An article in the September 1997 edition of the Scottish Economic Bulletin provides a summary of the current position with respect to the availability of official Scottish economic statistics⁹. The article makes a useful distinction between labour market statistics, business statistics and economic statistics and gives the lead department, source, time period and geographical area for all the data published under the GSS banner, either by the Scottish Office or by another government department. It excludes other (non-GSS) material, such as EAS's annual Government Expenditure and Revenue in Scotland (GERS) series.

The extensive range of official data that are already available is not discussed at length here. At the Scotland level, it includes: employment, self-employment, unemployment, vacancies, earnings, VAT registrations and deregistrations, regional assistance, gross domestic product (GDP), Regional Accounts, the Index of Production and Construction, Input-Output tables, government expenditure and revenue, the electronics industry and the overseas ownership of Scottish manufacturing industry, among many others. It is relevant to note that the outputs of economic statistics from the Scottish Office are not discrete entities. Rather, there is a significant overlap between them, which enables economies of scale to be generated in the data collection and publication.

Within the current portfolio of EAS statistical outputs, 2 series should be noted in particular. The Index of Production and Construction is a quarterly index of the real output of the Scottish production and construction sectors. A total of 13 disaggregated series are published to a pre-announced schedule, with some unpublished data available in much greater detail. Although the present series run back to 1986 on a consistent basis, aggregate data are available from 1954.

The maintenance requirements for the Index are substantial, requiring close liaison with the ONS, MAFF and the Department of the Environment, Transport and the Regions (DETR) on the various primary sources as well as on a wide range of technical issues such as re-basing (in due course, from 1990 to 1995), price deflators, sampling procedures, European standards and seasonal adjustment. EAS conducts its own "top-up" survey of Scottish companies to ensure the adequate coverage of the Scottish production sectors. The Index is reported by the media and scrutinised (sometimes intensely) by academics, consultants and independent forecasters. The published data are also used by outside bodies to inform the broader research agenda on the Scottish economy.

The second major data series is the Scottish Input-Output Programme (SIOP), which is a principal source of information about the detailed structural relationships within the Scottish economy. The Input-Output Tables provide information on the pattern of purchases for (currently) 128 industry/product groups within Scotland together with the distribution of sales from those groups. The full tables also provide estimates of economic multipliers (required for economic impact analysis) as well as the social accounting matrices (covering areas such as environmental impact and the employment effects of changes in the demand for Scottish goods and services).

SIOP is the product of a substantial in-house investment and collaboration with academic experts over many years. Full tables were produced for 1979 and 1989 and a limited set of tables - the Input-Output Balances for 1992 and 1993 - were released in 1996. The 1994 Input-Output Tables were published in September 1997¹⁰. The current plan is to update the balances on an annual basis and to produce the full tables every fifth year.

The required inputs to SIOP are obtained from a range of ONS surveys of output, turnover and employment as well as from other government departments and Scottish Office sources (including Finance, Agriculture, Fisheries, Forestry, Education and Health). The technical requirements of SIOP are demanding and the Programme is widely used by academics and consultants. However, its key feature is, undoubtedly, its relevance in the analysis of policy issues. Within the last 2 years, Input-Output data have been analysed by EAS in providing policy advice on, inter alia: the impact of BSE; the import content of Scottish manufactured exports; the domestic content of electronics output; the economic impact of the employment and purchasing policies within the financial sector; the linkages between defence expenditure and the rest of the economy; and the sectoral impact of real increases in the duties on non-road mineral oil products. In addition, EAS has liaised with members of the Dearing and Garrick Committees on the specific issue of the skill/occupational content of Scottish imports and exports.

Although some of the current data series - including SIOP - cover the whole economy, most of EAS's detailed statistical outputs concentrate on the production industries: manufacturing, energy, mining and quarrying and the construction sector. There are good reasons for this, not least that these sectors have generally been the focus of successive governments' policy initiatives responding to the major structural changes in the Scottish economy. However, EAS is fully aware of the view that the remainder of the economy - largely, the service sector - should also be measured in more detail.

