA was published in June, with a September deadline. The comments would be published in October, which was a small review period.
27. Sir Ian added that he did not think there was a sufficient window for comments to be properly considered. Sir Ian mentioned that he was prepared to raise concerns at future UN meetings given that other NSI were also concerned.
28. The Chair thanked Sir Ian for the opportunity to comment and to improve the SNA conceptually.
29. The Chair noted that there was unanimous agreement that the UN should take the time needed to revise the SNA manual to remove ambiguity and ensure clarity and precision. The National Statistician noted this.

6. System of National Accounts 2025 Chapter 5: Residence, Institutional Units, and Sectors

1. The Chair invited Chris to present the item.
2. Chris stated that the chapter was joint SNA 2025 and BPM7. The chapter summarised conceptual and measurement issues around residence, institutional units and sectors. The main update in the chapter was the additional guidance for the treatment of free zones, offshore banks and offshore financial centres. He informed the Committee that the ONS was happy with the detail of the chapter but that external stakeholders had some queries on the status of real estate funds, which was evident in comments on both Chapter 29 and Chapter 5.
3. Robert agreed with ONS comments. Nonetheless, Chapter 29 repeated a lot of the content of Chapter 5 and suggested that they could be merged, removing the repeated material. He also identified several inconsistencies between the two chapters, as noted above [5.4].
4. The Chair agreed with Robert but noted that the chapter was already long, suggesting that if editors explored merging the content of the chapters, they should consider how the content could be divided to make it more digestible.
5. Robert believed the chapter was not clear on the classification of government owned foreign entities. He drew on the definition in 5.38 and figure 5.1, the chapter appeared to classify a government that owned a foreign entity as a multinational enterprise group. Nick then questioned how the IMF and World Bank would be treated. The Chair remarked that the European Central Bank was owned by the national governments.

7. BPM7 Adoption: Principles for NSCASE

1. The Chair invited Cliodhna to present.
2. Cliodhna stated that the paper explained how NSCASE should engage with BPM, which focused on how the ONS should absorb the BPM as a default. Cliodhna welcomed the Committee’s thoughts on how the ONS could deviate from the BPM principles that brought benefits for measurement for the UK economy.
3. The Chair asked the ONS to clarify what was expected of the Committee when advising the National Statistician.
4. The ONS clarified that the ONS would like the Committee to review the ONS’s reasons to differ from BPM7 and mirror the process that had been provided for SNA 2025.
5. David welcomed an overview of ONS thoughts towards BPM7, which would allow the Committee to influence prior to proposals for deviation.
6. Matt welcomed David’s comments and Cliodhna agreed that the ONS would implement a similar prioritisation exercise to that of the SNA. Cliodhna added, it would be preferable to have a two-way process to ensure NSCASE fed into prioritisation.
7. Paul highlighted divergence should suitably correspond with divergence made in SNA, and that it was critical for the joint chapters.
8. Ian McCafferty asked if there was enough time to provide sufficient comment on drafted BPM manuals.
9. Matt clarified the final chapters for BPM7 were due for consultation in August 2024, and that additional annexes would be available in October 2024 and November 2024 with full sign off in 2025.
10. Robert advised that the secretariat should engage with the UK BOPCOM member to ascertain a full timeline of the consultation.
11. Robert advised that as BPM6 was the ONS’s current default methodology for the balance of payments the ONS could highlight to NSCASE where they currently deviate from BPM6 and where BPM7 deviates from BPM6 in areas that are relevant for the UK’s balance of payments. Such an approach would offer focus for the Committee to discuss BPM7 in future meetings.
12. Rebecca Riley asked if the ONS anticipated if the main macroeconomic aggregates of the UK would be affected more than other countries. If it was to affect the UK more, that could serve as a guide to what the Committee would review. Additionally, Rebecca welcomed worked examples that were presented to the committee.
13. The Chair summarised that the Committee had made a strong case for the ONS to choose BPM7 as its default manual for Balance of Payment and requested wording changes within the paper which were to be circulated to the committee before the paper was published.

