National statistician Len Cook has welcomed the final report of
the Review of the Measurement of Government Output and Productivity
'I am very grateful to Sir Tony Atkinson for his report, published
today. Like the interim report in July, it explains complex technical
issues with great lucidity, grounded on economic principles and
international guidance. It is a major contribution in its field, both
domestically and internationally, and will be widely regarded as
Mr Cook went on to say that it was already clear that a critically
important agenda lay ahead:
'The recent discussion on measures of public sector activity, and the
conclusions of this report, confirm my own view that key statistics
that measure public sector activity have a sensitivity in public life
in the UK that is comparable with that of the retail prices index. I
want to provide an outline of what actions the report will lead to,
and I hope this note will provide an indication of the broad
direction I expect that it will take.
'I am already clear that the broad way forward that Sir Tony Atkinson
recommends, with the cautious approach he has advised, is the right
one. The way ahead is to build carefully and steadily on the first
generation methods ONS has already put in place. I want to begin now
to meet the challenge posed by Sir Tony Atkinson's report, but I
recognise the breadth of engagement and collaboration necessary to
advance with the caution needed.
'To provide a way of both concentrating and delineating our work in
this sensitive area, we will create a new UK centre for the
measurement of government activity within the Office for National
Statistics. It will work to coordinate and drive forward the work
that is now needed, in combination with experts in government
departments and public services in all of the countries of the United
Kingdom, and with experts outside government.
'We are seeking to have the centre become one of a few European Union
centres of excellence on statistical matters, so that the wider
interests of EU statistics are recognised, as well as the pooling of
expertise on an issue all the countries share concerns about.
'This report reinforces the international guidance on national
accounting, maintained and promulgated by the United Nations, OECD,
Eurostat, the IMF and the World Bank, by making much more transparent
the current limitations in practice, method and concepts with which
we work. These need to be resolved, in order for the UK to meet the
international obligations we face, especially the requirements
embodied in the European Commission Decision of 17 December 2002.
'I fully agree that it is essential that the work that this report
inspires for the UK National Accounts methodology in respect of
public services has to remain firmly within this international
guidance on national accounting. Indeed, much of the new thinking
will need to build its credibility through application in other
statistics, such as satellite accounts, before being incorporated in
the National Accounts themselves.
'Confidence in the condition of the UK economy rests in part on a
variety of decisions taken in monetary policy by the Bank of England,
in money and commodity markets, and by global investors, in response
to what the National Accounts tell us. It is essential for the
National Accounts of the UK and for the international framework for
national accounts, that they retain their authoritative status and
'I would always want to reinforce Sir Tony Atkinson's emphasis, in
chapter 7 of his report and elsewhere, on the need for proposed
changes to methodologies not only to be conceptually well based, but
also to be implemented carefully and transparently, and only after
'The report was initiated by me. I did so because of my concern that
there were a variety of constraints on the level of analysis that we
could draw from the National Accounts about government activity.
Constraints on the availability of relevant information and access to
it, perceived limitations in existing methods, and the absence of an
international or EU consensus about the application of practices that
would be needed to meet our obligations under the European Commission
Decision of 17 December 2002, had become particularly important.
'In his report, Sir Tony Atkinson has amplified and enriched our
understanding of those concerns, and has set out a context for them.
It has not only outlined the scale of activity, and a path for their
resolution, but the review process itself has generated solutions
that have had immediate application. We have a path to extend
continually the quality, range and depth of analysis of sector
specific measures of government activity, and to demonstrate their
relationship with other published measures.
'The National Accounts can never give a fully comprehensive and
detailed account of government performance, neither in aggregate, nor
for individual sectors and institutions. A comprehensive and detailed
assessment of public sector performance would have to include many
facets that will never be included in how the national accounts
measure the activity of government.
'Any comprehensive and detailed account would in practice include
information which is essentially both managerial in nature, and
reflects aspects of targets and commitments of ministers. These are
never likely to be embraced in international frameworks such as
national accounts, which have to meet conflicting needs of
international comparability and national relevance.
'Critical in delineating the current boundary between what the
national accounts measure in practice and what they should measure in
theory, and the scope of any comprehensive account of public sector
performance, is an ongoing assessment of the change in quality of
government services, in either direction.