In fact, the Scottish Office does publish an annual estimate of the output measure of GDP at the broad disaggregated level (the production sectors given above, plus agriculture, distribution, transport and communication, and other services). The series, which extends back to 1963, is essential for deriving estimates of the long-run growth of the Scottish economy. Its drawback is its lack of timeliness; by the time all the information is available (from the ONS and elsewhere), there is an 18 month lag and the data have little immediate news value.

Recognising these limitations, research is currently underway within the Scottish Office to develop a more timely and regular (i.e. quarterly) estimate of Scottish GDP. Although the difficulties - both of concept and measurement - in this exercise are formidable, the results so far are promising and further work will take place in 1998. An important component of the overall series - the development of a methodology for producing a quarterly index of output for the financial intermediation sector in Scotland - was discussed in the September 1996 edition of the Scottish Economic Bulletin¹¹.

The lack of a quarterly GDP series represents a noticeable gap in the general knowledge about the Scottish economy. Its production would satisfy the significant demands for more up-to-date and comprehensive information. However, it is important that the normal safeguards - in terms of quality, consistency and sustainability - are firmly established in accordance with the recognised standards of both the Scottish Office Statistical Services and the GSS as a whole. Hence, the derivation of a fully detailed series, to a publishable standard, is a medium term objective: the realistic timetable is 2 years. In addition, as with the current statistical outputs, disaggregated data would only be released if the usual requirements of company confidentiality were met.

A Future Strategy

The Economic Data Requirements

The establishment of the Scottish Parliament will place new demands on the official statistical services. A starting point for addressing this issue is to be found in The Scotland Bill¹² and the preceding White Paper¹³. Schedule 5 of The Scotland Bill sets out those matters that are to be reserved functions. Among these are a number of financial and economic matters as well as other policies affecting trade and industry, including:

• Fiscal, economic and monetary policy, including the issue and circulation of money, taxes and excise duties, government borrowing and lending, control over UK public expenditure, the exchange rate and the Bank of England. (Head 1 Section 1).
• Financial services, including investment business, banking and deposit taking, collective investment schemes and insurance. (Head 1 Section 3).
• Financial markets, including listing and public offers of securities and investments, transfer of securities and insider dealing. (Head 1 Section 4).
• Regulation of anti-competitive practices and agreements; abuse of dominant position; monopolies and mergers. (Head 3 Section 3).
• The designation of Assisted Areas. (Head 3 Section 12).

By providing the schedule of reserved matters, The Scotland Bill was not required to give a detailed listing of devolved functions. However, for ease of reference, it is useful to note the relevant passages in the White Paper¹⁴:

• Training policy and lifelong learning, including all the training responsibilities presently exercised by the Scottish Office.
• Economic development, including the functions of Scottish Enterprise, Highlands and Islands Enterprise and the local enterprise companies.
• Financial assistance to industry, subject to common UK guidelines and consultation arrangements to be set out in a published Concordat.
• Inward investment, including the functions of Locate in Scotland.
• Promotion of trade and exports, including the functions of Scottish Trade International.
• Promotion of tourism, including the functions of the Scottish Tourist Board.

The Scottish Administration will also have responsibility for a number of other matters affecting economic performance, including functions relating to the energy sector, the administration of European Structural Funds, and a wide range of transport matters.

In addition, the Scottish Administration will be responsible for research and statistics in relation to devolved matters. In terms of economic data, the range of statistics currently published in the Scottish Office and/or other government departments - as described above - provides empirical support for monitoring and informing the Scottish Administration's devolved responsibilities.

It is acknowledged, however, that the Scottish Parliament may wish to examine a much broader range of evidence with regard to its allocated function of the economic development of Scotland, including the support for business and industry and the training policy and programmes. It is against this background that EAS's programme of development work on Scottish economic statistics is currently being conducted.

