Executive Director, Atkinson Review Measurement of Government Output and Productivity for the National Accounts “The Atkinson Review” Measurement of Government Output and Productivity for the National Accounts “The Atkinson Review” Joe Grice Executive Director, Atkinson Review

Subject of Review = National Accounts Purposes and Limits of National Accounts Macro-economic management Measurement contribution of economic activities to welfare Coherent with, but different from, micro-measures of efficiency of service providers or agency targets

Timetable UK National Statistician, Len Cook, commissioned Review, December 2003 Interim Report published, July 2004 Final Report will be published January 2005

A Long-Running Story European Implementation Conventional Approach Output = Inputs Assumes zero productivity growth SNA 1993 approach DIRECT measurement of output European Implementation ESA 1995 Handbook on price and volume measures in national accounts 2001 EU Decision of 2002

ONS Programme of Introducing Direct Output Measures 1998-

Key Findings of Interim Report ONS among the first to introduce direct measures, but “first generation” methods need to be refined (as already in health). Interim Report sets out a principled approach within the framework set by international guidelines. Important to improve measures of government inputs as well as outputs. Need for increased statistical resources to be allocated to measuring government outputs and inputs

Principles Output Output should be measured by incremental contribution to individual or collective welfare ie the added value of service concerned Start from services provided, and seek indicators that give full coverage. Value should be seen as adjusted for quality. Formal criteria should be established for extending direct output measures to further services. Measures should cover the whole of the UK.

Added Value Input Activities Output Outcome Parallel with market output Measures incremental contribution to individual or collective welfare Value depends on quality and context

Principles Inputs and Productivity Measures of inputs should be as comprehensive as possible, and should include capital services Consideration should be given to the 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”

Triangulation Outputs Inputs … we need to work on all three. divided by = Productivity Inputs … we need to work on all three.

Necessary Work Programmes (1) Review has already established work programmes with Departments covering key areas Report sets out questions that need to be addressed in each field.

Necessary Work Programmes (2) Health: improved measures introduced in June 2004; further work on quality adjustment , UK coverage, GP usage; productivity article to be published Education: improved volume and attainment measures, exploration of quality adjustments, and value of education approach, possible satellite account. Public Order and Safety: work on division between collective and individual services, alternative output measures, UK coverage Social Protection: work on improved coverage, UK coverage, relation with market sector.

Final Report (1) To be published in January 2005 Will draw on responses to Interim Report and discussions with international organisations and national statistical agencies

Final Report (2) Will revise and refine properties from Interim Report Will report progress on the key agendas… …and propose ways forward in each case * * * * * * * * * * Then for Len Cook, as UK National Statistician, to decide whether to accept recommendations