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Business case development and benefits quantification Neil Townsend 25 November 2012.

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1 Business case development and benefits quantification Neil Townsend 25 November 2012

2 Contents Why do we need a business case? What we did for 2011 Census Plans for Beyond 2011 business case development Role of users

3 Why do we need a business case? Beyond 2011 Programme will deliver a recommendation for future method to deliver population and socio- demographic statistics This recommendation will need to be underpinned by robust business case to secure funding to implement that recommendation. HM Treasury will want to see evidenced economic case £ value of benefits > £ costs Not straightforward for statistics ONS’s core funding did not cover the 2011 Census A business case had to be made for 2011

4 What was done for 2011 Census? Looked at funding allocated using Census data by Department of Health and Office of Deputy Prime Minister Worked out what the funding allocations would be using the next best alternative to the Census This gives different hypothetical allocations that are less efficient – funds are not being allocated in the way intended and there is a loss to society LA One gains £1m at the expense of LA Two, they will spend it on less beneficial services than LA Two cuts so overall society loses (but not by £1m) Hypothetical misallocation amounts to £9bn over ten years lost benefit is £446m

5 2011 Census business case Value of more efficient allocation = £446m over ten years Value of benefit to private sector market researchers (Census data used in their products) and supermarkets due to more profitable store locations = £274m Total benefit = £720m Cost = £432m so clear economic case Quoted other case studies but without quantified benefits

6 Key changes affecting benefit of population statistics (1 of 2) Changes in government policy in England reduces scale of benefit to central government departments Health allocation to Clinical Commissioning Groups largely according to registrations with GPs not population characteristics of the area CLG allocating less funds (c£27B) than ODPM did with 2011 business case (c£44B) and proposing to freeze allocations for 7-10 years Private sector uses Internet makes store location less important For market researchers, ONS population data is good (it’s free to them) but bad (it’s free to everyone else)

7 Key changes affecting benefit of population statistics (2 of 2) Relative costs With a Census... there’s high fixed costs (for example distributing, collecting and scanning/processing returns) Marginal cost of extra questions is low, we moved from 3 to 4 pages per person for an extra £30m in 2011 If we can produce population estimates without a Census... The marginal cost of attribute questions becomes much higher

8 What we need to do... Current economic climate means business case will get more scrutiny than last time. We will need to demonstrate the benefits clearly outweigh the costs to do more than the minimum necessary to meet legal requirements. We expect the case for producing population estimates to Local Authority level to be strong use in economic statistics (denominator for GDP, unemployment) But the case for producing attribute and lower level data will be harder: need the help of users to make this case (if there is one)

9 Assessing value What are the things that add value to the user? Type of outputs produced (population units, univariate and multivariate attribute data, information about sub-groups). The geographical level they are produced at (LA, MSOA, LSOA, OA) How valuable they are will be determined by a number of criteria, most significantly Accuracy Frequency

10 Three levels of quality standards for population attributes LA data annually MSOA data rolling 3 years LSOA data rolling 5 years Increasing quality will cost more. If we’re going to recommend a higher cost and quality option, we’ll need evidence from users about the value of the extra benefit. In particular, the case for OA data. LA, MSOA, LSOA and OA data every 10 years LA and MSOA every 10 years Greater frequency Greater accuracy and geographic detail

11 Questions for users (1 of 2) What is the minimum level of accuracy at national, regional, LA, MSOA, LSOA and OA levels for overall population, univariate and multivariate population attributes that you judge acceptable? If ONS did not provide data at lower level what would you do instead? Can you estimate the financial consequences? How much would you be willing to pay to continue to get the same level of local population and housing data as provided by the Census? With options that provide more frequent attribute data at higher geographic levels but less data at detailed geographic levels; how does the benefit of greater frequency compare with the loss of local detail?

12 Questions for users (2 of 2) How has the analysis of small area information derived from Census data helped in business decisions? For health and local authority users in particular: What plans have you got in place for analysis of 2011 Census data to inform changes in spending allocations? How does small area population data help inform decisions on planning, economic regeneration, transport, housing, education, social services and other services?

13 Approach Today Improve understanding of data uses and their value Going forward Work with users to value their use of data. We have the economists, need your knowledge/advice to help quantify financial benefits Need to get good understanding of benefits by summer 2013.

14 Contacts Neil Townsend neil.townsend@ons.gsi.gov.uk 01329 444252 Carol Harrison carol.harrison@ons.gsi.gov.uk 01329 444219 Neil Davies neil.davies@ons.gsi.gov.uk 01329 444484

15 Breakout session Complete templates Use Variables Geography – what do you REALLY need – level of use ?? Frequency – for which would you trade small area for frequency Value – and evidence ???? Uses of population statistics – WHERE QUANTIFIABLE BENEFIT Uses of low level attribute data – WITH VALUE IF AT ALL POSSIBLE MAKE THE CASE FOR WHAT YOU MOST CARE ABOUT


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