The document discusses a presentation given by Ed Palmer from the Office for National Statistics (ONS) on UK statistics and the ONS's role and activities. Some key points: - The ONS is an independent government body that produces official statistics to inform public policy and debate in an objective and trusted way. - It is responsible for key economic statistics like GDP, inflation, employment as well as data on populations, health, and other social and environmental topics. - The ONS is transforming how it produces statistics to take advantage of new data sources like administrative records and improve timeliness, detail, and accuracy of estimates. - Examples provided include using VAT data to improve regional GDP estimates and exploring use

1. Statistics for the public good
Ed Palmer
Deputy Chief Economist, Economic Advice and Analysis
Office for National Statistics
economic.advice@ons.gov.uk
Economic Forum, Nottingham University
16 January 2019

2. To discuss today
• UK Statistics Authority and the Office for National Statistics: our status and role
• What the ONS does
• Why we are transforming
• Some examples of how we are transforming
2

3. The status and role of the UK Statistics Authority
• An independent statutory body
• Operating at arm’s length from government as a non-ministerial department,
reporting directly to the UK’s Parliaments and Assemblies
• In law (the Statistics and Registration Services Act 2007) our objective is:
“promoting and safeguarding the production and publication of official
statistics that serve the public good”
• And that public good includes:
• informing the public about social and environmental matters
• assisting in the development and evaluation of public policy
• regulating quality and publicly challenging the misuse of statistics
3

4. Correspondence: an example
4

5. Who are we?
• Economic, public policy and population statistics
• Other government Departments also provide statistics,
e.g. energy, health, environment
• Our responsibility is for coherence of system as a whole
• Census provider in England and Wales
• Office locations in Newport, Titchfield, London
UK Statistics
Authority
Other
government
stats producers
Office for
National
Statistics
Office for
Statistics
Regulation
5

6. Explaining the statistics you see in the news: January 2019
6

7. And a lot more:
GDP growth Inflation
(Un)employ
ment
Wages
Trade
Public
finances
Regional and
country
economic
data
Crime
Births,
deaths and
marriages
Population Migration
Health and
social care
Personal
income and
wealth
Well-being Environment …and more
7

8. Three ways of calculating GDP
Expendit
ure
GDP(E)
How
much is
spent
Output
GDP (O)
How
much is
produced
Income
GDP (I)
How
much is
earned
8

9. Three ways of calculating GDP
Expenditure
GDP(E)
How much is
spent
Use of credit
card data
Retail sales
Output
GDP (O)
How much is
produced
Use of VAT
data
Purchases
Survey
Improving
Deflators
Income
GDP (I)
How much is
earned
Use of PAYE
& Self-
Assessment
data
Improving the Supply-Use system 9

10. VAT: the benefits
Current system
Turnover is used as a
proxy for gross value
added
Surveys sent to 45,000
firms each month
Limited regional and
local estimates
Refreshing a survey
takes time to get new
data
Future system
VAT could give us GVA –
in time…
2m returns each quarter
Significant increase in
granularity of estimates
Admin data comes with
historical data for rapid
use
10

11. Granularity: an example
11

12. Economic Statistics: analysis and research
Economic Statistics Centre of
Excellence
• National Accounts and Beyond GDP
• Productivity and the modern economy
• Regional and labour market statistics
• www.escoe.ac.uk
12
ONS Economic Statistics and Analysis
Strategy
• Sets out for users, stakeholders and
researchers clarity on how we are
working to improve UK economic
statistics.
• https://www.ons.gov.uk/methodology/clas
sificationsandstandards/economicstatistic
sclassifications/onseconomicstatisticsand
analysisstrategyfinancialyearending2019

13. Understanding the UK economy
Amina Syed
Office for National Statistics
economic.advice@ons.gov.uk
Economic Forum - Nottingham
16 January 2019

14. Latest data from the ONS
• GDP
• Economic well-being
• Inflation
• Employment
• Productivity
14

15. GDP growth: 0.6% in Quarter 3 2018
15
Gross domestic product growth rate, quarter-on-quarter and quarter on same quarter a year ago
UK, Quarter 1 (Jan to Mar) 2008 to Quarter 3 (July to Sept) 2018
Source: ONS