'Sir Tony Atkinson's report has enriched our understanding of the
various forms of quality change, enabling us to better understand and
anticipate the tensions between policy and methodology. We face very
different issues in methods, and of confidence in the selection of
methods, when we consider quality change involving individual
services, from when we assess the impact of changes in several
services on the quality of outcomes experienced by the public. We are
now more able to plan and explain changes in the first; in the
latter, we will need first to proceed outside of the National
'It has long been the practice that statistical experts, in the light
of the international guidance, resolve decisions regarding technical
issues in the National Accounts. Accordingly, it is my responsibility
as national statistician to uphold the continuing integrity and
acceptance of the National Accounts. That is a fundamental duty
applying across the accounts as a whole.
'However, it is clear that the methodology and statistics relating to
the public services are of such sensitivity that some additional
means are needed to underline and buttress their integrity. It is my
job to establish these, with the appropriate consultation in doing
'To that end, I have already announced, in my letter of 21 December
2004 to David Rhind, the chairman of the Statistics
Commission, the procedure I intend to adopt in respect of this year's
Blue Book, consistent with the National Statistics Code of Practice:
* Where changes are proposed which amount to incremental improvements
to existing methodologies, they will be subjected to ONS's normal
rigorous quality assurance process. Proposals that pass the quality
assurance process will be published with full details of the
methodologies and the associated data. The National Accounts
themselves, however, will be changed only at the time of the
publication of the annual Blue Book, in the summer, in accordance
with normal procedures. The sort of changes that would be considered
in this way for the Blue Book of 2005, released in June 2005, are at
most likely to involve the list given. I have today written again
to Professor Rhind with further information and details.
* Proposed improvements which represent more radical changes to the
current methodologies will be treated under a different procedure. In
such cases, I would expect the proposals to be published so that they
can be subjected to public scrutiny and expert debate. Only after
this would proposals, amended as necessary in the light of that
debate, be put to the normal quality assurance process. If and as
appropriate, such changes could then be incorporated into the
National Accounts at the time of future Blue Books.
'In addition, to enhance my capacity to discharge my responsibilities
to decide on complex and/or contentious issues relating to the public
services, I will be appointing a professional advisory board
consisting of acknowledged experts of the first rank, alongside the
leading national accounts experts already preparing UK National
Accounts. The advisory board will give the new ONS Centre on the
Measurement of Government Activity support from expertise of the
highest professional calibre. It will be able to offer challenge and
guidance in what is both a technically difficult and politically
'I will also be considering whether there are other ways in which my
own independent assurance can be enhanced so that the confidence in
the integrity and professional basis of methodological choices that
exists in other areas of the work of ONS is seen by all major
interest groups as continuing in this more politically sensitive
1. The Atkinson Review was commissioned by the National Statistician
in December 2003. Its terms of reference were published in an ONS
Press Notice of 4 December 2003.
2. These include a requirement to publish an interim report in July
2004 (actually published 19 July 2004) and a Final Report in January
2005. Sir Tony's report published today meets that requirement.
3. The review was commissioned by the National Statistician, as a
professional matter, not by the government. Sir Tony's report is
accordingly addressed to the National Statistician and it is
similarly for him to respond to it.
4. Sir Tony's report sets out the principles he recommends should
underpin future work in the measurement of government output and
productivity. It makes specific proposals for improving ONS output
measures in health, education, public order and safety and social
protection. It also recommends broad approaches for developing the
measurement of the output of public services which will improve the
accuracy, coverage and interpretation of figures, with publication of
methods and figures to ensure transparency and debate on ways of
achieving further improvements.
5. Len Cook wrote to Professor David Rhind on 21 December 2004
setting out the procedure he intended to adopt in respect of this
year's Blue Book. Mr Cook has written to Professor Rhind again today
with further details. These letters are available at
6. Joe Grice, deputy head of the government economic service and
executive director of the Atkinson review team, will be the executive
director in ONS of the new Centre for the Measurement of Government
ATKINSON REPORT ON MEASURING GOVERNMENT OUTPUT AND PRODUCTIVITY PUBLISHED TODAY
'Public accountability requires measures of what is achieved by
spending on public services', Sir Tony Atkinson said today,
publishing his independent report on measurement of public services
output and productivity. 'We cannot simply assume that outputs equal
inputs in such a major part of the economy. ONS has taken the right
route, but needs to develop further, under a principled framework.'
