• This article outlines a strategy for the future provision of official statistics on the Scottish economy. It describes the current work in progress within the Scottish Office on expanding the range of statistics and sets out the proposals for future development.
• The work of Scottish Office economists and statisticians is summarised. In addition to measuring and analysing trends in the Scottish economy, the former are principally concerned with the promotion of economic efficiency in the allocation of resources and securing value for money in public expenditure programmes. Scottish Office statisticians work to a rigorous Code of Practice and both groups are guided by the professional standards that apply across all UK Government Departments.
• The programme of development work on Scottish economic statistics is being conducted on the basis of the Scottish Parliament's allocated function of the economic development of Scotland.
• Development is currently taking place in 3 broad areas: economic statistics, business statistics and labour market statistics. The programme of work includes the derivation of a quarterly series of Scottish GDP, an official index of Scottish manufactured exports, the feasibility of producing an annual estimate of Gross National Income and the consolidation of the Scottish business database.
• The Scottish Office conducts an extensive programme of liaison within the Government Statistical Service and with data users. Under the Scottish Parliament, the technical and practical issues surrounding this liaison are likely to remain at least as important as they are now.
• The article has been prepared as a contribution to an open and constructive debate on this important area of the future Scottish Parliament's work. Constructive feedback is invited.

Introduction

This article describes the background and context for considering a future strategy for the provision of official Scottish economic statistics. It does so with particular reference to the establishment of a Scottish Parliament, which will create new demands for information on the Scottish economy and its linkages and contrasts with the rest of the UK³.

The article sets out some general background information on the role of economists and statisticians in the Scottish Office. These groups are members of the Government Economic Service (GES) and the Government Statistical Service (GSS), respectively, and are guided by the professional standards that apply across all UK Government Departments. The published role and aims of the Scottish Office Statistical Services are also given⁴.

The article then discusses the strengths and limitations of the current portfolio of Scottish economic statistics. The process of continual review of the economic data is outlined and it is seen that the expected requirements of the Scottish Parliament now constitute one of the key factors underpinning the review process. This is followed by a description of the 3 broad areas (economic statistics, labour market statistics, business statistics) in which developments are currently taking place within the Scottish Office. Finally, reference is made to the lessons for the future provision of economic statistics in Scotland that can be derived from the procedures and priorities currently adopted in other regions and countries.

The Role of Economists and Statisticians

Economic Advice in the Scottish Office

It is important to note that economists and statisticians in the economics divisions of the Scottish Office do not only measure and analyse the performance of the Scottish economy as a whole. Indeed, the macro-economic context constitutes a relatively small (though important) part of the overall economists' responsibilities.

Economists work in four of the five departments of the Scottish Office, although the scope of their work is not restricted or closely defined by departmental boundaries. The principal aim of their work is to promote economic efficiency in the allocation of resources and to secure value for money in public expenditure programmes. Organisationally they are located in specialist divisions within the Agriculture, Environment and Fisheries Department; the Industry Group of the Education and Industry Department; the Economic Infrastructure Group of the Development Department; and the Management Executive of The National Health Service. Each of those divisions is headed by a Senior Economic Adviser. Economists work closely with administrative colleagues at all levels and with professional staff from other disciplines in shaping advice to Ministers and senior officials on a wide range of policy areas including agriculture, health, transport, local government finance, local and regional economic development, environment and energy, training, tourism, housing and regeneration. Most of their work is based on the application of micro-economic principles - for example, in connection with the development and application of investment appraisal methods, policy impact assessment, design of delivery mechanisms, and regulatory and pricing issues.

The work of the Scottish Office economists is supplemented in several ways. First, Non- Departmental Public Bodies working under delegated authority will often conduct their own analysis of expenditure and take decisions based on this. Second, the department's economists liaise closely with those in other departments, including HM Treasury, in order to ensure the consistency of advice across government on common and cross-cutting issues. For example, the Scottish Office economists contributed directly to the revision of the "Green Book", which provides the central guidance applicable across government on the conduct of investment appraisals and policy evaluations⁵. Third, it is normal to consider published academic research when developing advice and, where necessary, additional work is commissioned from universities and specialist economic consultancy firms. Often, this commissioned work is carried out in association with other public bodies in a further effort to promote cohesion and consistency in the provision of advice.

Where possible, the economists place their work in the public domain by, for example, placing articles in the Scottish Economic Bulletin or the Scottish Office Economic Research Paper series. Papers are also presented to conferences and seminars in an attempt to share information and to stimulate wider debate. Inevitably, however, much of the economic advice is given in confidence to Ministers as an integral part of overall policy advice.

The future organisational arrangements for the provision of economic advice is not speculated on here. Following the creation of the Scottish Executive, as with other civil servants currently in the Scottish Office, the economists and statisticians will remain part of the Home Civil Service and will support the work of Ministers accountable to the Scottish Parliament.

Scottish Office Statistical Services

The general role of the Statistical Services within the Scottish Office is clearly stated in all of the Office's statistical publications:

• To collect and analyse statistics on most aspects of Scottish life;
• To provide statistics and statistical advice to Scottish Office Ministers and civil servants;
• To make statistics available to Parliament and the public.

The aims of the Scottish Office Statistical Service are also given:

• To provide a timely and cost-effective statistical service;
• To maintain the integrity and validity of the statistics, by ensuring that they are accurate and not presented in any way which is misleading;
• To improve the quality and relevance of the statistics, taking account of the needs and priorities of users;
• To minimise the burden on suppliers.

