The connection UK experience The Atkinson Review The way forward

1. Slovenian Statistical Days8 November 2004 Atkinson Review of Measurement of Government Output and Productivity for the UK National AccountsAileen Simkins, Co-Director, Atkinson Review

2. The connection UK experience The Atkinson Review The way forward National Accounts • Public Services

3. National Accounts • GDP includes value of public services • How to measure? • Output = input: assumes no change in productivity • Measure outputs directly (SNA 1993; since 1998 in UK; Eurostat requirement from 2006) • What outputs? • What has happened to productivity?

4. ONS Introduction of Direct Output Measures 1998 -

5. Government Productivity estimates implied by UK National Accounts (2000=100)

6. Public Services (UK) • Count • spending • units of resource (hospital beds, nurses) • units of activity (operations, nursery school places) • Set targets and minimum standards • standards and inspection • % children vaccinated • school league tables of exam results • maximum waiting times for hospital treatment • success rates e.g. prisoners reoffending in 2 years

7. Atkinson Review :commissioned by Len Cook, National Statistician Terms of Reference To advance methodologies for the measurement of government output, productivity and associated price indices in the context of the National Accounts, recognising: • 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 outputs and costs • the existing work of the ONS • the appropriate measurement of inputs, including quality and the distinction between resource and capital, so that, together with the measurement of output, light can be thrown on developments in government productivity

8. Work Programme • Prioritised 4 areas of most spending • Agreed action plans with Government departments • Coverage: • Govt pays (may also be Govt provides) • Not transfers, grants, subsidies • Individual and collective services • Outputs, inputs, pay and price deflators

9. Interim Report : July 2004 Measurement of government output, and of inputs and productivity, should be based on a set of principles, within the framework set by international guidelines.

10. Principles : Output • Output should be measured by incremental contribution to individual or collective welfare i.e. the added value by service concerned; • Value should be seen as adjusted for quality; consider adjusting for rising real value as real GDP rises; • Start from services provided, and seek indicators that give full coverage; • Formal criteria should be established for extending direct output measures to further services: full range of services, quality change, tested, context assessed; • Measures should cover the whole of the UK;

11. Principles : Inputs and Productivity • Measures of inputs should be as comprehensive as possible, and should include capital services; consider split between current and capital spending; • Criteria should be established for price deflators applied to input spending series; • Independent corroborative evidence should be sought on government productivity, as part of a process of “triangulation”.

12. Progress Report : • Health • Improved measures of health output introduced into National Accounts June 2004 • 1700 categories instead of 15, • output growth rose from 2.2% pa average to 3.2% • Better data sources needed to measure outputs of General Practitioner services; • Improve data sources for proper UK coverage; • Incorporate quality measures into health output; • ONS to publish health productivity article.

13. Progress Report : Education • Current measure: pupil years + 0.25%; • Consider move to pupil hours (absence rates); • Measure quality through exam results and/or overall school performance ratings; • Use UK data (exam systems differ); • Consider using net present value of future earnings from educational attainment; • Consider satellite account on education - formation of human capital.

14. Progress Report : Public Order and Safety • Measure criminal justice system as collective service: crime reduction as key overall outcome; • 3 methods being explored - may all be used for ‘triangulation’ assessment of productivity; • Measure civil courts output as individual services; better cost weighted index needed, with quality measures; • Fire services: range of indicators available to assess productivity.

15. Progress Report : Social Protection • Improve coverage of cost weighted activity for adult and children’s social services; • Measures are ‘net’ of charges paid by some users; • Use UK data; • Research underway to identify possible quality measures; • Update index for payment of benefits and pensions.

16. What Next? • Final report January 2005; • Recommendations to be considered by National Statistician; • ONS is planning for work to be taken work forward • In discussion with OECD and Eurostat; • Learning from each other - European Commission decision applies from 2006.