The report, commissioned by national statistician, Len Cook in
December 2003, makes 54 recommendations on how to improve the
measurement of public services output and productivity, which is a
fifth of total GDP. These include nine principles to provide the
framework for methods to measure public services.
Sir Tony stressed the importance of a principled approach to
measurement of output and productivity in this sensitive and
important area. 'In that way', he said, 'we can take a coherent
approach to the difficult methodological issues involved, while at
the same time providing a defence against unwarranted political
intrusion into technical measurement issues. Many of our
recommendations set out a clear process for documentation, expert
review and transparency, so that development work is made public and
the limits of official measures are clearly understood.'
Sir Tony said: 'The method of measuring government output can make a
considerable difference to the recorded growth rate of the economy.
The UK growth rate 1995 - 2003 would have been about 1/4% a year
higher if the old input method had been used, and this would have
halved the gap between the UK and the USA - who don't use output
measures. But the UK methods are better - we don't capture the value
of services to people who use them if we only count what is spent.'
Sir Tony commented on key points from the Report:
'The traditional Output=Input convention, from which ONS has properly
moved forward in recent years, does not capture the complex workings
of the public sector and the UK cannot return to using this
convention. We have also set out the shortcomings in current input
measures and recommended improvements. We want senior officials to
understand the importance for the National Accounts of accurate
measures of public spending.
'Direct measures of output should be used. There is an intrinsic case
based on public accountability for seeking to measure what is
achieved by spending on public services. We cannot simply assume that
outputs equal inputs in such a major part of the economy. To fail to
measure the output would be to miss the essential complementarity
between public services and private economic growth.
'There is a need for major improvements in indicators used to measure
public service outputs. Current indicators have been too limited in
their coverage of activities, have been aggregated at too high a
level and have often used data from England, not the whole United
Kingdom. In some cases they have been misclassified or affected by
changes in the machinery of government. They often use information
with a substantial time lag.
'Measurement of government output, should, as far as is possible,
follow methodology parallel to that appropriate for the private
sector. In essence, what we are trying to measure is the same for
'The measurement of quality is central to our concerns. We are firmly
of the view that measures of output growth should take account of
quality change. Quality has many dimensions, and some will prove
elusive, but there are several possible ways forward. If quality
adjustments cannot be comprehensive, they should be representative of
the range of dimensions. This will not always be straightforward and
may take some time.
'Productivity change is extremely complicated to measure. No single
number, however carefully constructed, can fully capture the
performance of complex public services with multiple objectives.
Productivity change should be interpreted in the light of a range of
other information - the triangulation principle.
'This review is part of a dynamic process. We fully support the
significant revisions to the health indicators carried out by ONS in
June 2004, and work is well under way in other fields. While our
remit was for the UK, we strongly urge joint learning and development
with other countries, to underpin international comparability of
'We urge ONS and departments to be transparent, engaging the
substantial expertise of academic and regulatory bodies, and others
with a legitimate interest. It would be highly regrettable if
objective study of a matter of public importance were to be inhibited
by misunderstanding and public criticism of figures that are clearly
Sir Tony's report also includes specific recommendations for the way
forward in the key areas of health, education, social protection, and
public order & safety. In each case, these build on work currently in
progress and on what has been achieved so far. Main proposals are:
* Better measures for primary care
* Movement towards measuring whole courses of treatment
* Ideas for measuring quality change in health care
* Measure pupil attendance not pupil numbers
* Update the quality measure for schools as an interim measure
* Develop new extended quality measure, which might include measuring
the value of education through increased earnings
* New measures for output of initial teacher training and publicly
funded nursery places
Public order and safety
* More detailed measures for the criminal justice system, with
possible quality adjustment to reduce the value accorded to
overcrowded prison cells
* Measure fire output on basis of weights which reflect the cost to
the community of fire
* Further development of measures of the output of the criminal
justice system as a whole
* Wider and more detailed coverage in the measure of adult social
* Extension of the children's social services output measure
* Development work on quality adjustments for social services
* Update the index for social security administration, including
adjustment for accuracy and timeliness
1. The independent review of the measurement of government output in
the National Accounts was commissioned by National Statistician, Len
Cook, in December 2003, with a final report to be produced by the end
of January 2005. An interim report was published on 19 July 2004.
