Independent Review of UK Economic Statistics - Gov.uk

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Independent Review of UK Economic Statistics Professor Sir Charles Bean

March 2016

Independent Review of UK Economic Statistics Professor Sir Charles Bean

March 2016

ii  Independent Review of UK Economic Statistics

Contents Chapter 1: Introduction and overview Background to the Review A vision for the future provision of economic statistics Recommendations: Measuring the economy Recommendations: ONS capability and performance Recommendations: Governance of statistics Content outline Chapter 2: Measuring the modern economy – established challenges Measuring GDP Measuring services Measuring financial inter-connectedness Regional statistics Measuring the labour market Physical capital Land market statistics Addressing established statistical limitations Chapter 3: Measuring the modern economy – emerging challenges

1 1 6 8 10 13 15 19 19 35 42 47 50 58 62 68 71

Value added in the digital modern economy 71 The sharing economy 91 Intangible investment 98 Accounting for quality change 106 Understanding the international location of economic activity 112 Keeping abreast of an evolving economy 116 Chapter 4: Effectiveness of ONS Recent history of ONS ONS resources Recent ONS performance Culture, Capability and Collaboration Survey data sources Administrative data and alternative data sources

121 121 124 130 137 156 162

Contents iii

Data science capability Technology and data infrastructure Dissemination of ONS statistics Chapter 5: Governance

167 176 180 191

Background to the current governance arrangements 192 Independence 195 Quality assurance and improvement 201 Prioritisation 207 The role and effectiveness of the UKSA Board 210 Oversight of UKSA 217 Annex A: List of tables and charts

221

Annex B: Acronyms

223

Annex C: Terms of reference

226

Annex D: Call for evidence

227

Annex E: Call for evidence respondents

231

Annex F:

234

Stakeholder Engagement

Annex G: Bibliography

238

Chapter 1: Introduction and overview  1

Chapter 1: Introduction and overview

Background to the Review 1.1

On 10 July 2015, as part of the government’s productivity plan,1 the Chancellor of the Exchequer, George Osborne, announced an independent review of UK economic statistics. The Terms of Reference of the Review are to: • Assess the UK’s future (economic) statistics needs, in particular relating to the challenges of measuring the modern economy (‘Needs’); • Assess the effectiveness of the Office for National Statistics (ONS) in delivering those statistics, including the extent to which ONS makes use of relevant data and emerging data science techniques (‘Capability’); • While fully protecting the independence of UK National Statistics, consider whether the current governance framework best supports the production of world-class economic statistics (’Governance’).

1.2

The Review was prompted by the growing difficulty of measuring output and productivity accurately in a modern, dynamic and increasingly diverse and digital economy. In addition, there was a perception that ONS was not making full use of new data sources and the continuously-expanding volume of information that was becoming available about the evolution of the economy, often as a byproduct of the activities of other agents in the public and private sectors. Finally, frequent revisions to past ONS data, together with several instances where series turned out to be deficient or misleading, had led to a perception in some quarters that official data were not as accurate and reliable as they should be.

1.3

The Review has been undertaken by Sir Charles Bean, Professor of Economics at the London School of Economics and formerly Deputy Governor for Mon