ONS Economic Forum Email: economicforum@ons.uk Twitter: @ONS # ONSeconomy

1. ONS Economic Forum Email: economicforum@ons.gov.ukTwitter: @ONS #ONSeconomy Website: http://www.ons.gov.uk/ons/about-ons/get-involved/events/events/economic-forum/index.html WIFI code for Glaziers Hall: event123 13 July 2015

2. ONS Economic Forum – July 2015 Agenda 09.45 Introduction & welcome 10.00 What’s new 10.40 What’s next 11.20 Refreshment break 11.50 Productivity 12.30 Close

3. Introduction and welcome Jonathan Athow, Deputy National Statistician for Economic Statistics ONS Economic Forum 13 July 2015

4. What’s new Peter Patterson, Deputy Chief Economic Adviser ONS Economic Forum 13 July 2015

5. What’s new - outline • New construction price deflator, impact on GDP growth • Highlights from latest ONS economic statistics • Income and earnings statistics – impact of taxes and benefits on household incomes, median incomes • UK Statistics Authority trade statistics assessment • Flow of Funds - initial outcomes, inc. loans matrix

6. Interim solution – the basics • A project cost approach is used where we enumerate the input costs of different construction projects and use this as a proxy for output prices • We have developed indices for: • All new work types • Repair and maintenance • All construction

7. Interim solution – the basics New work Repair and maintenance Measurement of price changes for two categories of input: Labour Materials • To measure price change for the new work projects, price changes for three categories are measured: • Labour (AWE for construction excluding bonuses) • Plant (SPPI) • Materials (relevant PPIs based on PPPs)

8. Interim solution - strengths and limitations • Strengths • Open and transparent, based on real data • Uses existing ONS data • Monthly series can be created • Limitations • Assumes that input costs move in the same way as output prices • Assumes that productivity is constant • Representative projects are selected by Eurostat and may not be representative of the UK • Limitations around PPIs

9. Results • The interim solution has been implemented from January 2014 onwards • To account for changes to seasonal patterns a seasonal review was also implemented at the same time • Late data has also been incorporated.

10. Implied construction price deflator

11. Output in the construction industry

12. Revisions to GDP growth

13. QNA: revisions to GDP growth estimates Revisions to expenditure and output measures of GDP/GVA growth, CVM measures, changes on same quarter of previous year, percentage points

14. Business services & finance output

15. GDP and household expenditure deflators

16. Private sector financial balance

17. PNFCs’ income and expenditure

18. Regular pay growth, private sector

19. Earnings growth and continuous employment

20. Part-time employment trends

21. Average weekly hours worked

22. Current account balance

23. Primary income balance

24. Official statistics on income and earnings – looking forward • UK Statistics Authority event, 2 July – users and producers met to discuss a range of income and earnings statistics • Feedback on a number of prototype outputs: • Alternative measures of RHDI (eg cash based measures) • Supplementary analysis of trends in earnings (eg analysis of composition effects in ASHE) • Nowcasts of median household income • Price indices for different sub-groups of • Real income indices for different sub-groups • Understanding user priorities: • Better and more timely data on self-employment income – a key priority because of the increasing scale of self-employment • Increase awareness of available datasets and guidance • More focus on changes in business environment and productivity story e.g. wage dynamics

25. Well-being indicators

26. Effects of Taxes & Benefits • Effects of Taxes & Benefits (annual article) published 29 June 2015 • Provides important insights into distributional impact of taxes (direct and indirect) and benefits (including in-kind transfers provided by state) • Provide a consistent time series of key income measures (e.g. median disposable income) going back to 1977 • Main messages: • Overall levels of income inequality in 2013/14 broadly unchanged on other recent years. • However, inequality among retired households increased, with the Gini coefficient for disposable income rising to 27.2%, up from 24.3% in 2009/10. • Before taxes and benefits, the richest fifth of households had average income 15x higher than poorest fifth. Ratio reduces to 4-to-1 after all taxes & benefits. • Median disposable income in 2013/14 was £24,500 – higher than in 2012/13, after accounting for inflation and household composition, but still below the level seen in 2007/08 • The median disposable income of retired households was 7.3% higher in 2013/14 than in 2007/08, compared with 5.5% lower for non-retired households.

27. Original and final income by quintile, 2013-14

28. Headlines: Effects of Taxes & Benefits

29. Distribution of growth in household incomes

30. Headlines: Effects of Taxes & Benefits

31. Nowcasting household income • ETB and other statistics on income distribution currently published around 15 months after end of reference period • Other income measures (e.g. RHDI per capita) more timely but do not reflect distribution • In response to considerable user feedback, ONS investigating ‘nowcasting’ techniques to provide early estimates of key ETB indicators: • Median equivalised disposable income • Distributional measures • Initial methodological article was published 1 July 2015 • Further work still needed to refine methodology • Aim is to share progress to date and get feedback on methodology and further understand user requirements • Need to ensure nowcasting can deliver estimates that are fit for purpose • Continuing development over summer • Aim to publish experimental 2014/15 estimates taking into account feedback received