It should be emphasised that the quality control requirements for Scottish Office statistics - as in the provision of all GSS data - are demanding. Government statisticians work to a rigorous Code of Practice⁶ and data and analysis are provided subject to a Statistical Quality Checklist⁷.

Current Activities

The Existing Responsibilities and Review of Procedures

Within the administrative structure of the Scottish Office, the lead on the measurement and analysis of the Scottish economy is taken by the Economics Advice and Statistics (EAS) Division of the Education and Industry Department (EID). EAS is responsible for the presentation of economic data to Scottish Office Ministers and officials and to other users outwith Government, including the general public.

The statistical outputs of EAS are kept under continual review and assessed against a number of relevant tests:

• Are the economic data relevant, especially for Ministers and Scottish Office officials?
• Are the resources available for measuring the Scottish economy being allocated in the most appropriate way?
• Is there a risk that the available statistical resources are being spread too thinly?
• Could the presentation of economic data be made more user-friendly?
• Could the liaison function (with the GSS/ONS) be undertaken more efficiently (see next section)?
• Are the consultation arrangements working effectively, enabling full account to be taken of the needs of users and the views of producers?
• Is there an overall coherence to the EAS statistical responsibilities?
• How might the future requirements for economic data change?

This review process ensures that there is a dynamic focus to the Division's statistical interests, the impetus of which is now largely driven by 4 factors:

• EAS's own perception of where the coverage of Scottish economic data could be improved;
• The requirements of Ministers and officials and of other users;
• The wider changes within the GSS and the ONS ; and
• The expected requirements of the Scottish Parliament.

The Economics Advice and Statistics Division's Liaison Role with GSS/ONS and with Data Users

The Division also liaises with statisticians in other government departments - especially the ONS - on technical issues and on matters affecting the Scottish Office⁸.

This constitutes a vital and resource-intensive part of the Division's work - albeit one which is little seen by the outside world - and it is appropriate to draw a wider attention to it.

On the one side, there is our relationship within the GSS. There are 3 facets to this. First, there is the liaison on survey design and coverage which, at present, is a major issue for the Scottish Office. At the ONS's instigation, several of the current UK business and labour market data collection systems have recently been or are currently under review and this has implications for the derivation of regional (including Scottish) estimates. An example is the new Annual Business Inquiry, which will replace the Annual Employment Survey, the Annual Census of Production and the annual Distributive and Service Inquiries. In addition, the ONS has recently led a wide-ranging public consultation exercise on the future presentation and dissemination of UK and regional labour market statistics. Throughout these reviews of data collection and presentation, the EAS presence within the structure of the relevant GSS sub-groups has been essential, given the obvious Scottish Office interests. This is particularly important because the availability of relevant and detailed labour market information will undoubtedly be a major requirement of the Scottish Parliament (see below). Moreover, such information is also an essential input to the production of other Scottish economic data series, including the proposed quarterly GDP series.

The second aspect of the GSS relationship concerns the obligation on the Scottish Office to match the broader statistical developments that are taking place at both the UK and international levels. These include:

• A methodological review of EAS's quarterly Index of Production and Construction;
• The re-basing of economic indices (including the Index and the GDP series) from 1990 to 1995 prices, including the re-estimation of appropriate base-year weights; and
• The adoption of the new European Standards of National Accounts (known as ESA95), which will require significant changes in the measurement of capital expenditure and GDP, including the incorporation in the latter of an estimate of the "black" economy.

Although these issues are essentially of a technical nature, they cannot be ignored, as they affect the estimation of our own series (including the Index, GDP and the Input-Output tables) and they have obvious implications for the use of statistical resources.

Third, there is the formal relationship between the Scottish Office and the GSS. Non-statutory agreements are being drawn up between the Scottish Office (and related departments) and other government departments to establish how they would work together on matters of common interest after the establishment of the Scottish Parliament. The relevant agreement on statistics will provide the framework by which departments will continue to consult on statistical issues, exchange information required for statistical purposes, provide advance notification, conduct joint working, and generate harmonised and high quality statistics at the GB/UK level, as well as for the constituent countries. Within the Scottish Office, the lead on this is being taken by the Chief Statistician, with contributions on economic statistics from EAS. The Division's statisticians are also contributing to the specific GSS committees examining the implications of Government policies (including devolution) for the collection, processing, analysis and dissemination of economic data.

The other side of the Division's statistical liaison role is with the users/customers of data, including other Scottish Office divisions, Scottish Enterprise, Highland and Islands Enterprise, local enterprise companies, Unitary Authorities, COSLA, academics, businesses, consultants and the general public. The general principle is to ensure that the data requirements of Scottish users are taken into account, when reviews of economic data are conducted by ONS or others. In practical terms, in recent months, this has applied to decisions taken (or about to be taken) on:

• The coverage and presentation of unemployment and other labour market statistics, including the greater weight to be given to the measures available from the Labour Force Survey;
• The boundaries of the new NUTS areas (to be used in assessing the future eligibility of local areas for European Structural Funds);
• The new travel-to-work areas (TTWAs), which take account of the commuting patterns revealed in the 1991 Census of Population;
• The derivation of historical data for the Unitary Authorities;
• Contributing to the Scottish Office's preparation for the 2001 Census of Population, the lead on which is being undertaken by GRO (Scotland);
• The recommendations of the Osmotherly Report on survey holidays.

In summary, the EAS Division's liaison function within the GSS and with data users is extensive. Under the Scottish Parliament, the technical and practical issues surrounding this liaison are likely to remain at least as important as they are now.