Business Harmonisation Task and Finish Group Meeting Agenda

Tuesday 15th August 2017 at 13:00 to 14:30 hrs

Timing Agenda Item Paper No Presenter 1 1300 –

1310 hrs Welcome and Introductions Gareth James, ONS

2 1310 – 1320 hrs

Review of Previous Minutes and Actions

BHTFG (17:2) 08 Gareth James, ONS

3 1320 – 1330 hrs

Update since last meeting Verbal Ian Sidney, ONS

4 1330-1340 hrs

Update on ONS Data Collection Transformation Programme

Verbal Alison Pritchard, ONS

5 1340-1350 hrs

Disaggregation of Turnover - Activity, Regions & Exports

Presentation Rob Edmunds ONS

6 1350 – 1400 hrs

Discussion on required areas of disaggregation of Turnover

Ian Sidney, ONS and BHTFG

7 1400 – 1415 hrs

Change in Stocks / Capital Acquisitions and Disposals

BHTFG (17:3) 09 BHTFG (17:3) 10

Presentation

Ian Sidney, ONS and BHTFG

8 1415-14.25 hrs

Business Variable Question Bank

Presentation Ian Sidney, ONS

9 14.25 – 14.30 hrs

AOB / Next Meeting Gareth James, ONS

BHTFG (17:2) 08

Minutes of the Business Harmonisation Task & Finish Group (BHTFG) Meeting 7th April 2017

1100 to 1230 hrs ONS, 1 Drummond Gate, London, SW1V 2QQ

Attendees: Apologies: Charlie Wroth-Smith (Deputy Chair) (video – ONS Titchfield)

ONS

Alison Pritchard (video – ONS Newport) ONS Debra Leaker ONS Andreas Mastrosavvas (video – ONS Newport) ONS Debra Prestwood ONS Arlene Connolly (audio – NISRA) NISRA Gareth James - Chair ONS Becki Aquilina (video – ONS Titchfield) ONS Jennifer McLoughlin NISRA Craiger Solomons (audio – Welsh Gov) Welsh Gov Kate Thorsteinsson ONS Daniel Harrison (audio – Scot Gov) Scot Gov Marina Curran Scot Gov Ian Sidney (video – ONS Newport) ONS Paul Downey GDS Mark Williams (video – ONS Newport) ONS Richard Batterham HMRC Robert Edmunds (video – ONS Newport) ONS Selina Matthews DEFRA Robin Griffith (audio – NISRA) NISRA Stephen Jobling (audio – NHS Digital) NHS Steve Dempsey (audio – BEIS) BEIS

Mark Herniman (Secretariat) ONS

1.0 Welcome and Introduction – Charlie Wroth-Smith The Chair welcomed members to the third meeting of the Business Harmonisation Task and Finish Group (BHTFG).

2.0 Review of Previous Minutes (BHTFG (17:1) 04) and Actions – Charlie Wroth-Smith The minutes from the last BHTFG were discussed:

• there were no comments arising from the minutes from the 3rd February 2017 meeting andthese were accepted as a true reflection of that meeting

All the actions were complete except for three which were on-going: • action 5, Ian Sidney to liaise with SSD to coordinate harmonisation work on ‘self-

employment’ – Ian has spoken with Roger Smith and will update the meeting during one ofthe presentations

• action 7, BHTFG members to provide comment on the proposed definitions for ‘hoursworked’ and ‘full-time equivalent’ – it was agreed this action was now complete

• action 11, Charlie Wroth-Smith to draft a dissemination plan for business harmonisationoutputs, ready for the next meeting - will be addressed under item 7 of today’s meeting

3.0 BHTFG (17:2) 05 a-b and Presentation, Update on Progress of ‘Total Turnover’ and ‘Numbers of Employees’ – Ian Sidney The papers were presented adding this was an update to where we are with these topics and if there are no further comments these will be sent to the Steering Group for approval. The following points were discussed:

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• it was agreed there is still some clarity required for ‘Agency Workers’ as there are two kindsof workers involved; those that run the agency and those clients of the agency

• there was some concern the clients of the agency may not be captured, although theyshould be captured as they are paid through the agencies payroll

• BEIS and other departments would be interested in having data /estimates on the numberof ‘Agency Workers’ and ‘Contractors’ who are working in specific industries. It wassuggested that it would be good if these could be collected separately.