32. UK Statistics Authority assessment of UK Trade Background Nov 2014 – UK Statistics Authority removed National Statistics Status from UK Trade May 2015 – UK Statistics Authority published Assessment of Statistics on UK Trade Requirements summary • Assessment includes 13 requirements that must be completed by ONS in order to regain National Statistics Status for UK Trade • The requirements include the following areas: • User engagement • Methods • Quality • International comparison • Systems • Developments • Commentary and analysis • Accessibility

33. UK Statistics Authority assessment of UK Trade ONS Response • ONS is expected to report its completed actions to the UK Statistics Authority by February 2016 • ONS is engaged in a range of improvements and developments to address the requirements, including: • Publication of results and planned response to a recent user survey • Additional analysis of quarterly Trade in Services in monthly bulletin • Expanded quality information, development & publication of technical report • Review of trade data published by other countries • Publication of information about assurance arrangements for admin data • Development of a new ONS Trade web page • ONS is committed to meeting the requirements and regaining National Statistics status for UK Trade as soon as possible and will keep users informed of progress

34. Flow of Funds • Late 2014: ONS began work on a joint project with the Bank of England to develop Flow of Funds statistics • 13 July 2015: Joint ONS and Bank of England article published : • Outlines the project, progress, and future programme; • Includes first ‘from who-to-whom’ matrix: balance sheet levels of loans • Feedback welcome: flowoffundsdevelopment@ons.gsi.gov.uk • Summer / Autumn 2015: Spending Review 2015 bid to be submitted: detailing options, plans and costs for future development of flow of funds

35. Flow of Funds

36. What’s next Nick Vaughan, Director of National Accounts and Economic Statistics ONS Economic Forum 13 July 2015

37. What’s Next – outline • Blue Book – update and next steps • National Accounts work programme, post consultation • Measuring consumer prices – post consultation • Impact of population estimates on economic statistics • Claimant Count definition change - impact

38. Blue Book 2015 - update So far: • Series of methodological articles relating to ESA95, ESA10 and other (Mar – May) • Impact article – GDP in current prices 1997 to 2010, levels and growth (12th Jun) To come: • Series of impact articles - GDP real terms, annual and quarterly to 2013 • 17th July, 5th August and 11th September • 30th Sep: Quarterly National Accounts & Balance of Payments consistent with Blue and Pink Books • 30 Oct 15: Blue and Pink Books published

39. Scope Three types of changes: • GNI: improvements to remove ESA 1995 reservations • Classification changes • Other methodological changes

40. Impact of ESA 1995 on GNI levels (indicative) -£11.9bn or 0.1% of total GNI over the 2002 to 2010 period

41. Impact of ESA 2010 on GDP levels, CP (indicative) Between 1997 and 2010, CP GDP level revised by a range per year of -£2.8bn to +£4.8bn

42. Contributions to changes to CP GDP annual levels, ESA 2010 basis: indicative impact Between 1997 and 2010, CP GDP level revised by a range per year of -£2.8bn to +£4.8bn

43. Impact of ESA 2010 on GDP growth, current prices: indicative GDP annual growth, current prices, revised each year by between -0.4pp to +0.3pp

44. Blue Book 2015 – What is still to come

45. National Accounts Medium-Term Work Plan • 2013 - National Accounts Work Plan published • Blue and Pink Books 2014 - ONS delivered significant changes in line with revised international standards • 2014 - National Statistics Quality Review of UK’s National Accounts and Balance of Payments • Today - refreshed Medium-Term Work Plan published

46. NA Medium-Term Work Plan - Scope • Briefly reflect upon progress since the first work plan • Provide users of National Accounts with sight of the high priority aims for National Accounts over the medium term • Provide a high level plan of how the high priority aims will be delivered over the next 3 years

47. How Can You Help? • Whilst not a formal consultation we would welcome comments on the work plan, in particular: • Are there any priorities not included in the work plan? • Of the priorities covered in the plan which ones are the highest priority for your needs? • Which of the priorities included in the work plan could be dropped or slowed to allow other priorities to be pursued?

48. How To Contact Us • Copies of the work plan available today • Published on the ONS website http://www.ons.gov.uk/ons/about-ons/get-involved/consultations/open-consultations/index.html • Comments - please email national.accounts.change.programme@ons.gsi.gov.uk

49. Measuring Consumer Prices consultation • UK Statistics Authority consultation • Opened: 15 June 2015 • Closes: 15 September 2015 • Follows Johnson Review of consumer price statistics • Seeking user views on 4 areas: • Measuring prices across the economy • Measuring consumer price inflation for different household types • RPI • Evolving consumer price statistics

50. Measuring Consumer Prices consultation • User events: • London event held on 24 June 2015 • Series of events planned across the UK including Belfast, Cardiff and Edinburgh (details to follow) • Consultation document: • http://www.statisticsauthority.gov.uk/reports---correspondence/consultations/index.html