2. The terms of reference of the review set out by the National
'To advance methodologies for the measurement of government output,
productivity and associated price indices in the context of the
National Accounts, recognising:
* the full scope of government outputs;
* differences in the nature and quality of these outputs over time;
* the relationship between government outputs and social outcomes;
* the need for comparability with measures of private sector
services' output and costs;
* the existing work of the Office for National Statistics (ONS); and
* the appropriate measurement of inputs, including quality and the
distinction between resource and capital, so that, together with the
measurement of output, light can be thrown on developments in
3. Sir Tony Atkinson has been Warden of Nuffield College Oxford since
1994. Previously he was Professor of Economics successively at Essex
University, University College London, the London School of Economics
and Cambridge University. His main research interests are welfare and
public economics on which he has published extensively. He served as
a member of the Royal Commission on the Distribution of Income and
Wealth, the Pension Law Review Committee, and the Social Justice
Commission. He was a member of the Retail Prices Index Advisory
Committee between 1984 and 1990.
4. Sir Tony has been supported by a team of staff from the ONS, the
Treasury, Department of Health and the Bank of England, directed by
Joe Grice, Deputy Head of the Government Economic Service, and Aileen
Simkins of the Department of Health. The team consulted extensively
with ONS National Accounts Group and worked with officials in the
spending Departments, Devolved Administrations, and the Treasury. The
review team also consulted international statistical bodies, other
national statistical offices who are working actively on measurement
of public service outputs for national accounts, and with a wide
range of other experts and stakeholders.
5. The Final report benefited extensively from comments received on
the Interim Report published in July.
6. International guidelines on the measurement of government output
are set out in the United Nations System of National Accounts (SNA)
and the European System of Accounts (ESA). This review will
consolidate the UK's position at the forefront of government output
measurement, and its conclusions will influence the future shape of
the SNA and ESA.
7. Announcing the review on 4 December 2003 [ref], National
Statistician Len Cook, said:
'The UK is a world leader in the measurement of government output. It
is one of very few countries to follow best practice as set out in
international guidelines. In 1998 we began the task of measuring
output directly, rather than from the amount of money spent on
producing it, that is from the inputs. The review will take this work
forward taking account of changes in economic and social structures,
technology, institutional arrangements and analytical techniques that
have taken place in recent years.
'Since 1998, the amount of resources allocated to public services has
increased. Delivery and management mechanisms have developed and are
more complex. There is an increasing emphasis on the quality of
service for the customer. As a result there are greater demands on,
and expectations of, measures of government output. This is reflected
in increased interest in government performance indicators more
'It is essential that National Accounts measures keep up with these
developments and that the UK continues to be at the forefront of
measurement issues. I am delighted that Tony Atkinson, one of the
world's leading economists, has agreed to help us do this and
establish the future strategic direction for statistics in this
The full text of the announcement can be found at
Press release from the Scottish Executive follows:
The final report of the Atkinson Review examining the measurement of government output and productivity was published today.
Public service reform minister Tom McCabe said it will make a significant contribution to the accurate measurement of public sector productivity in the UK and Scotland where the Executive participated fully.
Mr McCabe said:
'The Executive is committed to improving the delivery of public services and ensuring we spend taxpayers' money wisely.
'We are already making progress in measuring what we and the wider public sector do and this process will continue with our Efficient Government initiative.
'This report will undoubtedly make a significant contribution to the measurement of public sector output and productivity in the UK. The Scottish Executive has been working closely with Sir Tony and his team throughout the whole review process and this features in his final report.
'It is important we play a full part in this work that is going on at the UK level. The UK National Accounts should fully reflect activity the Executive is undertaking here in Scotland and we will continue to work with the Office of National Statistics to ensure that happens.
'Drawing on this work, we will aim to introduce enhanced measures of public sector activity specifically for Scotland. I completely support the view of the report that any statistical methods we use have to be robust and implemented in a transparent way after rigorous scrutiny.'