ACTION 1 – Ian Sidney to investigate separating ‘Agency Workers’ from the people employed to run the agency

• until this point is confirmed it will not be taken to the Steering Group for approval

4.0 BHTFG (17:2) 06 and Presentation, Approve ‘Number of Hours Worked’ Variables – Ian Sidney Ian presented the paper, highlighting that one of the comments already raised for ‘hours worked’, was that it needs to be collected for a specific time period rather than on a specific date. The following points were also discussed:

• it was agreed a specified minimum period for the variable (inc in the question) is required• there should be guidance stating it needs to be collected over a specific time period• it was agreed a day would be too short a time period and a week was also probably too

short and extra research should be conducted to find a suitable period of time• this may also depend on the survey being conducted and the industry it is aimed at• it was suggested and agreed a month should be the minimum and this should be

researched further

ACTION 2 – Harmonisation Team to investigate one month/four weeks as a suitable minimum time period for collection of the ‘number of hours worked’ variable

• the guidance for the ‘numbers of hours worked’ question is in line with that used on theLabour Force Survey

• for the question on the ‘number of full-time equivalents’, it is suggested we need to specifythis should be for contracted hours and not hours actually worked

• for question wording it was agreed a good choice would be; ‘How many ‘Full-timeEquivalents’ are working in this sector’

5.0 BHTFG (17:2) 07 and Presentation, BHTFG Workplan – Ian Sidney Ian presented the paper, explaining this represents what will be looked at over the next 12-month period and asked members to make comments on anything they feel should be included as it is important this work extends across the GSS. The following additional points were discussed:

• disaggregation of total turnover varies with the sector it applies to, for example withconstruction, is this for houses or industrial building and on the retail side are sales internet sales or sales from within a shop

• for these reasons, it may be difficult to come up with harmonised questions• BEIS are really interested in disaggregating Turnover to show the amount of exports

ACTION 3 – BHTFG members to look at the priorities of the business variables on the list in the presentation and feedback comments to the Harmonisation Team (harmonisation@ons.gov.uk), particularly if there is anything missing or if it needs re-prioritising

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BHTFG (17:2) 08

6.0 Verbal Update – ONS Data Collection Transformation Programme – Alison Pritchard The main points of the update were:

• regarding e questionnaires (online data collection), a number of surveys are now on-line• UK Innovation Survey (BEIS) has been on-line for almost two month and although there

have been teething problems these are getting sorted out• ONS has the Monthly Wages and Salaries, the Quarterly Business Survey and the Retail

Sales Enquiry are also on-line• several workshops have taken place with colleagues in the Economic Statistics

Transformation Programme (ONS) to work out which surveys could be translated on-lineas they are and which need transforming

• there are discussions where some surveys which could be translated now andtransformed later using administrative data

• short-term business surveys will be transformed and moved on-line first, followed by thefinancial sector surveys

• it is also planned to make use of the new Enterprise Architecture and the platforms withinit to enable an ‘end to end’ for retail sales (currently the Retail Sales Enquiry), enlarged abit to include to Motor Sales’ and ‘Wholesale’ and possibly include some sectors currentlynot covered by ONS monthly business surveys

• it is hoped to cover the whole economy, asking them about their total turnover, whichbroad areas of activity they work in and their turnover in those areas

• we should also be asking for exports across the whole economy and testing work for thishas just started and will be finished in the autumn

• Internet Sales – there is a concern it is difficult to identify where sales belong, as youcould be purchasing something from outside the UK (but the goods are shipped from awarehouse/distribution network in the UK) - who should be collecting this information? (UK– where warehouse is or Country in which retailer is resident)

• there was a Globalisation Seminar in Luxemburg on 3 Apr 17, where it was reported theCentral Statistics Office in the Republic of Ireland (CSO ROI) have done a lot of work onthis and are suggesting new indicators covering this

• the Economic Statistics Review Group have published a report (on their website) whichintroduces a new indicator called Gross National Income* (GNI*) which is designed towork out the true GNI of the country instead of the National Accounts rules which uses theconcept of economic ownership

• hope to improve the quality of the data provided on a short-term basis and will beconsulting with BEIS, Bank of England, Treasury, DEFRA and the devolvedadministrations, although this is still in the planning stages

• this is a long-term project, putting the surveys on-line, harmonising the questions andintegrating the administrative data

The following additional points were discussed: • Alison emphasised that these are tentative plans which may change, in line with Agile

Project Management principles• the work ONS has done on the Single Business Register will have a big impact on

business statistics because of providing information on very small businesses which arenot currently included in the Business Register

• the PAYE information on monthly and quarterly earnings will potentially have an impact• we need to be aware of the differences in the definitions and that sometimes gaps in data

may be due to a different definition being used• BRES will continue much as it is, but only for businesses with more than one local unit• within ONS, it is very unlikely that the business surveys will be completely replaced by

administrative data sources

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• transition of surveys and time series are included in the methodological work plan whichwill look at, and try to understand, these and other issues