16. UK growth compared to other G7 countries
16Source: OECD and ONS

17. Latest data from ONS
• GDP
• Economic well-being
• Inflation
• Employment
• Productivity
17

18. Economic well-being dashboard, Q2 2018
18Source: ONS

19. Latest data from ONS
• GDP
• Economic well-being
• Inflation
• Employment
• Productivity
19

20. Measures of inflation: input producer prices, output
producer prices, consumer prices
20Source: ONS
12-month growth rates for input producer prices and output producer prices (left-hand side),
and Consumer Prices Index including owner occupiers’ housing costs (CPIH) (right-hand side)

21. What is driving the growth in consumer prices?
21Source: ONS

22. House prices, inflation and wages
22Source: ONS, Land Registry
Index, January 2007 = 100
80
90
100
110
120
130
140
1/1/2007 4/1/2008 7/1/2009 10/1/2010 1/1/2012 4/1/2013 7/1/2014 10/1/2015 1/1/2017 4/1/2018
House Prices, inflation and wages
City of Nottingham Nottinghamshire East Midlands
United Kingdom CPIH AWE

23. Latest data from ONS
• GDP
• Economic well-being
• Inflation
• Employment
• Productivity
23

24. Labour market headline figures
24Source: ONS
UK, seasonally adjusted, Jan to Mar 2006 to August to Oct 2018

25. Wage growth
25

26. Latest data from ONS
• GDP
• Economic well-being
• Inflation
• Employment
• Productivity
26

27. Productivity performance is a key weakness
27Source: ONS

28. Latest data from ONS
• GDP
• Economic well-being
• Inflation
• Employment
• Productivity
28

29. Recent developments in ONS economic
statistics - a regional perspective
Richard Prothero
ONS Centre for Subnational Analysis

30. Contents
• Devolution Programme
• Regional GVA
• Productivity
• Country and Regional Finances
• Service Exports
• Housing
• ONS Blog
• Analysis (Economic Review)
• Developments

31. Devolution Programme
A programme to improve ONS regional and local statistics.
Regional Balanced GVA
Regional & Sub-Regional Household Final Consumption Expenditure
Regional Short Term Indicators
Country and Regional Public Sector Finances
Exports of Services Data
Productivity
Small Area Data
Flexible Geographies
Investigating Uses of Administrative Data
Regional Prices
Stakeholder Engagement

32. Regional Gross Value Added
December 2017:
First publication of experimental balanced measure, GVA(B)
Combines income and production measures using quality metrics
Uses administrative VAT turnover data for latest year output estimates
Greater industry detail in nominal (value) and real (volume) terms
NUTS1 – 81 industries
NUTS2 – 72 industries
Regional prices used for deflation of housing rental
Implied deflators derived from value and volume estimates
First estimates produced for combined authorities
Along with local authorities and local enterprise partnerships (LEPs)

33. Regional Gross Value Added
December 2018
Balanced GVA (and components) now have National Statistics
status
Following assessment by the Office for Statistics Regulation
Now uses VAT administrative turnover data for lower-level areas
Virtual census of business activity at individual site (local unit) level
Greater industry detail in nominal (value) and real (volume) terms
NUTS3 – 48 industries
Local Authority (LA) – 34 industries
LA data used to compile combined authorities, city regions, LEPs
and other areas of economic interest in nominal and real terms

34. Economic Output (Regional GVA)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Average Annual Growth Rates in Real GVA
by Region/Country
1998-2007 2009-2017

35. Economic Output by Industry
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
Average Annual Growth in Real GVA in
Derbyshire and Nottinghamshire (NUTS2) by
Largest Industry Sectors
1998-2007 2009-2017

36. ONS Regional Productivity Outputs.
• Regional and Subregional Productivity in the UK
• Headline measures of productivity by NUTS1,2,3, LEPs & City
Region.
• Productivity by Region (NUTS1) by Industry
• Provides an industry split for NUTS 1 consistent with headline
productivity estimates.
• Economic Review: April 2018
• Articles on regional GVA growth; firm level regional productivity
analysis for the business economy; & international comparisons of
regional productivity.
• Exploring labour productivity in rural and urban areas in Great Britain:
• Firm level productivity analysis by rural urban classification, city size
and the classification of workplace zones.
• Next regional productivity releases on Feb 6th .

