HC Deb 13 May 1991 vol 191 cc19-21W
Mr. Wray

To ask the Chancellor of the Exchequer what changes are proposed to the methods of monitoring of the economy; how he proposes to ensure that such changes will reflect objective and reliable data; and how the retail prices index will reflect what ordinary people are paying for more expensive and less expensive goods and services.

Mr. Maples

A comprehensive statement on the current state of official economic statistics was submitted by the Central Statistical Office to the Treasury and Civil Service Select Committee on Wednesday 24 October 1990—see HC 671, Session 1989–90.

The memorandum gave details of an important package of measures to improve the reliability of economic data which the Central Statistical Office is now implementing. This package was announced to the House by the then Chancellor of the Exchequer on 17 May 1990, at column 172 . It is directed towards improving the quality of both the gross domestic product and the balance of payments estimates. In this context it has three major objectives.

  1. (i) Reducing revisions to early estimates of both gross domestic product and the overseas current account by extending the range of quarterly sources;
  2. (ii) Improving the accuracy and coherence of the measurement of gross domestic product through strengthening the weaker elements in the estimates;
  3. (iii) Improving the accuracy and coherence of the financial accounts including the overseas or balance of payments accounts.

The range of quarterly information available is being extended in two ways to improve the reliability of the latest estimates. First, gaps in quarterly coverage are being filled by new statutory quarterly inquiries. Secondly, existing voluntary inquiries are being replaced by strengthened statutory inquiries, which have been found to be more effective in providing reliable estimates. Specific measures aimed at improving estimates of gross domestic product include:

  1. (i) New quarterly turnover inquiries for the service sector;
  2. (ii) Statutory inquires replacing voluntary inquiries into stocks and capital expenditure;
  3. (iii) The voluntary Inland Revenue inquiry into company profits being replaced by a statutory CSO inquiry;
  4. (iv) A new quarterly labour force survey together with other measures to improve employment statistics, and
  5. (v) Improvements to construction statistics.

Other measures are aimed at improving balance of payments statistics and the financial accounts. These include:

  1. (i) New annual and quarterly inquiries into overseas trade in services;
  2. (ii) A survey to assess the reliability of overseas trade valuations;
  3. (iii) Voluntary quarterly inquiries into inward and outward direct investment being replaced by statutory inquiries;
  4. (iv) An annual share register survey;
  5. (v) A new annual inquiry into the financial assets and liabilities of large companies;
  6. (vi) A review of the sectoral analysis of banking flows;
  7. (vii) An investigation of the impact on the financial accounts of institutions in the Isle of Man or the Channel Islands, and
  8. (viii) A review of balance of payments statistics to be completed in July of this year.

Some of these measures have already contributed to improvements in the quality of economic statistics and the others will contribute to further and sustained improvements over the next two years. The statistics have also benefited from implementation of the recommendations of the review of economic statistics completed in April 1989. In particular the introduction of the statutory monthly sales inquiries in 1989 has led to more reliable early estimates of manufacturing output. Also the 1989 annual share register survey has provided more accurate estimates of the holdings of shares by the overseas sector leading to a reduction of £13 billion in the cumulated balancing item for the overseas sector.

The Government attach great importance to the need for reliable economic statistics and will consider further measures to maintain and improve the quality of economic data as the need arises.

The retail prices index measures the change from month to month in the prices of the full range of goods and services bought by the majority of consumers in the United Kingdom. It does so on the basis of well over 120,000 prices collected across the country each month and information on buying patterns from a large and continuous survey of family expenditure. A number of improvements have recently been made to the quantity and quality of price data collected.