7.0 Discussion – Dissemination of Harmonised Definitions – Charlie Wroth-Smith A discussion took place around how the ratified harmonised definitions and principles are disseminated. The main elements were:

• it is important the work, once ratified is disseminated correctly across the GSS and peoplestart to use the definitions

• this was one of main points asked by the UK Statistics Authority• a dissemination plan has been developed to promote the harmonised definitions and

questions once ratified, which will be circulated after the meeting

ACTION 4 – Harmonisation Team to circulate the dissemination plan to BHTFG members for comment

• the plan currently includes inclusion on the GSS website, promote via blogs and sending toStatistical Heads of Profession for each department for dissemination downwards

• it is important that all formats for dissemination are thought of so we don’t just promote thefact it’s been ratified but also promote its continued use

• it was suggested Survey Control Units could be informed so they could ensure its take up• a nudge campaign may be useful to promote use – for example, ‘90% of surveys are

harmonised - don’t be one of the 10% that aren’t’• NISRA and the Scottish Government promote such items on their website in the form of

bulletins• it was also thought presentations by the Harmonisation Team on harmonisation in general

may be worth doing (NISRA would like one)• the Harmonisation Team have also developed a Communications Plan, with the aim of

promoting across the GSS and beyond and includes presenting at conferences, events anddepartmental visits

• NISRA run an ongoing seminar series with invited guests to attend and talk to all staffacross the agency and a formal invitation could be sent to the Harmonisation Team

ACTION 5 – Arlene Connelly to send Charlie Wroth-Smith an invite to attend NISRA to do a presentation on Business Harmonisation

• a presentation could be done for the statistical community in the Welsh Government andthe Harmonisation Team should contact Craiger Solomons to get this set up

ACTION 6 – Charlie Wroth-Smith to contact Craiger Solomons regarding the harmonisation Team presenting to the Welsh Government

• the Harmonisation Team are attending the RSS International Conference in Glasgow inSeptember to promote business harmonisation and will be presenting at the GSSMethodology Symposium in July to promote business harmonisation

• the meeting was asked to let the harmonisation team know of any additional ideas of howwe could promote business harmonisation

ACTION 7 – BHTFG members to contact the Harmonisation Team (harmonisation@ons.gov.uk) with any additional ideas for how business harmonisation can be promoted

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BHTFG (17:2) 08 8.0 Any Other Business

• No matters were raised under AOB 9.0 Next Meetings

The date of the next meeting is yet to be agreed (mid to late June) and members will be notified when this will take place.

Annexes:

A. List of Actions B. Presentation Slides – All Presentations

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ANNEX A

ACTIONS FROM THE BHTFG MEETING – 7th APRIL 2017

Action No

Para Action Responsible Status

1 3 Ian Sidney to investigate separating ‘Agency Workers’ from the people employed to run the agency

Ian Sidney Complete

2 4 Harmonisation Team to investigate one month/four weeks as a suitable minimum time period for collection of the ‘number of hours worked’ variable

Harmonisation Team

Complete

3 5 BHTFG members to look at the priorities of the business variables on the list in the presentation and feedback comments to the Harmonisation Team (harmonisation@ons.gov.uk), particularly if there is anything missing or if it needs re-prioritising.

BHTFG Members

Complete

4 7 Harmonisation Team to circulate the dissemination plan to BHTFG members for comment

Harmonisation Team

Complete

5 7 Arlene Connelly to send Charlie Wroth-Smith an invite to attend NISRA to do a presentation on Business Harmonisation

Arlene Connelly

Complete

6 7 Charlie Wroth-Smith to contact Craiger Solomons regarding the harmonisation Team presenting to the Welsh Government

Charile Wroth-Smith

Complete

7 7 BHTFG members to contact the Harmonisation Team (harmonisation@ons.gov.uk) with any additional ideas for how business harmonisation can be promoted

BHTFG Members

Complete

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BHTFG Discussion Paper

Change in Stocks of Goods and Services

This paper has been designed to allow for further discussion on the requirements of harmonised definitions across the topic area ‘Changes in Stocks’ and raises a number of questions which are included within the paper.