8. BPM7 Chapters 5, 7, 8 and 9

1. The Chair invited Matt to present this item.
2. Matt asked for feedback on the format of the paper, which sought to highlight the changes made from BPM6 as the UK was already aligned to the guidance. He noted that the ONS did not have significant comments or considerations on the chapters which was why the Committee were asked to review them together. On Chapter 9, the ONS raised a lack of discussion on crypto assets, which had been a consistent theme in ONS comments across the SNA and BPM consultations.
3. Robert noticed that on Foreign Direct Investment, the writers had removed three ways to approximate market value and asked if it affected how ONS would calculate the stock of direct investment. He raised that Chapter 7 (7.44-1) included resetting the value of loans that had deteriorated due to publicly known events. He noted this guidance was slightly different from that in the SNA Chapter 14 (14.73) and asked how the ONS would deal with the issue. He stated that it needed to be carefully drafted to avoid asymmetries.
4. David asked if the actual value of a debt changed or whether the expected return to the creditor changed. He believed it was strange that legally the debt remained but became less likely to be paid off. There was discussion on this topic and the Committee agreed that more detail was needed. Matt stated he would speak to the BPM team for more information.
5. Robert also identified a slight inconsistency in Chapter 8 between paragraph 8.28 (a) and 8.16(a) regarding the distribution of dividends out of accumulated reserves and whether these are recorded as withdrawals of equity or not.
6. The Committee gave positive feedback on the format of the paper including the clear identification of where changes had been made. Matt added that there had been fewer changes between BPM6 and BPM7 than for the SNA update; therefore a similar exercise for the SNA would not have been possible.
7. Nick observed that there was a new paragraph on special drawing rights (SDR). Robert noted that BPM6 introduced recording a counterpart liability for the SDR. Matt added that this addition may have been building on information already included in BPM6. Robert stated that he did not see this as an issue and that the ONS recorded the SDR as a government reserve asset.