37. Labour Productivity
(GVA per hour worked)
60 70 80 90 100 110 120 130 140 150
Cornwall and Isles of Scilly
Lincolnshire
West Wales and The Valleys
South Yorkshire
Shropshire and Staffordshire
Devon
Northern Ireland
North Eastern Scotland
Berkshire, Buckinghamshire and…
Outer London - South
Outer London - East and North East
Inner London - East
Outer London - West and North West
Inner London - West
GVA per hour worked, 2016…
Highest and lowest labour productivity, 2016, - NUTS2 Regions.

38. Labour Productivity since 2007
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
-15% -5% 5% 15% 25% 35%
Real GVA
Growth
Growth in Hours Worked
Growth in GVA versus hours worked,
NUTS 2, 2007-2016.
Decrease in
Labour
Productivity
Increase in
Labour
Productivity
Chart from ONS Regional and sub-regional productivity in the UK: February 2018

39. Distribution of firm level productivity (GVA per
worker) in the non-financial business economy,
NUTS1 regions

40. European Comparisons:
Labour Productivity By Nuts 1 Region

41. Country and Regional Public Sector Finances
• First published in May 2017 and updated in August 2018.
• They provide information on:
What public sector expenditure has occurred, for the benefit of
residents or enterprises, in each country or region of the UK
What public sector revenues have been raised in each country or
region.
The net fiscal balance (which at the UK level is equivalent to public
sector net borrowing).

42. Net Fiscal Balance by country and region, 2016/2017
(£million)
• In the financial year ending (FYE)
2017, all countries and regions
except London, the South East and
the East of England had a public
sector net fiscal deficit.
• This was the same when North Sea
oil and gas revenue was allocated to
regions on both geographic and
population shares (the chart shows
the geographic share).
-40,000 -20,000 0 20,000
London
South East
East of England
South West
East Midlands
North East
Yorkshire and the Humber
West Midlands
North West

43. Net Fiscal balance from 1999/2000 to 2016/17
(£ million)
-60,000
-30,000
0
30,000
60,000
90,000
120,000
150,000
180,000
UK
Greater South East (London + SE +EE)

44. Regional Exports of Services
• First published in July 2016. Latest publication October
2018.

45. Regional Exports of Services
Service Exports from East Midlands Region, 2016.
Data for NUTS 3 and for Combined Authorities will be published for the first time on Feb 12th.

46. House Price Statistics for Small Areas
• Improving the coverage of
property transactions by:
- Using additional Land
Registry Price Paid data to
include transactions with an
identifiable buy-to-let mortgage
- Linking Land Registry
data with Ordnance Survey data
to improve the coverage of new
property transactions
• Providing statistics on the number
and price paid for leasehold and
freehold properties by area,
property type and new/existing
Future improvements to measuring
price paid for residential properties in
small areas

47. Sub-national Housing Analysis
First-time buyer housing affordability
• Combined analysis of survey data and admin data on first-time buyer mortgages to compare
housing affordability for prospective first-time buyers with affordability for those who actually
bought their first home.
Sales of new leasehold properties
• Analysis of the number and price paid for leasehold properties by type in local authorities
across England and Wales. Currently forms part of the House Price Statistics for Small Areas
but will be made into its own annual publication in Summer 2019
Recent developments
New research publications
30th January 2019 - Research Outputs: Subnational dwelling stock by tenure estimates
• This research investigates the use of data from the Annual Population Survey (APS)
and occupancy rates from the English Housing Survey (EHS) to estimate the number
of dwellings by tenure for a range of sub-national geographies in England.
Q1 2019 – Research Outputs: Analysis of secured deposits for privately rented
dwellings
• This research investigates sub-national trends in the number of securely held deposits
in privately rented accommodation, using data from the three Tenancy Deposit
Protections schemes in England and Wales

