Headlines: December 5th, 2003

The assessment of public service productivity by the Office for National Statistics published in June this year was heavily criticised for its simplistic approach. The Office has responded by launching a review of the future development of measures of government output, productivity and associated price indices. The review will be led by Sir Tony Atkinson, Warden of Nuffield College Oxford. He previously was Professor of Economics successively at Essex University, University College London, the London School of Economics and Cambridge University. He will be supported by a team made up from ONS staff and staff seconded from the Bank of England and the Treasury, supported by statisticians, economists and analysts from government departments responsible for the relevant public services.The assessment published in June concluded that public service productivity was declining. This was based on evidence that between 1995 and 2001 government output went up by 11 per cent while the volume of its inputs rose by 14 per cent. The unreliability of this form of reasoning was demonstrated from a number of areas. In education for example, improved exam results is an outcome which might result from better teaching, but other factors influencing the situation include the existence of the internet, better public libraries and more support from parents.

The review will look at methodologies for the measurement of output and productivity. They will take into account differences in the nature and quality of outputs, the relationship between outputs and social outcomes and the need for comparability with measures of private sector services output and costs.

The UK is a world leader in the measurement of government output. It is one of few countries to follow best practice as set out in international guidelines. In 1998 the ONS began measuring output directly, rather than from the amount of money spent on producing it. The review will take this work forward. An interim report will be published in June 2004 and the 7 final report in January 2005.