9. UK’s adoption of industrial classifications of economic activity

1. The Chair invited Janine Jenkins to present the item.
2. Janine gave an overview that the paper followed the consultation regarding the UK’s Standard Industry Classifications (SIC). The paper outlined the responses that they had and the impacts. She highlighted that the paper had been written in collaboration with colleagues in the Economic, Social and Environment Group in the ONS to demonstrate the impacts of each option.
3. Matt noted that following the consultation, the ONS presented four options to the Committee on how to proceed with the classification. The options were to: (a) adopt ISIC (International Standard Industry Classification); (b) adopt NACE (Statistical Classification of Economic Activities in the European Community); (c) adopt ISIC as default and create bespoke classifications as appropriate, or; (d) adopt NACE as default and create bespoke classifications as appropriate. He informed the Committee that ONS’ preferred option was option D.
4. He pointed the Committee to the annexes of the paper which included stakeholder responses to the initial consultation. He highlighted that the Department for Culture, Media, and Sport (DCMS) were content with option D and were open to working with ONS to develop the bespoke classifications where necessary.
5. David thanked ONS for this paper. He stated that the group had argued for deviation from international standards if it better suited the UK’s needs. However, he expressed the view that as the SIC was a fundamental building block of the statistical system, it would require ONS to demonstrate a substantial need for any departure from international standards on this topic. He recognised that it was important for the UK to have its own elements of classification for certain aspects of the economy. For example, for complex multi sectoral units and to maintain flexibility within classifications for advances in technology but reiterated his commitment to international comparability. He added that if the UK deviated from international standards, it would be more difficult for users to analyse the data and therefore argued that ONS needed to make a case of why deviation would be necessary at the 4-digit level, and why it could not be done at the 5^th digit level.
6. Robert questioned whether the Committee were being asked on the principle or on the detail of this decision. He agreed that NACE could be adopted to UK needs but questioned whether the ONS would come back later with detail of how the manuals would be adapted. Matt clarified that the examples in the paper showed divergences between ISIC and NACE at certain levels as opposed to proposals for divergence at this time.
7. Robert sought more clarification on option D, referring to Eurostat’s comment quoted in paragraph 34 of the paper. He clarified whether ISIC was to be followed first, and then in terms of NACE, and finally bespoke classifications as per Eurostat’s process. Matt answered NACE was preferred because it had more detail overall, but ISIC had more detail at the lower level for certain industries. Therefore, the paper sought to show an example of what could be done if the Committee agreed to option D that allowed for flexibility between the two classification standards.
8. Steve Drew added that ISIC was the global classification at the 3-digit levels, then regions had autonomy to develop their own regional classifications. He stated the Committee were being asked to advise on whether the UK should start with ISIC and discard NACE at the lower level or start with NACE as the basis for developing lower levels. He noted the ONS preferred NACE as the UK had a similar economy to EU countries whereas ISIC had the potential to generate work unnecessarily.
9. The Chair asked Steve whether the ONS was proposing to the Committee that the ONS adopts their own 5-digit classification or whether the ONS proposed to deviate from the 4-digit classification in some instances.
10. Steve clarified that the Committee were asked which to adopt as a starting point, and noted that options C and D allowed the UK to create further detail. Robert asked for clarification on whether NACE follows ISIC up to the 2-digit level. Steve answered that NACE is derived from ISIC and follows the standard to the 3-digit level. Robert then suggested that this implied that option D was a hybrid option of both NACE and ISIC.
11. David referred to the table on the final page of annex two and wanted clarification on where ONS would deviate at the fourth digit level instead of the fifth digit level. He argued that the UK had its own 5-digit classifications already but breaking at the 4^th digit would be very different.
12. The Committee expressed confusion as to what was being proposed and what the UK already does. Janine clarified that the proposal was that the UK aligned with NACE as they currently did, then, in some instances, they wanted to break away from the European standard to have a bespoke breakdown, finally, they wanted to maintain the 5^th digit where it was suitable for aspects of the UK economy.
13. Nick agreed in principle that the UK could provide more detail through sub-dividing the 4^th digit but wanted absolute clarity from the ONS whether they were asking the Committee to agree to sub-division at the 3^rd digit.
14. Janine said there were some instances where the ONS wished to deviate from NACE. Steve added that there were some cases where ISIC was more detailed than NACE, in which cases the ONS wanted to adopt the more detailed classification. Grant confirmed that they proposed a hybrid option.
15. Mairi asked Steve why this was not able to be addressed at a 5-digit level.
16. Steve replied that this was something they could look into and noted that when the ONS delivered data internationally, it had to be consistent with ISIC. ONS preferred option D because adopting NACE avoided creating bespoke classifications that were established as part of NACE.
17. David stated that the Committee should make a principal recommendation on whether they approved divergence at the 4^th digit rather than cope with UK differences at the 5^th The Chair agreed and suggested the Committee should advise the National Statistician on specific deviations at the 4^th digit. He summarised that the Committee did not see a problem with deviations at the 5^th digit but did not see there was a sufficient case for deviations at the 4^th digit.
18. The Chair wondered whether the Committee effectively supported option C, as NACE allowed for categorisations at the 5^th digit.
19. Ian suggested that if the UK diverged at the 4^th digit, would this create more but tighter categories that could be aggregated back up to NACE.
20. Mairi questioned if this was the case why it could not be done at the 5^th digit instead.
21. Rebecca clarified that option B would not affect the UK’s ability to have 5-digit classifications where necessary. She identified that there was a routing issue and a separate issue on the presentation of the classification. She referenced the Eurostat comment that recommended that NACE was used but that compilers consider ISIC when routing but when routing down at a higher level. She understood that there may be cases where a different approach was needed but that this explained why it was not always possible to aggregate statistics in a coherent way. Having considered these two respective issues, she asked if the ONS could just be looking at the routing aspect for the UK. For example, she questioned whether in some cases it would be useful to have a breakdown at the three- or 4-digit level that led to a different routing down to the 5^th digits, and whether this was possible to do without introducing a completely different classification. She suggested using the 5-digit classifications in the first instance and using them as a routing mechanism.
