The Scottish Government

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CONTINUING TO IMPROVE MACRO-ECONOMIC STATISTICS TO THE LEVEL REQUIRED FOR A DEVOLVED COUNTRY

Overall activity

34. Current main priorities include:

• Working with the ONS, both through the new ONS/ SE liaison group and the more specific arrangements, to drive forward the recommendations of the Allsopp Review.
• Working with the Atkinson Review team looking at productivity in public services to ensure that Scottish views are incorporated into the UK review and that the review recommendations make sense for Scotland.
• Conducting the initial stages of the Scottish Macro-economics Development Programme to harmonise key statistics across the Input-Output, Regional Accounts and Gross Domestic Product (GDP) systems.
• Continue improving the quality of the GDP estimates for Scotland by considering additional data sources and methodological developments, especially in light of UK developments undertaken by the ONS.
• Continue to develop the quality of tourism and trade statistics for Scotland.

Allsopp Review

35. We are working closely with the ONS as they develop their work plan to ensure that the Scottish needs are met as the recommendations are implemented incrementally over the next 4-5 years.

36. The principal outcomes from the recommendations of the Allsopp Review are:

• Good quality baseline Gross Value Added (GVA) estimates for NUTS1 regions, and improved detail at lower levels, as part of an integrated system producing both National and Regional accounts.
• A statistical system that is not skewed towards particular sectors of the economy, that reflects the contribution and nature of different economic sectors, and that evolves alongside future change in the economy.
• A coherent and efficient suite of registers, surveys and estimation procedures, based on sound statistical principles, that reflects the balance of the economy and delivers reliable results at acceptable compliance costs.
• That the range of information held by government can be used to increase the quality and the compliance and cost efficiency of economic statistics, while safeguarding its confidentiality.
• Good links between the centre, Office for National Statistics or Government Statistical Service (GSS) statisticians located in the regions and devolved administrations and regional bodies, with greater comparability of those micro-regional data that are not collected centrally.

Atkinson Review

37. In December 2003, the National Statistician asked Sir Tony Atkinson to undertake a review to advance methodologies for the measurement of government output, productivity and associated price indices in the context of the UK National Accounts. The terms of reference of the review recognise:

• The full scope of government outputs.
• Differences in the nature and quality of these outputs over time.
• The relationship between government outputs and social outcomes.
• The need for comparability with measures of private sector services' output and costs.
• The existing work of the Office of National Statistics.
• The appropriate measures of inputs, including quality and the distinction between resource and capital, so that, together with the measure of output, light can be thrown on developments in government productivity.

38. The review covers productivity measures for the UK as a whole. The overall indicators for the UK are being built up from data provided by various Whitehall departments together with the devolved administrations. In Scotland, we are considering how best to reflect our own input and output measures in a way that both makes sense to us and fits the UK framework. Careful consideration is necessary where services are provided in different ways - for instance, we have a very different education system.

39. Particular methodological issues that we are addressing include: consistent definitions of inputs and outputs (where possible); treatment of quality improvements as part of an output measure, which is important; and where systems for delivering public services and/or data collection differ, how we reflect this variation in the choice of indicators.

40. At present, in terms of measuring output, GVA in the public sector in Scotland is estimated using employment data as a proxy. This has been considered to be reasonable as the main components are compensation of employees and operating surplus. This does not mirror the methodology used in the UK where a combination of employment and output indices are used. Work will be carried out to assess whether alternative measures can be used for Scotland as part of our response to this report.

Macro-Economics Development Programme

41. In April 2004, following a feasibility study, we embarked on a programme of work to develop and re-engineer the Executive's macro-economic statistics system and methods. The feasibility work involved discussions with the UK National Accounts Re-engineering Project Team, the Scottish Economic Statistics Consultation Group (SESCG) and Statistics Denmark. A project business case was produced for consultation. The proposed project received strong backing from SESCG members and has now been approved within the Executive.

42. In effect, this brings together the various key economic statistics for Scotland in a consistent and efficient way, making such information easier to understand and use.

43. During the first year our plans were to:

• harmonise GVA estimates across input-output, Regional Accounts and the GDP systems;
• begin the development of a new, more efficient Input Output IT system which will incorporate new methodologies.

Gross Domestic Product Developments

44. During 2004, we have been considering, in depth, the data sources currently used to proxy value added. Our programme of work :

• considers ongoing data and methodological changes in the UK GDP estimates undertaken by ONS (e.g. assist ONS with their review of Real Estate activity);
• considers the emerging data improvements following the implementation of the Allsopp recommendations;
• considers the way public service value added is measured, alongside the Atkinson Review productivity development, to reflect output rather than the traditional input methodology;
• Improves data sources to provide best estimates of quarterly activity in series which currently are only updated annually.

Developments in Scottish tourism and trade statistics

45. We have also been building on recent developments in this area, producing improved estimates of Scottish exports from all sectors and of the economic impact of tourism.

• A pilot Tourism Satellite Account (TSA) was published in 2004, in line with the project being carried out for the UK as a whole. The TSA is an extension of the Scottish Input Output tables, and follows an overhaul of the tourist expenditure column within the tables. The analysis will feed into the development of a quarterly Scottish tourism index, which will be used to track the growth of tourism.
• Estimates of exports from all sectors of the economy in 2003, by industry and destination, were published in December 2004. These were based on the Global Connections Survey, which was carried out by the Scottish Executive in association with Scottish Development International during summer 2004. The results of this survey will be incorporated in Input Output tables, as part of the overall development programme. The quarterly manufactured exports series was re-launched as a volume index in 2004, providing a complement to the annual value estimates.

DEVELOPING OUR ARRANGEMENTS FOR INVOLVING USERS AND PROVIDERS

46. Links with users and providers are crucial to the achievement of our other objectives.

47. Outwith the Executive, ScotStat and its sub groups provides the focus for involving users and providers. Action is still required to get a few of the Committees on the required basis.

48. The ScotStat Board has been giving priority to the following issues:

• Neighbourhood Statistics.
• Dissemination and use of SE statistics.
• Performance information and key statistics.
• Data protection, data sharing and use of administrative data.

49. All meetings papers and minutes are available on the ScotStat web site.

50. Within the Executive, there is a need to improve the interaction with Ministers, special advisers, administrative colleagues and other analysts to ensure that statistics we produce have the necessary impact on decision making and that we produce the right statistics in the right way.

51. Specific action to improve the position includes the following

• The Chief Statistician will continue to increase direct contact with Ministers to help departments enhance the support they provide and to assist Ministers to achieve their objectives within the terms of the National Statistics Code of Practice.
• We will continue to contribute to developments such as the Executive's Delivering Professional Policy group.
• Statistics branches, working with colleagues in Analytical Services Divisions will explore ways of further developing their links with internal users.
  

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