Information on stocks is collected via two ONS surveys Quarterly Stocks Survey and the Annual Business Survey and one NISRA survey Annual Business Inquiry

1. What other surveys collect information on stocks / inventories across the GSS?

At this stage we are not considering ‘Financial stocks’

Users of the data

The main user is ONS itself, which uses the data to provide estimates for use in the compilation of two estimates of GDP. The change in inventories, or stock building, is part of final expenditure in the National Accounts. Holding gains on inventories are also used at the detailed level in the compilation of annual current price Input-Output Supply and Use Tables, which determine the level of current price GDP. H.M. Treasury, Bank of England and the Department of Business, Energy, Innovation and Skill (BEIS) use the results for forecasting, analytical and briefing work on the economy wide output and on the company sector.

2. Do other departments use ‘Changes in stocks’ data or do they use the estimatesderived from them, for example GVA / GDP?

Change in Stocks

Inputs - Definitions

This document details three Change in Stocks definitions and defines the term work in progress;

1. Change in Stocks of Goods and Services2. Change in Stocks of Goods and Services purchased for resale in the same condition

as received3. Change in stocks of finishes products and work in progress manufactured by the unit4. Work in progress

The three definitions are derived from those currently used and being developed within FRIBS regulations. ‘Work in progress’ has also been included as a term because it is specifically used in ONS surveys and is defined on these surveys.

1. Change in stocks of goods and services

Definition

Change in stocks (positive or negative) is the difference of the total value of Stocks (inventories) recognized by the statistical unit at the end and at the beginning of the reference period. Change in stocks may be measured by the value of entries into stocks less the value of withdrawals and the value of any recurrent losses of goods held in stocks.

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Stocks are recorded at purchaser's prices exclusive of VAT if they are purchased from another unit, otherwise at production cost. The value of said inventories is the one at which they have been recognized in the financial statements.

Among stocks (and the change in stocks), the following breakdown can be made: - stocks of finished goods

- stocks of work in progress

- stocks of goods and services purchased for resale in the same condition as received,

- stocks of raw materials and consumables.

Included are the stocks of finished products or in the course of production, which have been produced by the unit and which have not yet been sold. These products include work in progress belonging to the unit, even if the products in question are in the possession of third parties. Equally, products held by the unit which belong to third parties are excluded.

Included are the stocks of goods and services bought for the sole purpose of reselling them in the same condition. Excluded are stocks of goods and services which are provided to third parties on a commission basis.

Products purchased for resale and stocked by services enterprises can include goods (industrial equipment in the case of "turnkey" engineering contracts, or buildings in the case of property development, etc.) as well as services (rights to use advertising space, transport, accommodation, etc.).

When services are stocked the services concerned are the output from service activities, rights to use predetermined services, or physical supports for services.

Included also are the stocks of raw and ancillary materials, intermediary products, components, energy, non-capitalized small tools and services which belong to the unit.

2. Change in stocks of goods and services purchased for resale in the samecondition as received

Definition

Change in stocks of goods for resale is the difference of the total value of inventories recognized by the statistical unit at the end and at the beginning of the reference period as items intended for resale to third parties without further processing. The value of said inventories is the one at which they have been recognized in the financial statements.

This variable is defined as the change in stocks at purchaser's prices exclusive of VAT between the end and the beginning of the reference period. The change in stocks may be measured by the value of entries into stocks of products purchased for resale less the value of withdrawals and the value of any recurrent losses of goods held in stocks.

Included in these stocks are goods and services bought for the sole purpose of reselling them in the same condition. Excluded are stocks of goods and services which are provided to third parties on a commission basis.

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Products purchased for resale and stocked by services enterprises can include goods (industrial equipment in the case of "turnkey" engineering contracts, or buildings in the case of property development, etc.) as well as services (rights to use advertising space, transport, accommodation, etc.).

When services are stocked the services concerned are the output from service activities, rights to use predetermined services, or physical supports for services.

3. Change in stocks of finished products and work in progress manufactured bythe unit

Definition

This variable is defined as the change in the value of the stocks of finished products or in the course of production, which have been produced by the unit and which have not yet been sold, between the first and last days of the reference period.

These products include work in progress belonging to the unit, even if the products in question are in the possession of third parties. Equally, products held by the unit which belong to third parties are excluded.

Stocks are valued at production cost, and are valued prior to value adjustments (such as depreciation).

4. Work in Progress

Definition

Work in Progress consists of goods and services that have been partially processed, fabricated or assembled by the producer but that are not usually sold or turned over to others without further processing.

These products include Work in Progress belonging to the unit, even if the products in question are in the possession of third parties. Equally, products held by the unit which belong to third parties are excluded, as are partially completed structures for which the ultimate owner is deemed to have taken ownership, either by the existence of a contract of sale/purchase or because the production is for own use.

