Public Service Productivity Estimates - Office for National Statistics

27 February 2014

Public Service Productivity Estimates: Total Public Services 2010, Addendum Author Name(s): Fiona Massey and Sarah Caul

Abstract This addendum contains a new total public service productivity index for 1997-2010 that includes Social Security Administration (SSA) data. It also has a section on Social Security Administration with estimates of SSA output, input and productivity growth rates between 1997 and 2010.

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This addendum to Public Service Productivity Estimates: Total Public Services 2010 (ONS 2013a) includes Social Security Administration (SSA) data. The data was not included in the original article as it was subject to additional quality-assurance checks at the time of publication. This addendum publishes a new total public service productivity index for 1997-2010 that includes SSA data. It also has a section on Social Security Administration with estimates of SSA output, input and productivity growth rates between 1997 and 2010. With SSA data included, total public service productivity has remained broadly constant between 1997 and 2010, with an annual average growth rate of 0.0%. This is the same estimate (to 1 decimal place) that was previously published without SSA data in April 2013. Over the whole time period, both public service output and public service inputs grew by 2.9% per year on average. The two most recent years, 2009 and 2010, showed small total productivity growth rates of 0.6% and 0.2% respectively. In both years this is driven by increases in productivity in education which has an expenditure weight of 22.4% in 2010. In 2009, SSA also made a positive contribution to total public services productivity growth. Including data on SSA in this addendum has also affected the “other” service area estimates, but only for years 2008, 2009 and 2010. The Revisions section provides a comparison of the estimates in this Addendum for total output, inputs and productivity compared to the last complete total public service productivity release published in 2010 (ONS 2010).

Summary Total public service productivity growth is calculated by comparing growth in public service output with growth in public service inputs used.

Office for National Statistics | 1

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Total public service output and inputs indices are calculated by aggregating output and inputs for the following service areas. • • • • • • • • •

Healthcare Education Adult social care Children’s social care Social Security Administration Public order and safety Police Defence 1

Other (this includes general government services , economic affairs, environmental protection, housing and recreation).

Total public service productivity is then calculated by dividing this index of output by the index of inputs. Our estimates show that growth in output is broadly matched by growth in inputs for most of the period 1997-2010. Output estimates for police, defence and ‘other’ are all based on the ‘output=inputs’ convention. That is, output is deemed to be equal to the volume of inputs used in generating the output. Together, these areas account for 31.4% of total expenditure in 2010. Within healthcare, we assume that output=inputs for approximately 9% of output; this output is services delivered by non-NHS providers. Similarly, within children’s social care, we assume that output=inputs for approximately 60% of output; this output relates to ‘non looked after’ children. Together, these account for approximately 4.3% of total expenditure in 2010. Therefore in total, almost 36% of output is measured using the ‘output=inputs’ convention. The other 64% is measured directly by activities performed and services delivered. Figure 1 shows indices of total public service output, inputs and productivity, with 1997 as the reference year. Figure 2 shows annual growth rates between 1998 and 2010.


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Figure 1: Total Public Services Output, Inputs and Productivity Estimates 1997-2010 UK

Source: Office for National Statistics Download chart XLS format (30.5 Kb)


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Figure 2: Growth rates for total public services output, inputs and productivity 1998-2010 UK

Source: Office for National Statistics Download chart XLS format (31.5 Kb) Table 1 shows that between 1997 and 2010, total public service productivity stayed broadly constant. Output increased by 45.8% and inputs increased by 46.5%.


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Table 1: Indices of total public services output, inputs and productivity, 1997-2010 United Kingdom

Index, 1997=100 Output

Inputs

Productivity

1997

100.0

100.0

100.0

1998

102.0

101.5

100.7

1999

104.4

103.7

100.6

2000

108.4

108.1

100.2

2001

112.1

111.4

100.9

2002

117.3

118.2

99.6

2003

122.9

124.1

99.0

2004

127.4

129.1

98.9

2005

131.3

133.0

98.9

2006

134.7

135.7

99.7

2007

136.1

138.0

99.4

2008

140.8

142.7

99.2

2009

143.9

145.3

99.8

2010

145.8

146.5

100.0

2.9

2.9

0.0

Percentages, annual average growth 1997-2010 Table source: Office for National Statistics Table notes: 1. Means are geometric.

Download table XLS format (21.5 Kb) Reference tables are available to download containing more detailed data by service area.


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This publication includes a revisions section which shows how the statistics published in this release differ from those published in 2010 (ONS 2010). Background notes include a guide to the interpretation of the estimates in this release. A user guide to the key statistics in the release was published in April 2013. A sources and methods paper has also been published (ONS 2014) which explains how statistics contained in this Addendum and Public Service Productivity Estimates: Total Public Services are calculated. Notes 1.

