Non-market output: the view from national accounts David Caplan National Accounts Group, ONS

Non market output The challenge for national accountants The UK experience The issues arising –Concepts –Data –Relationships –Quality

The challenge for national accountants Seeking exhaustive coverage of the economy Value output as equal to sum of inputs –Labour, depreciation and intermediate consumption Traditionally deflate inputs to produce volume measure But assumes no productivity change –Questionable assumption SNA93 and ESA 95 proscribe direct measures of volume

UK experience Introduced some direct measures in 1998 –Health, education and social security administration –“first generation” measures –Noted at the time that developments would be needed –Not well handled by ONS But measures of this nature can never be an all embracing summary of the output of a complex public service National accounts statistics entered the Political domain And then the Atkinson review

Issues post Atkinson Some things improved –Resources –Links with other government departments –Improved conceptual framework Other things revealed on remain

Concepts What are we measuring A particular problem for collective services But may also be true for individual services where there is ambiguity about what is being produced

Data Partial coverage of category Truncated time series Poor timeliness Lack of regular surveys Limited geographical coverage Future proof?

Relationships National accountants do not see the world in the same way as those in charge of delivery –Different concepts of output (education) –Different hurdles for data –Desire to show maximum value

Measuring quality the idea that quality improvements in the public services can be objectively measured and that such a fuzzy concept should be captured in the measurement of national output is absurd. It's absurd that the current measure of productivity does not cover the range of massive improvements that are being seen across the NHS.

Quality issues Likely to be based on outcomes –Much more in this conference Reliability (consistent over time and well measured) Timeliness – may not be available quickly –UK education Confounding with other factors Comprehensiveness of measures Quantifying the effects

Conclusion SNA said –There is no mystique about non-market health or education which makes changes in their volume more difficult to measure than volume changes for other types of output such as financial or business services. But –No units or prices –Changing policies –Policy environment –Data difficulties Maybe the authors of the SNA were over- optimistic.