3. Any comments on the above working definitions?4. Are there other definitions that should also be included?

ONS collects monthly stocks data across the UK, across a number a range of SIC’s

Difference in form types and guidance (Quarterly Stock Survey)

The form types are designed to collect a breakdown of stocks across a range of SIC’s. The specific breakdown is designed to meet customer requirements and is dependent upon the specific SIC. For example 35100 Energy (Electricity) are asked to breakdown their stocks into Coal, Oil, Gas, Nuclear fuel, Other stock and total stock. The full list of SIC’s and breakdowns of stocks is shown in below.

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Form Types Notes UK SIC 2007 Asset breakdown 0001 / 0002 (NI)

N17T01C 10110 - 33200 Manufacturing

Materials, stores and fuel Work in progress Finished goods Total stock

0003 / 0004 (NI)

N17T03C 05101 - 08990 Mining and Quarrying

Raw materials and consumable stores All other stock Total stock

0005 / 0006 (NI)

N17T05C 35100 Energy (Electricity)

Coal Oil Gas Nuclear fuel Other stock Total stock

0007 N17T05C 35200 Energy (Gas) Natural gas Other fuel Non fuel Total stock

0009 N17T09C 35300 Energy (Steam) Coal Oil Other fuel Stores Work in progress Total stock

0011 /0012 (NI) N17T11C 36000 - 37000 Energy (Water, Sewage and Waste)

Stores Work in progress Total stock

0013 / 0014 (NI)

38 / 39 Materials, stores and fuel Work in progress Finished goods Total stock

0033 / 0034 (NI)

N17T31C 41100 - 43999 Construction

Materials, stores and fuel (dwellings) Work in progress and goods on hand for sale (dwellings) Materials, stores and fuel (non dwellings) Work in progress and goods on hand for sale (non dwellings) Total stock

0052(NI) N17T51C 46 / 47 Total stock 0057 / 0058 (NI)

N17T57C 45111 - 45400 Motor Trade

New vehicles Used vehicles All other stock Total stock

0061 / 0061 TDE

N17T51C / On Form

46 / 47 Total stock

0070 TDE On Form 61 Total stock

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Annual Business Survey (ABS) and Annual Business Inquiry (ABI)

The ABS across all form types only asks for Total value of Stock, and breaks these down into Work in Progress and Goods and Energy bought for resale without further processing. The ABI only asks for the total value of stocks.

All survey’s and form types use the same definitions of stocks although there are some slight variations in the includes and excludes included in the attached Notes for completion based on the SIC receiving the form type.

Examples of questions and guidance

Question Examples – Quarterly Stocks Survey

Taken from 017 0061 Quarterly Stocks Survey (ONS)

Taken from 017 0001 Quarterly Stocks Survey (ONS)

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Guidance notes are given on a separate ‘ Notes for Completion document’ and contain general comments under the heading ‘ Scope of Survey’ and then question specific guidance.

Scope of the Survey

i. This survey covers United Kingdom businesses that are primarily engaged inproduction. The business is the individual company, partnership, sole proprietorship,etc., to which the questionnaire has been addressed, unless specified otherwise onthe front page of the questionnaire. Figures for subsidiaries of the businessaddressed should be excluded, unless specified otherwise on the front page of thequestionnaire.

ii. Stocks should be valued for balance sheet purposes, i.e. the lower of cost or netrealisable value. Stocks should be valued on the basis used in your financialstatements, i.e. on the basis of UK GAAP (Generally Accepted Accounting Practice)or International GAAP.

iii. As the figures are to be used for estimating changes in stocks, it is important that thefigures for the beginning and end of the period should be on the same basis, i.e.covering the same units and using the same valuation method.

iv. Stocks are sometimes known as inventories

Examples of the question specific guidance

Taken from 017 0061 Quarterly Stocks Survey (ONS)

1. Value of stocks held

Include: • All stocks owned and either held by you or currently in transit within the United

Kingdom; • Duty for dutiable goods held out of bond;• The value of any goods let out on hire, only if they were charged to current account

when acquired and do not rank as capital items for taxation purposes.

Exclude: • Stocks you hold that do not belong to you;• All stocks held abroad or in transit on the seas;• Duty on stocks held in bond;• Value added tax, whether paid on purchases or chargeable on sales.

Taken from 017 0001 Quarterly Stocks Survey (ONS)

1. Value of stocks held

Include: • All stocks owned and either held by you or currently in transit within the United

Kingdom; • Duty for dutiable goods held out of bond;• The value of any goods let out on hire, only if they were charged to current account

when acquired and do not rank as capital items for taxation purposes.