General government services include foreign affairs, economic aid to developing countries, basic research, and services undertaken by government not specified by function.

Estimates of productivity by service area Figure 3 shows the annual average growth rates in productivity for each service area. Figure 3: Productivity annual average growth rates by service area 1997-2010

Source: Office for National Statistics


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Download chart XLS format (31 Kb) Table 2, shows the index of productivity for each service area. Between 1997 and 2010, healthcare and education productivity grew by 6.2% and 4.5%, respectively. Adult social care and children’s social care showed falls of 20.0% and 11.6%, respectively. Social Security Administration showed a rise of 18.8% and Public Order and Safety showed the largest fall of 25.9%. Figure 4 shows the expenditure weights of each area in 2010. Large productivity falls in some service areas are offset by increases in health and education, which have much larger expenditure weights. SSA has shown the largest overall increase in productivity since 1997 but as the expenditure share is only 1.3%, it does not make a significant impact on overall estimates of annual average public service productivity growth (to one decimal place). More details of each service area that has not been affected by the inclusion of SSA data. are given in Total Public Services 2010 (ONS 2013a). Table 2: Productivity indices by service area, 1997-2010 United Kingdom Index, 1997=100

Healthcare Education

Adult Social Children's Social Security Social Administration Care Care

Public Order & Safety

Police Defence

Other

Total

1997

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

100.0

1998

100.0

101.3

101.5

100.9

107.9

104.3

100.0

100.0

100.0

100.7

1999

100.1

105.9

97.4

89.3

107.7

92.8

100.0

100.0

100.0

100.6

2000

100.2

106.5

96.1

82.9

110.3

85.5

100.0

100.0

100.0

100.2

2001

102.6

105.1

95.2

91.8

105.7

90.1

100.0

100.0

100.0

100.9

2002

100.5

103.2

94.3

90.3

104.1

85.9

100.0

100.0

100.0

99.6

2003

101.6

103.4

90.0

74.3

98.9

83.2

100.0

100.0

100.0

99.0

2004

102.3

103.0

88.7

82.5

93.9

77.4

100.0

100.0

100.0

98.9

2005

104.6

100.8

88.9

74.6

91.9

76.7

100.0

100.0

100.0

98.9

2006

107.7

100.0

90.0

85.4

86.1

76.6

100.0

100.0

100.0

99.7

2007

107.2

98.8

88.6

101.1

86.5

74.2

100.0

100.0

100.0

99.4

2008

108.4

98.4

84.1

99.3

83.2

73.3

100.0

100.0

100.0

99.2


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Healthcare Education

Adult Social Children's Social Security Social Administration Care Care

Public Order & Safety

Police Defence

Other

Total

2009

107.2

101.0

81.9

131.1

87.9

74.4

100.0

100.0

100.0

99.8

2010

106.2

104.5

80.0

118.8

88.4

74.1

100.0

100.0

100.0

100.0

0.3

-1.7

1.3

-0.9

-2.3

0.0

0.0

0.0

0.0

Percentages, annual average growth 1997-2010

0.5

Table source: Office for National Statistics Table notes: 1. Means are geometric.

Download table XLS format (23.5 Kb)


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Figure 4: Expenditure weights by service area 2010

Source: Office for National Statistics Notes: 1. ASC: Adult Social Care 2. CSC: Childrens Social Care 3. SSA: Social Security Administration 4. POS: Public Order and Safety

Download chart XLS format (30 Kb)

Social Security Administration Figure 5 shows annual growth rates for SSA output, inputs and productivity between 1998 and 2010.


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Figure 5: Growth rates for SSA Output, inputs and productivity 1998-2010 UK

Source: Office for National Statistics Download chart XLS format (31 Kb) 1

Social security administration had a relatively small weighting of 1.3% in 2010. SSA data contained in this Addendum is now consistent with the underlying data supplied to ONS for Social Protection expenditure by the Department for Work and Pensions (DWP). Other Government Departments such as Her Majesty’s Revenue and Customs (HMRC) also contribute to Social Protection expenditure through their administration of tax credits and child benefit. Key points: •

Over the period 1997-2010, productivity in SSA has increased by 18.8%, an average growth of 1.3% a year.


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•

• • • • •

But productivity growth has been volatile throughout the series; it’s ranged between -17.8% in 2003 and 32.1% in 2009. This has mainly been driven by changes in deflated expenditure on goods and services. SSA output has seen an increase of 2.3% between 1997 and 2010, an average increase of 0.2% a year. SSA Inputs has seen a decrease of 13.8% for the same time period, an average decrease of 1.1% a year. The highest growth for output of 8.3% was in 2009, as claims for Job Seekers Allowance and other benefits grew at the onset of the recession in the UK. In 2009, a big drop in input growth and positive output growth led to the biggest rise of productivity in the series. In 2010, a rise in input growth and a small decrease in output created a fall in productivity.

