§ Mr. LidingtonTo ask the Chancellor of the Exchequer (1) what information is provided by information on business turnover collected by the Office for National Statistics which is not available to the Government from information collected by Customs and Excise; [40834]
(2) for what reason the Office for National Statistics is required to collect turnover information from businesses. [40835]
§ Ruth KellyThe information requested falls within the responsibility of the National Statistician. I have asked him to reply.
Letter from John Pullinger to Mr. David Lidington, dated 11 March 2002:
The National Statistician has been asked to reply to your recent questions on information collected on business turnover. (40834, 40835).
The ONS collects monthly turnover data directly from businesses in the production, retail and services industries. These statistics are key inputs to monthly short-term indicators of economic activity such as the Index of Production, the Retail Sales Index and the Experimental Index of Services. The same data are used to give timely measures of quarterly Gross Domestic Product. These economic indicators are used by government and the public to help monitor the performance of the UK economy, and by the Monetary Policy Committee of the Bank of England to help set interest rates. Other key users of the data are the Treasury, the Department of Trade and Industry and the European Union.
Turnover information is also collected on an annual basis via the Annual Business Inquiry. Here it is one of a set of data items needed on a coherent basis from the annual accounts of a business and cannot be taken in isolation. This set of data is used to compile the National Accounts (including estimation of Gross Domestic Product and Investment) and for other important statistics such as Productivity. Key users again include the Treasury, the Department of Trade and Industry and the European Union.
VAT returns made by businesses to Customs and Excise do include data on turnover. However VAT sources are far from ideal for the purposes of producing national statistics. The data are for the most part collected on a quarterly basis and they are less timely. Also, some businesses are exempt from VAT so that coverage is incomplete.
The possible use of these returns to replace or partially replace directly collected survey data is part of ONS' long term strategic development programme. In 2000 a feasibility study suggested that it might be possible to use VAT sources more directly. In 2001 ONS piloted and introduced a secure system for transmitting VAT turnover data from Customs and Excise to ONS and confirmed that there would be no legal barriers to such data transfer. We plan to further develop the methodology adopted in the 2000 feasibility study, to prepare inputs to the Index of Production and Index of Services in parallel with those based on business surveys and to quality assure the alternative sources with key users. If this is successful ONS will then move to the much greater use of VAT returns.