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Exclude: • Stocks you hold that do not belong to you;• All stocks held abroad or in transit on the seas;• Duty on stocks held in bond;• Value added tax, whether paid on purchases or chargeable on sales.

1.1 Materials, stores and fuel

Include: • Raw materials and components purchased for incorporation into products for sale;• Consumable stores;• Semi-processed goods;• Office supplies (including stationery);• Packaging materials.

1.2 Work in Progress

• Work in progress consists of goods and services that have been partially processed,fabricated or assembled by the producer but are not usually sold or turned over toothers without further processing.

Include: • Products that you own in intermediate stages of completion (even if not held by you);• Long term business contract balances in line with UK GAAP or International GAAP.

Exclude: • Products in intermediate stages of completion that do not belong to you.

1.3 Goods on hand for sale

Include: • Finished goods;• Any stocks purchased for resale without processing (i.e. merchanted or factored

goods)• Vehicles, plant, machinery, etc. let out on hire only if they were not charged to capital

account when acquired or made.

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Example of question and guidance Taken from 202 1501 Annual Business Survey

NOTE D: VALUE OF STOCKS HELD (EXCLUDING VAT, CONSIGNMENT STOCK AND STOCK YOU DO NOT HOLD TITLE TO) Inventories should be valued on the basis used in your financial statements i.e. on the basis of UK GAAP (Generally Accepted Accounting Principles) or International GAAP. Where long-term contract balances are included in stocks, they should be recorded net of progress payments. Where the outcome of the contract is known with reasonable certainty and a proportion of the contract income has been recognised as turnover, progress payments should be disregarded.

Include

All stocks that you own title to, of goods and materials on hand for sale or processing (other than goods supplied to another party with a reservation of title clause if treated as turnover);

• All stocks owned and held by you in the UK or currently in transit within the UK;• The value of any goods let out on hire, only if they were charged to current account

when acquired and do not rank as capital items for taxation purposes;• Products that you own title to in intermediate stages of completion;• Duty on stocks held out of bond;• Long term business contract balances (with progress payments treated in line with

UK GAAP or International GAAP);• Contracts not yet finalised - commission fees for work carried out;• Building work carried out by yourselves (including finished properties built by

yourselves) with the intention to sell.

Exclude • Duty on stocks held in bond;• All stocks held overseas or in transit abroad;• Products in intermediate stages of completion that do not belong to you.

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Note: Work in Progress consists of goods and services that have been partially processed, fabricated or assembled by the producer but that are not usually sold or turned over to others without further processing. These products include Work in Progress belonging to the unit, even if the products in question are in the possession of third parties. Equally, products held by the unit which belong to third parties are excluded, as are partially completed structures for which the ultimate owner is deemed to have taken ownership, either by the existence of a contract of sale/purchase or because the production is for own use.

Example of question and guidance taken from the Northern Ireland Annual Business Inquiry

4. VALUE OF STOCKS HELD (EXCLUDING VAT)

Stocks should be valued for balance sheet purposes, i.e. the lower of cost or net realisable value. Where long-term contract balances are included in stocks they should be recorded net of progress payments. Where the outcome of the contract is known with reasonable certainty and a proportion of the contract income has been recognised as turnover, progress payments should be disregarded.

INCLUDE: • Materials, stores and fuel, work in progress and goods on hand for sale. (Work in progressconsists of goods and services that have been partially processed, fabricated or assembled by the producer but are not usually sold or turned over to others without further processing); • Raw materials and components purchased for incorporation into products for sale;• Consumable stores;• Semi-processed goods;• Office supplies;• Packaging materials;• Any stocks purchased for resale without further processing (i.e. merchanted or factoredgoods); • Finished goods;• All stocks owned and either held by you or currently in transit within the United Kingdom;• The value of any goods let out on hire, only if they were charged to current account whenacquired and do not rank as capital items for taxation purposes; • Products in intermediate stages of completion that you own (even if not held by you);• Long term business contract balances;• Duty for dutiable goods held out of bond.

EXCLUDE: • Stocks you hold that do not belong to you;• All stocks held abroad or in transit on the seas;• Duty on stocks held in bond;• VAT, whether paid on purchases or chargeable on sales;• Products in intermediate stages of completion that do not belong to you;• Land.

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The question examples given show a range of specific questions and typical guidance that is given. Guidance on all Surveys / form types referred to in this document have the guidance situated away from the survey question.

Questions asking for stock of specific commodity do not give extra guidance i.e. no extra guidance is give to explain gas, or nuclear fuel.

5. Should we be developing harmonised definitions which include other stocksespecially those that collect stocks by volume (not value) for example agricultural stocks, (grain, cattle) and Building Materials Inquiries (Bricks, Slate)?

