National Statistics Quality Review: National Accounts and Balance of Payments (PDF) was commissioned by the ONS and led by Dame Kate Barker, a non-executive board member at the Office for Budget Responsibility and former member of the Bank of England’s Monetary Policy Committee (MPC), assisted by Art Ridgeway, former head of National Accounts in Statistics Canada.
Overall, the review found that ‘National Accounts data are of a good standard’. The authors endorsed a number of significant improvements being undertaken by the ONS, noting that ‘while, compared with other countries, the ONS National Accounts may not be overall at the leading edge, there are elements which are for example with regard to the measurement of the services sector’.
However, it also identified ‘major challenges’ that lie ahead, for example, implementing the new EU regulation on national accounts (ESA10), and meeting the increasing demand for improved 'flow of funds' data. ‘The recent financial crisis has increased demands on National Accountants across the world for better data on the flows of funds transacted and on financial balance sheets internationally and domestically,’ it explains. The review authors welcome the fact that a joint working group between the ONS and the Bank of England has recently been established, although it says there is ‘a clear requirement for a specific group focused on flow of funds’.
The review notes that ‘Many of the ONS staff seemed to be under continuous pressure’ despite increases in staff numbers. ‘Workload issues are exacerbated by systems shortcomings which required workarounds,’ it continues. A number of improvements to systems and methods are suggested including the establishment of ‘a small team of economists, possibly based in London […] to act as a third pair of eyes.’ The review also suggested establishing a formal external advisory team to consult on methods and processes as needed.
Members of the Royal Statistical Society’s National Statistics Advisory Group (NSAG) contributed their own expertise and opinion to the review’s process. Mike Hughes, chair of NSAG, said: ‘The national accounts and balance of payments are vital to understanding the UK economy, which is why we welcome the Barker Review, which has clearly been appropriately comprehensive and exhaustive.
'We welcome the view that the National Accounts are judged to be of a good standard. Nevertheless, the report makes clear that work needs to be done to ensure that the quality of National Accounts data is maintained in order for them to continue to be fit for purpose.
‘We also welcome the fact that the report highlights the need for adequate resources and fully agree with the authors when they say, “It is vital that resources for the National Accounts, both in terms of finance and more importantly capabilities, are protected if not enhanced in the next public spending round.” Of course, given the complexity of the subject matter, it will take time to fully assess the recommendations of the review and their implications.’
The Society’s NSAG will now work on a more detailed response to the review’s findings.