New measures of public sector output

Andrew MortimerShort-term Economic Indicators Branch

andrew.mortimer@scotland.gsi.gov.uk

• Background– Why new measures are required– implementation

• Public administration and defence– Civil service and local authorities– Defence– Public order and safety

• Education– Public sector (to be covered later)– Further education– Higher education

• Health & Social work– Health– Adult social services– Children’s social services

Background

GDP – weights and seriesSector 2003 Weight

(percent)Number of Series

Agriculture etc 2% 7

Oil & Mining 1% 4

Manufacturing 15% 144

Energy & Water 3% 3

Construction 7% 11

Services 50% 78

Public Services 22% 19

Total 100% 266

Historical context• Previous assumption of non-market output = inputs• System of National Accounts 1993 / European

System of National Accounts 1995• Eurostat price and volume handbook (2001)

– ‘A’ methods: multiple direct measures of output, quality adjusted

– ‘B’ methods: Output indicator, not quality adjusted; or multiple quality adjusted input measures for collective services

– ‘C’ methods: Use of single input volume indicators (e.g. employment)

• ONS response to ESA95 – ahead of the game• Atkinson review

Actions• Supply data to ONS for UK National

Accounts.• Replicate productivity analysis for Scotland.• Ensure UK assumptions make sense for

Scotland.• Consider inclusion in Scottish GDP system.• Consider policy relevance of new measures

24th October• New economic target makes Scotland/UK

comparability ESSENTIAL!• Will introduce as many new measures as possible

into the next release of quarterly GDP– Ideally quality-adjusted output– Implement simple output measures if they are

similar to UK– May consider revised input-based methods if they

are an improvement over current estimates.• Improve scope for further incremental improvements.

Public Administration and Defence

Public Administration and Defence

7.2% of Scottish GVA Current measures Proposed measures

Civil Servants – numbers employed FTE employment in Civil Service by grade, weighted by salary.

---DWP also included---

Armed Forces personnel based in Scotland. No change

Number of administrative and clerical staff in NHS

No change

FTE employees in Local Government FTE employment by grade, weighted by salary.

Scottish Police and related services numbers No change

New series: Direct output measures for justice services

FTE employment on Fire Services Direct output measures – numbers of fires attended, weighted cost by type; hours spent

on fire prevention activities; RTAs.

Changes in grade structure of the Scottish Government 1999-2007

1000 800 600 400 200 0 200 400 600 800 1000

A1/A2

A3

A4

B1

B2

B3

BF

C1

C2

C3

Others

SCS

1999 2007

Justice services• Currently not measured explicitly• New cost weighted activity measures:

– Number of convictions:• High Court• Sheriff Solemn• Sheriff Summary• District

– Social work orders:• Probation Orders• Community Service Orders• Supervised Attendance Orders• Drug Treatment & Testing Orders• Restriction of Liberty Orders• Social Enquiry Reports

– Prisons:• Average daily prison populations

Fire services• Currently using staff numbers• New cost weighted activity measures:

– Fire response • 51 distinct measures• Type of residence / industry

– Special services• Road traffic accident• Other

– Fire prevention• No comparable Scottish measures available at this time (number of

hours engaged in fire prevention and community safety)• Low weight• Use UK data in the interim

Education

Education 6.5% of Scottish GVA

Current measures Proposed measures

Primary school teachers/

Secondary school teachers

Direct measure of output: number of pupils, adjusted by attendance and quality

adjustment for changes in attainment.

New measures: special education, teacher training and nursery education.

LA – other education employees Delete: included in output measures

Number of grant-aided and independent teachers

Number of students in independent schools.

Number of teachers in FE colleges Number of students (hours attended), cost weighted by type of course

Number of University lecturers. Number of students in higher education.

Further Education

• Currently Using Staff Numbers.• Further Education Funding Council PIs

– Student Units of Measurement (SUMs)• 40 Hours of Staff student contact.

– Cost Weightings (13 broad course types) are also available.

– Further PIs allow for future quality adjustment • Success and retention measures which depend on nature of

course. (e.g. assessed or non-assessed.)

• Comparable to current UK approach (but better).

Further Education

80

85

90

95

100

105

1999 2000 2001 2002 2003 2004 2005 2006

Current measure Proposed measure

Higher Education• Currently Using Staff Numbers• Higher Education Statistics Agency

– FTE Student Numbers are available and propose to use.– Complete alignment with existing UK measures

• Future refinements:– Quality Adjustments possible in principle but will require further

development– Candidate measures for research activity are less obvious.

Potentially:• numbers of PhD’s awarded; or• deflated research grants and contracts.

Health and Social Work

Health6.2% of Scottish GVA

Current measures Proposed measures

Health: Employees in Employment: NHS

To be determined. Possibly change to deflated expenditure whilst a

direct measure of quality adjusted output is finalised.

GPs Included in above

Dentists Included in above

Private and other health No change.

Veterinary practices No change.

Health services

• Currently use 3 employment series– NHS staff; GP’s and Dentists

• Direct measure of output still in development

• Alternative approach: deflated inputs– 74 distinct measures (staff and supplies)– Deflated at source using unit costs– If used, will lead to minimum change to existing estimates

• Final decision on approach to be confirmed

Social services6.2% of Scottish GVA

Current measures Proposed measures

FTE Employees in LA Social Work Activities

New direct measures of output for adult and children’s services; number

of bed-nights in residential care, number of hours in day care and

domiciliary care, number of referrals etc.

Non-LA employees in Social Work activities

Ditto.

Social services• 10 new direct output measures

– Adults• Care Homes (resident weeks per year)• Home Care (hours per year)• Day Care (sessions per year)

– Children• Secure Accommodation (child-days)• Residential Schools (number of pupils)• Care Homes (number of children)• Adoption Services (number of children)• Fostering/Family Placements (number of children)• Assessment (deflated inputs)• Other Services (deflated inputs)

• Weighted by relative cost of delivering each service

Conclusions

Conclusions

• Significant methodological improvements to be introduced in next GDP release

• Improved comparability with UK methods• Greater scope for future incremental improvements• Too early to gauge full impact

• Further work over next 12 months on:– Direct output measures for Health services– Replication of UK measures of social security output– Quality adjustment of Higher & further education– Replication of future UK developments for Scotland

Discussion

New measures of public sector output

Reserve slides

Atkinson Review - History

• 2003 - No 10 ! • Tony Atkinson – 1 Year’s commission• Interim Report – July 2004• Final Report – January 2005• 54 recommendations to improve the

measurement of public services output and productivity

• Implementation Strategy for Scotland – April 05• Action Plans – updated quarterly• Working teams set up in Scottish Executive.• Established links with ONS UKCeMGA.

Atkinson: summary of key principles

• Principle A: the measurement of government non-market output should aim to follow a procedure parallel to that adopted for market output.

• Principle B: the output of the government sector should in principle be measured in a way that is adjusted for quality of the service delivered.

• Principle C: account should be taken of the complementarity between public and private output – e.g. NHS output increasing private sector productivity.

• Principle E: measures should cover the whole of the United Kingdom; and reflect regional variation in the delivery of public services and/or data collection.

• Principle F: the measurement of inputs should be as comprehensive as possible, and in particular should include capital services – e.g. imputed rent for buildings

• Principle G: Pay and price deflators should be sufficiently disaggregated to take account of changes in the mix of inputs; and should reflect full and actual costs.

Atkinson RecommendationsInput (proxy) Poor

Total Inputs - deflated Better

Output (proxy) Even Better

Total quality-adjusted Output - deflated

Good!