22. Nick suggested there should be limited cases where 5 digits were applicable. Rebecca replied that the Netherlands had lots of 5-digit categories. She asked if it was possible to address these concerns by splitting the 3-digit level by having the 5-digit level but taking that into account somehow in the routing. She argued that the routing was causing the issues with the 5-digit, otherwise there should not have been an issue to go with the 5 digits.
23. David referred to Mairi’s earlier point that the fundamental question was what the objections were to use a 5^th digit and to understand where it had the potential to cause statistical error. Rebecca stated that the routing was the problem. She believed the paper showed that this was a counter argument against introducing more 5-digit categories.
24. Ian believed the issue with creating more 5-digit classifications was related to the balance of categories. For example, consideration for the size of the categories and the size of the number of subtexts is relative to the number of sectors. Nick replied that he was not proposing to create additional 4-digit categories but for sub-division of existing categories. He argued that these could be reproduced at the 5^th
25. Rebecca highlighted that the Eurostat comment recommended that countries considered sub-divisions not included in NACE when trickling things down. There was an example of a 3-digit classification in NACE which had less disaggregation than ISIC, Eurostat suggested considering ISIC when routing through this category. She stated that this could lead to a different aggregation.
26. David therefore questioned whether the routing algorithm was appropriate for central large complex fiscal systems. He suggested there may therefore be a case for developing a rules-based approach for a certain category of business which operated across sectors. He remarked that it was already somewhat murky because there could be output from one industry recorded in another industry based on the allocation of principal products.
27. Rebecca noted that this was therefore a producer issue. David agreed with this but noted it was more difficult to implement in practice but that it seemed a reasonable challenge to produce more detail. Grant added that by this implication, the more granular the categories were, the greater the possibility for multi-industry cross over.
28. Nick asked whether the registers would be able to accommodate this. He thought that if the producer could replicate the international standards at the 4^th digit, then it would be suitable.
29. Rebecca returned the question to what users wanted. David referred to DCMS’ feedback to the consultation and noted their aim was to understandably get an appropriate handle on the computer games industry. He believed the 3-digit breakdown was perfectly feasible and would meet the needs of users. His question was what the disadvantages would be if going to the 5^th digit rather than partitioning parts of the 4^th digit which would lead to complexity in using the data sets.
30. Mairi asked if they planned to replace 4-digit categories and why it could not be done at the 5^th digit instead of deviating at the 4^th. Nick stressed the importance of being able to return to the high-level category.
31. Janine appreciated the Committee were confused and emphasised that whatever decision was made, that it would inform part of the UK SIC revision process and the GSS would be consulted. She noted it was a long consultation, and even for the ‘bespoke’ options, they still had to consult industry and businesses so wished to reassure the Committee that this informed part of an ongoing conversation.
32. Robert asked Janine what the timetable would be going forward and was there pressure for the ONS to finalise a certain classification.
33. Janine answered that there were no legal restrictions since leaving the EU. ISIC is not mandatory to adopt but is the preferred ONS position to maintain international comparability. There were also impacts on implementation, business registers, and national accounts and SNA impacts which have been planned. Steve added that his team have created a provisional road map for forthcoming manual changes to prepare for the consequential impacts these would have on surveys and registers. The working timeline was to implement the new classification standard into the register by the middle of next year, but he noted that the whole implementation will take 3-4 years. Janine added that the SIC revision would need to happen before the changes Steve outlined.
34. Robert asked if the classifications team would conduct a consultation on lower-digit breakdowns and then return to NSCASE on where they thought deviations would be necessary. Janine answered that they were asking the Committee for a decision but had not planned to return to NSCASE as they would use the established SIC revision process. She stated she would be willing to consult the Committee if necessary.
35. Janine confirmed that the standard mandated was that ISIC and NACE must align to the 2-digit level.
36. Nick sought more clarity on the options.
37. Cliodhna summarised her understanding that ONS had historically only been able to consult at the 5-digit level but now were potentially able to expand the consultation to the 3 or 4-digit level. The consultation suggested the ONS may have wanted to consider expanding the consultation in this way, but she surmised that the examples in the paper had not justified deviating from the standard. She noted that the Committee preferred that deviation would be done at the 5-digit level and that deviation at the 3- or 4- digit level required a significant justification.
38. Matt reiterated that DCMS supported option D because it met their needs on the basis that deviation at the 4^th digit was possible.
39. The Chair asked whether the timetabling implications prohibited ONS to consider option B and return to the Committee to approve suggested deviations that would be considered on their merits.
40. Mairi noted there it depended on how statistics are reported.
41. Robert stated that the answer was ISIC for the first 2-digits for international comparability, NACE for the 3^rd and 4^th digit levels for regional comparability, then potential to split at the 5^th digit for bespoke cases.
42. The Chair emphasised that he was concerned with maintaining international comparability and comparability of statistics over time. He favoured following NACE to the 4^th digit and ONS could use discretion at the 5^th digit but if they sought to depart from NACE, the Committee should be consulted.
43. Cliodhna concluded that the next steps for the ONS would be to consult on specific areas where they wished to deviate. She noted a broad agreement from the committee that ONS should primarily consult on the 5-digit level as they were opposed to changes at the 4^th digit level in principle. She summarised the feedback from the committee that any proposed changes at the 4 digital level should be based on substantial consultation, with clarity on the user need and logic as to why the need an only be met in this way.
44. The Chair added that if the Committee received a large volume of cases for divergence, then they would need to reassess how this was delegated. He stated there would need to be a strong case for how the data was improved if deviating at the 4^th digit instead of the 5^th digit.
45. Janine mentioned that a classifications committee with stakeholders across the GSS made decisions following consultations. She asked whether the Committee would be happy to delegate to this committee instead. The Chair answered that in principle the Committee should review these proposals.
46. The Chair brought the discussion to a close and concluded that the Committee recommended that NACE should be adopted to the 4^th digit, ONS had discretion with the 5^th digit but any 3^rd or 4^th digit deviations they wanted to make should be brought back to the Committee. He noted that NSCASE felt strongly about commitment to international comparability and to comparability over time and felt that proposals to deviate at the 3^rd or 4^th digit needed to make a strong case. This was agreed unanimously.