The EAS Development Work on Official Scottish Economic Statistics

It follows that the further development of official statistics on the Scottish economy should take place in all 3 of the broad areas described in the September 1997 SEB article:

• Economic statistics: in particular, quarterly indices of constant price output by disaggregated industrial and commercial sector, including the service industries; and the full annual analysis of the Scottish economy;
• Business statistics: including, the sectoral distribution and size breakdown of Scottish companies; trends in the number of small-to-medium sized enterprises (SMEs); the employment impact of the largest companies; expenditure on R&D and innovation; allocation of Regional Selective Assistance grants by sector and locality;
• Labour market statistics: especially economic activity patterns by type of labour market participant and by local area.

EAS is already taking forward development work in all 3 areas:

• As noted, a more timely and regular estimate of Scottish GDP is being derived. Initially, this will involve the production of a quarterly version of the annual series (based on physical indicators and pro-rating several UK series) for internal purposes. However, this methodology will be developed and improved using data from the ONS's monthly and quarterly service trades inquiries, whenever feasible. In addition, the feasibility of producing 3 other series is being examined: an official quarterly index of Scottish manufactured exports, which is consistent with the corresponding series for the UK; an annual analysis of the service sector; and an annual estimate of gross national income (GNI). The last of these is likely to be a longer term project¹⁵.
• Some gains will be made through more effective co-ordination in the presentation of the Scottish business database, much of which is already published. The introduction of a new and regular Statistical Bulletin will take matters forward. This will exploit new data sources on the corporate sector in Scotland, especially the Inter-Departmental Business Register (IDBR). The IDBR has already enabled Scottish Office officials to examine the contribution to total employment of the largest 250 private sector companies in Scotland. This research will be extended to develop the understanding of the overall corporate structure of Scotland and it will be published, subject to the normal confidentiality requirements for company data.
• Clearly, if more robust or detailed labour market survey estimates are necessary, then boosted sample sizes for Scotland will be required - for example, for the Labour Force Survey and the Annual Business Inquiry - and the costs of these are currently being assessed. These will cover both the cost to Government and the compliance costs to businesses. In addition, EAS statisticians are part of the GSS taskforce examining the implications of the new labour market policies on data requirements.

Lessons from Other Nations/Regions

There are clearly lessons for Scotland in terms of how other regions/countries order their priorities for the collection of economic data. EAS is currently pursuing this avenue of enquiry by undertaking research comparing the availability of economic data in Scotland with that in a range of European (and other) regions/states/provinces. The aim is twofold:

• To compare the published data series; and
• To consult with officials in these areas on the customers for their data (both within and outwith government), the perceived gaps in their knowledge about the local economies, and the relationship between data availability and the economic functions of the devolved government.

It is expected that the final analysis might cover at least some of the German Lander, Finland, Sweden, Austria, France, Canada, Australia and Catalonia. It is important to recognise, of course, that this group of regions/countries covers a wide range of models of devolved government, which have been derived in different circumstances within their various historical contexts. In turn, these models have different requirements of their supporting administrative infrastructures. However, by casting the net relatively widely, the aim is to draw upon the lessons of best practice elsewhere, in order that the economic data requirements of the Scottish Office - and the Scottish Parliament - continue to be given full consideration.

Resources and Timing

The resources available to EAS are fully taken up by the work described. Changes in the balance of outputs would require hard choices to be made among existing priorities, while additional data outputs would require extra resources.

A related point concerns the time lags that inevitably accompany the establishment of new economic data series. In considering what might be produced and when, account would have to be taken of the inevitable lead times. These might be 3 years from the decision to proceed through to the publication of robust data in a new series.

Feedback from Data Users

The evolution of the strategy for Scottish economic data is likely to be a continual process, both in the period prior to the Scottish Parliament being fully operational and subsequently. As noted in the introduction, this article is aimed at stimulating informed and constructive comments from the providers and users of Scottish economic data. Feedback is welcome and should be directed to:

John Rigg
Economics Advice and Statistics Division
The Scottish Office Education and Industry Department
Third Floor
Meridian Court
5 Cadogan Street
Glasgow
G2 6AT