48. National Statistical - ONS Blog.

49. ONS Regional Analysis
Economic Review – Apr 2018
Location quotients by broad industry group, UK, 1998-2016

50. Developments - Quarterly Regional GDP
(Regional Short Term Indicators)
Background:
• Quarterly GDP for the nine NUTS1 regions of England
• Data sources: VAT, Monthly Business Survey, range of external
suppliers
• Will publish at a section level (A, B, C etc), growth rates with
indices.
Progress:
• Data sources have been finalised. There will be an emphasis on
using VAT data ahead of other data sources.
• System build is ongoing and nearing completion
• Plan to publish in the first half of 2019 – publication date to be
announced in the first quarter of 2019.
• A user consultation will accompany the initial publication.

51. Developments - Regional household
expenditure measures
• In September 2018, we published experimental regional estimates of
household spending across the whole UK for the first time.
• These were aimed at showing users what is possible; the production of
these estimates has involved making some very broad assumptions
using currently available data sources, some of which have limited
sample sizes, and so strong caution is advised when interpreting the
findings.
• Over the next few years, we aim to identify and introduce new data
sources that will allow us to improve the quality of these experimental
figures and further understand how changes in sampling and the
assumptions made can affect the results; we will use these initial results
to consult with users on how best we can develop them in the future.

52. Developments – Regional Prices
• Research funded by ONS investigating the potential to use existing
data sources to develop regional price indices was published in
November 2017.
• This research demonstrated the limits of the currently available data:
whilst measures could be created and over the long-term used to
assess trend inflation by region, there was volatility in the short-
term, driven by erratic changes in weights.
• Further work is taking place to build on some of the findings in the
first report, in particular exploring the potential for small-area
estimation techniques to improve expenditure weights at the
regional level.

53. Developments - Admin-based income
statistics
The admin-based income
statistics (ABIS) bring together
data from the Pay As You Earn
(PAYE) and benefit systems to
derive estimates of net and
gross income.
Please note these statistics are
work in progress and both the
income measure and coverage
are currently incomplete.
However, the ABIS do
demonstrate the future potential
of administrative data sources
to produce detailed small area
income statistics.

54. Economies of Ale

57. Management practices and productivity in Great Britain:
First results from the Management and expectations survey
Professor Paul Mizen
University of Nottingham
and
ONS Fellow
Ted Dolby (ONS), Nicholas Bloom (Stanford), Ted Dolby (ONS), Jenny Vyas (ONS), Paul
Mizen (Nottingham), Rebecca Riley (NIESR), Tatsuro Senga (QMUL) and Philip Wales (ONS)

58. • The UK’s recent labour productivity performance has
been strikingly weak…
58
Motivation

59. 59
75
80
85
90
95
100
105
199419961998200020022004200620082010201220142016
The UK’s ‘Productivity Puzzle’: Q4 2007=100
Source: ONS Labour Productivity
Motivation

60. • The UK’s recent labour productivity performance has
been strikingly weak…
• …the UK’s ‘productivity gap’ remains stubbornly wide…
60
Motivation

61. Motivation
61
GDP per hour worked, UK=100
Source: ONS International Comparisons of Productivity

62. • The UK’s recent labour productivity performance has
been strikingly weak…
• …the UK’s ‘productivity gap’ remains stubbornly wide…
• …while the ‘gaps’ between firms are equally striking…
62
Motivation

63. 63
0.0%
0.5%
1.0%
1.5%
2.0%
-10 0 10 20 30 40 50 60 70 80 90 100
Density, %
Productivity, £,000
Firm-level output per worker, 2015
Source: ‘Who are the laggards?’ Understanding firms in the bottom 10% of the labour productivity distribution
Motivation
Range of productivity per worker
covers -£10,000 to £100,000

64. • The UK’s recent labour productivity performance has
been strikingly weak…
• …the UK’s ‘productivity gap’ remains stubbornly wide…
• …while the ‘gaps’ between firms are equally striking…
• … and the ‘gaps’ seem to correlate with management
practices (at least in US data).
64
Motivation