6. Are there other stocks breakdowns that are currently collected or produced?

7. Are there other stocks breakdowns that are currently not collected but there is auser need?

Ian Sidney ONS August 2017

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BHTFG Discussion Paper

Definitions of Gross investment in tangible non-current assets

Gross investment in tangible non-current assets

Definition Gross investment in tangible non-current assets includes all additions to tangible non-current assets, recognized as such by the statistical unit during the reference period, except any increases from revaluations or reversals of previously recognized impairment losses and from reclassifications (transfers) of other tangible non-current assets.

The additions include, but are not limited to, acquisitions, finance leases, improvements, alterations, renovations, constructions, self-constructions and any capitalized expenses, as allowed by the applicable accounting standards which define the recognition and valuation criteria.

Further explanations to the definition The term “non-current assets” has the same meaning as in the further explanations given to the definition of the variable Total purchases of goods and services. (See Note: Definition of ‘Non-Current Assets’)

A. Gross investment in land

Definition Gross investment in land includes all additions to land, underground deposits, forests and inland waters, tangible exploration and evaluation assets, mining, oil and gas assets and others alike, recognized as such by the statistical unit during the reference period. Gross investment in land is a part of the variable Gross investment in tangible non-current assets.

B. Gross investment in construction and improvement of buildings

Definition Gross investment in construction and improvement of buildings includes all:

a. additions to construction of new buildings for own use (self-constructed),b. acquisitions of new buildings (usually the result of a construction contract, the

beneficiary of which is the reporting statistical unit),capitalized additions, alterations, improvements and renovations to existing buildings (if additional economic benefits associated with them are likely to flow to the statistical unit), recognized as such by the statistical unit during the reference period.

Gross investment in construction and improvement of buildings is a part of variable Gross investment in tangible non-current assets.

C. Gross investment in the acquisition of existing buildings

Definition Gross investment in the acquisition of existing buildings includes all additions to or acquisitions of buildings and similar structures already used (i.e. not new) at the moment of acquisition, recognized as such by the statistical unit during the reference period.

Gross investment in the acquisition of existing buildings is a part of variable Gross investment in tangible non-current assets.

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D. Gross investment in machinery and equipment

Definition Gross investment in machinery and equipment includes all additions to machinery, vehicles, fixtures and fittings, office equipment, computer, communication and network equipment and others alike, recognized as such by the statistical unit during the reference period.

Gross investment in machinery and equipment is a part of variable Gross investment in tangible non- current assets.

E. Gross investment in intangible non-current assets, other than goodwill

Definition Gross investment in intangible non-current assets, other than goodwill, includes all additions to intangible non-current assets, recognized as such by the statistical unit during the reference period, except goodwill.

The additions include, but are not limited to, acquisitions, finance leases, improvements, additions, alterations, renovations, constructions, self-constructions and any capitalized expenses, as allowed by the applicable accounting standards which define the recognition and valuation criteria and wherein the term “goodwill” is also defined.

The term “non-current assets” has the same meaning as in the further explanations given to the definition of the variable Total purchases of goods and services.

While the term “goodwill” is defined in the applicable accounting standards, it is usually equal to the difference between the price paid and the net fair value at acquisition of the subsidiaries consolidated by the parent.

Note: Definition of ‘Non-Current Assets’

Further explanations to the definition The term “current assets” referred to in the definition means any asset which the statistical unit classifies as such, because it:

• expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;• holds the asset primarily for the purpose of trading;• expects to realize the asset within twelve months after the reporting period; or• the asset is cash or a cash equivalent (as defined in the applicable business accounting

framework) unless the asset is restricted from being exchanged or used to settle a liability forat least twelve months after the reporting period.

An asset that does not satisfy any of the above criteria is classified as a “non-current asset”.

In business accounting terms it is also customary to use “short-term” instead of “current” and “long-term” instead of “non-current”.

Ian Sidney ONS August 2017

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Business Harmonisation T&FG

15th A t 201715th August 2017

Update

• Harmonised definitions agreed by NSH SGTotal TurnoverTotal TurnoverEmployment - Number of EmployeesEmployment – Total hours worked / FTE

• Dissemination ongoing• Presented progress on harmonisation at GSS Annual

Methodology Symposium 12th July

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Business Harmonisation Timescales

Total Turnover Disaggregation of Turnover

Capital Ex

Stocks

Hrs Worked/ FTE

No. of Employees

Reporting Period

Purchases

Employee costs

Q2 2017 Q3 2017 Q4 2017 Q1 2018

Disaggregation of Turnover

•Activityo ABS designed to collect across a range of industries

(e.g. Retail, Motor Trade, Wholesale, Shipbuilding, Fishing, Forestry, etc. approx 30-33 different industries)

o MBS – Retail / Production / Services•Regional•Exports

S ifi C t ioSpecific Countries

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Discussion Paper - Change in Stocks of Goods and Services

1. What other surveys collect information on stocks / inventoriesacross the GSS?

2. Do other departments use ‘Changes in stocks’ data or do they2. Do other departments use Changes in stocks data or do theyuse the estimates derived from them, for example GVA / GDP?