10. Note on upcoming updates to manuals and classifications

1. The Chair invited Rosie Maslin to present.
2. Rosie provided an outline of which international manuals and classifications were being updated by 2027 and 2028. The note was compiled following a request from the Chair and Deputy Chair to view the UK’s response to the GFSM questionnaire.
3. She highlighted that the questionnaire demonstrated ONS’s priorities toward the GFSM. She added that Jim Ebdon from the Office for Budget Responsibility represented the UK on the GFS Advisory Committee.
4. Robert reiterated the importance of having ONS priorities presented to the Committee at future meetings. The Committee agreed.

11. NSCASE Forward Plan

1. The Chair asked the Committee for comments on the forward workplan.
2. Ian raised that GFSM was not referenced in the workplan. Paul suggested that a supplementary meeting might be needed to address this. The Chair agreed and it was suggested that an extra meeting should be held, probably in November or December. Matt added that it had been difficult to formulate a workplan considering the several and ongoing consultation deadlines.

12. Any other business

1. The Chair commented on the results of the recent self-review of the effectiveness of NSCASE survey that was circulated to Committee members and ONS stakeholders. He expressed that there had not been time for a discussion at the current meeting and he intended that the review should be discussed in October. He informed the Committee that the feedback was generally very positive and there were no major criticisms to relay.
2. Cliodhna raised that the ONS had been discussing the best way to prioritise and work through all the SNA content before the September 13^th consultation deadline. She noted that she planned to work with the Chair on how to go about this in the weeks following the Committee meeting which would inform which chapters would be brought to the Committee at the October and January meetings.
3. She noted that on chapters the Committee had already seen, the ONS would consider if there had been substantial changes that warranted the Committee re-reviewing the chapter. On chapters not yet taken to NSCASE, the ONS would consider if there had been substantial changes since the SNA2008 and ask NSCASE for advice accordingly. She informed the Committee that ONS also considered having the Committee assigned chapters to review and indicate whether they agreed with ONS’ position on the chapter. She added that colleagues could now view the SNA as a holistic document rather than on a chapter-by-chapter basis which had previously been the case in earlier consultation phases.
4. Robert understood the need to review all the chapters but asked what would be expected of the Committee following the September deadline, he asked how far the Committee’s input would have influence over the chapters.
5. Cliodhna answered that Committee members would be asked to review where the ONS may wish to deviate if the chapters were not changed before the finalisation. She asked the Committee to indicate areas of chapters where the UK may wish to make interventions at the UN Statistical Commission.
6. Robert questioned whether any level of discussion would be permitted at the Commission. Nikki answered that NSCASE’s advice was imperative to inform the UK’s strategic position to strengthen the impact of interventions.
7. The Chair informed the Committee that Rosie was leaving her role. He and the Committee thanked her for all her work for the Committee.
8. The Chair noted the planned dates for the 2025 meetings. These were scheduled for the 20^th January, 28^th April, 21^st July, and, 21^st  October.
9. The Chair closed the meeting.