65. Motivation
65
Decile of Management Practice Score
Productivity Operating Profit Output
Growth
Source: Bloom et al, 2013,“Management in America”, Center for Economic Studies Working Paper, US Census
Bureau

66. Management and Expectation Survey
(MES)

67. Management and Expectations Survey (MES)
Survey of 25,000 firms, covering
private business economy
The sample covers firms in
production and services
industries,
Excludes finance and agriculture
Designed to give representative
results by size-band, industry and
region
12 questions on management
practices

69. Results

70. Mean management results
70
Section result Question result(s)

71. 71
Distribution of management results
Share of
population
80%
11%
5%
4%
100%

72. 0
0.5
1
1.5
2
2.5
3
3.5
0 0.2 0.4 0.6 0.8 1
Density, %
Score
10 to 49 50 to 99 100 to 249 250+ Population
Distribution of management score by firm size
UK’s long lower tail
larger for smaller
firms

73. 73
Share of
population
20%
80%
100%
7%
1%
12%
19%
20%
2%
9%
30%
Distribution of management score by industry

74. Share of
population
95%
5%
55%
11%
66%
34%
100%
Distribution of management score by industry

75. (1) (2) (3) (4)
Log(GVA/worker) Log(GVA/worker) Log(GVA/worker) Log(GVA/worker)
Management score
1.454
***
1.136
***
1.101
***
0.961
***
(0.16) (0.14) (0.14) (0.16)
Log(employment)
0.001 -0.023 -0.081
**
(0.02) (0.02) (0.03)
Family-owned
-0.08
(0.06)
Family-owned and non-family-managed
-0.144
(0.08)
Family-owned and family-managed
-0.017
(0.06)
Foreign owned
0.366
***
0.357
***
(0.06) (0.07)
Industry dummies No Yes Yes Yes
Location dummies No No No Yes
Degree_m dummies No No No Yes
Degree_nm dumiies No No No Yes
Age No No No Yes
Age squared No No No Yes
R-squared 0.075 0.368 0.374 0.412
Observations 7416 7416 7388 6723 75Standard errors in parentheses
* p < 0.05, ** p < 0.01, *** p < 0.001
Productivity and management practices

76. Conditional analysis
Look now at which management practices are more
strongly correlated with productivity

77. (1) (2)
Log(GVA/worker) Log(GVA/worker)
Continuous Improvement
0.378*
(0.16)
KPI practices
0.063
(0.12)
Target practices
0.168
(0.11)
Employment practices
0.497***
(0.13
Q5: Resolving problems with production
0.371**
(0.14)
Q6: Number of KPIs
0.191*
(0.10)
Q11B: Basis for performance bonuses – non-
managers
0.188*
(0.08)
Q12A: Basis for promotion – managers
0.189**
(0.06)
Q14B: Amount of training – non-managers
0.301**
(0.10)
Industry dummies Yes Yes
Location dummies Yes Yes
All individual questions No Yes
R-squared 6714 6324
Observations 0.416 0.413
77Standard errors in parentheses
* p < 0.05, ** p < 0.01, *** p < 0.001
Productivity and management practices

78. Key findings & Next steps
• Substantial variation in management scores amongst UK
businesses
• Management scores are highest among:
 Larger firms
 Not family owned firms
 Multinational firms
 Services firms
• Management practice score is strongly correlated with
productivity
• Employment related practices and continuous improvement are
most correlated with productivity
78

79. Next Steps
• £1.1m ESRC funding 2019-2021 allows analysis of within firm differences in
management practices and productivity.
• RCT trial in which we give different interventions to UK firms that requested
feedback from the first wave MES, before observing the effects in the second
wave.
• Link findings to other activities via administrative datasets (VAT, PAYE, etc),
trade, exporting, innovation and R&D, patenting.
• Make international comparisons with MOPS (US), Ifo (Germany) and Tankan
(Japan)
• Connect management practices to Behavioural Insights (delivery) and Indeed
employment survey (satisfaction)
79