3. Any comments on the above working definitions?4. Are there other definitions that should also be included?5. Should we be developing harmonised definitions which include

other stocks especially those that collect stocks by volume (notvalue) for example agricultural stocks, (grain, cattle) andBuilding Materials Inquiries (Bricks Slate)?Building Materials Inquiries (Bricks, Slate)?

6. Are there other stocks breakdowns that are currently collectedor produced?

7. Are there other stocks breakdowns that are currently notcollected but there is a user need?

Capital acquisitions - Disaggregation

Current ‘high –level’ disaggregation on Annual Survey, NISRA and ONS

FRIBS / Eurostat capital acquisitions definitions

• Major Improvements and Construction Work

• Services and Costs associated with Major Improvements and Construction Work

• Transport Assets and Equipment• Computers and Telecommunication

Equipment• Furniture and Office Equipment

y• Gross investment in tangible non-

current assets• Gross investment in land • Gross investment in construction

and improvement of buildings• Gross investment in the acquisition

of existing buildings• Gross investment in machinery and

equipment• Electronic Appliances and Electrical

Equipment• General and Special Purpose

Machinery and Equipment• Fabricated and Other Products• Intellectual Property Assets

q p• Gross investment in intangible non-

current assets, other than goodwill

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Business Question Bank - Project Brief

• Convert all of ONS’ business surveys (includingall form types) to a machine readable format toall form types) to a machine readable format tocreate a shared question library

• Validate ‘scraped’ surveys with survey owners toensure questions are captured correctly

• Once captured the next phase is to begin toperform text analytics to short list similarperform text analytics to short list similarquestions and relevant admin data attributes

Benefits

• Enable harmonisation and rationalisation byidentifying question wording similarities throughtext analyticstext analytics

• Identifying likely candidate survey questions thatadmin data attributes could supplement throughtext analysis

• Provide input into I.T. development to managequestion bank/libraryquestion bank/library

• Direct link to eQ authoring tool• Be a resource for the wider GSS

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Business Question Bank

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Going Forward

• Complete the initial scrapping of ONS survey questions• / guidance including (paper forms and eQ)

• Input all social questions / principles

• Include from questions from across government

• Develop a user focused search tool

• Develop a user friendly interface

• Make the question bank available across GSS andDevolved Governments

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Short-term statistics transformation:Short term statistics transformation:

Disaggregation of turnover –Activity, Regions & Exports

K t Th t i & R b Ed dKate Thorsteinsson & Rob EdmundsData Collection Methodology (DCM)

07/2017

Turnover by activity type

31 / 49 different activities, most were minor (approx 10%) e.g. Property Services (financial v(approx 10%) e.g. Property Services (financial v estate agency)

No overwhelming evidence that a lot of revenue is being missed.

“it depends on the categories - given experience with some of your surveys in the past... we just don't track on that basis”

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Regional breakdowns

Large businesses: even questionable if they can b kd UK EU d /breakdown UK v EU and / or E/S/W/NI

Those that could produce regional figures, do not match NUTS1 boundaries

Data validity and respondent burden issues

Regional breakdowns

• “yes we can, the real answer is why would we”

• “I would like to say a strong no!!”

• “Is it where:

- we operate or who we charge, like your exports?”

- the client is or where the work is carried out?”

• “If asked I may just disconnect this phone call now" (Freight)

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Exports – define export?

• For many, it would be more work, but possible to provide.However, definitional issues arose:

• GB / UK or EEC /EU?

Courier: “Most of our revenue will be classed as exports, eventhough it is not our goods, but someone else's goods”

• Tool hire out to foreign companies: “not really an export.”

• Market research: an export of services for research carried out• Market research: an export of services for research carried outin other countries

• Port company: 'do not export goods, only provide a service' .

Exports - burden

• “we have to provide it for the VAT officeanyway so we’d provide you the same”anyway, so we d provide you the same

• “if it doesn't service any internal purpose it's abit more tedious”

• “Can do Irish exports, but any more than 2 or3 becomes onerous”.