Output growth is partly driven by the economic climate, which influences the number of claims. The highest growth rates in output were in 2008 and 2009, which is in line with increases in jobseekers claims. The main driver for inputs growth is goods and services procurement expenditure, which has fluctuated significantly over the period. It is also subject to large quarterly changes in some years, which can appear more significant when data is presented in calendar years instead of financial years. For example the large fall in inputs in 2009 and subsequent increase in 2010 appears smoother when presented in financial years. The main contributing department to SSA expenditure is the Department for Work and Pensions (DWP). Investment and the volume of inputs increased following the creation of the Department in 2001 when there was a period of re-organisation and investment, including new jobcentre plus offices, new pension centres and modernisation of IT systems (DWP, 2010). The subsequent falls in inputs within DWP were driven by reductions in staff numbers and other costs in line with the Gershon efficiency challenge. These changes are reflected within the data for the whole of the SSA service area, where it is estimated that the volume of inputs fell by over 30% between 2003 and 2010. Notes 1.

It should be noted that expenditure and receipts associated with the National Insurance Fund (NIF) have been omitted from the SSA data. These payments and receipts sum to zero in financial years, but due to quarterly timing issues they create a slight distortion of the figures when presented in calendar years. Removing NIF data only affects data in 2008 and 2009 by less than 1% of total expenditure. This methodology was also used in ONS (2010).

Other public services This Addendum contains underlying data that is now consistent with data supplied to ONS for Economic Affairs administrative expenditure by the Department for Work and Pensions (DWP). It


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was found during quality assurance, that some DWP expenditure should have been transferred from Social Protection to Economic Affairs for years 2008, 2009 and 2010. Incorporating this change means that there are minor changes to the estimates of output and inputs for the “other” category of public services, compared to ONS (2013a). Figure 6 shows the annual average growth rates in “other” public services between 1997 and 2010. Figure 6: Growth rates for ‘other’ inputs 1998-2010 UK

Source: Office for National Statistics Download chart XLS format (30.5 Kb) ‘Other’ had an expenditure weight of 16.0% in 2010. This is up 0.1 percentage point compared to the weight previously published in April 2013 (ONS 2013a). The service areas included in this category are: economic affairs (30%), general government services (19%), recreation (18%), environmental protection (16%), housing (16%) and other (1%). Key points:


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• • • • • •

‘Other’ output is measured using the ‘outputs=inputs’ convention. Over the period 1997-2010, inputs have increased by 46.7%, with an annual average growth rate of 3.0%. Inputs showed growth in each year up until 2009, with the first half of the series showing the strongest growth. Inputs fell by 2.8% and 2.2% in 2009 and 2010, respectively. Compared to the data previously published in April 2013 the annual growth rates in 2008, 2009 and 2010 have been revised up by 0.9, 0.6 and 0.8 percentage points, respectively. The key contributors to the positive growth rates seen in the earlier years were economic affairs and housing. The slowdown seen in the latter part of the period was driven by falls in expenditure for all services.

Revisions This section explains the differences between the estimates published in this release, and those published in the last, complete total public service productivity release (ONS 2010) which contained data between 1997 and 2008. Figure 7 shows the difference between the annual growth rates in output, inputs and productivity in this release, compared with ONS 2010.


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Figure 7: Revisions to annual growth rates of total public services outputs, inputs and productivity 1998-2008 UK

Source: Office for National Statistics Download chart XLS format (30 Kb) Annual average output growth for the period 1997-2008 has been revised up by 0.3 percentage points to 3.2%. Annual average input growth for the period 1997-2008 has stayed at the same level of 3.2%. Annual average productivity growth for the period 1997-2008 has been revised up by 0.2 percentage points to -0.1% (to 1 decimal place). Revisions to the annual average growth rate for output and productivity estimates are the same, to one decimal place, as reported in the total service productivity release in April 2013 that did not include SSA data. The revision to the annual average growth rate for inputs is now smaller in this Addendum by 0.1 percentage point at 3.2% compared to estimate from the release without SSA data (ONS 2013a).


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Reasons for revisions The causes of revisions have not changed since the previous release without SSA data as the service areas subject to the most revisions have not changed. Details can be found in ONS (2013a). In summary, the main changes were due to: • • • • •

Revisions made to data, by data providers. The replacement of forecast data with actual data - particularly for 2008. Using the latest expenditure weights data. Re-estimated forecasts and back-casts using more data points than previously available. Change in classification of COFOG data throughout the series

In addition, revisions have been made due to methods changes for some service areas. These changes are summarised below. Healthcare output methods changes The coverage of healthcare output estimates has been extended to include an ‘output=inputs’ treatment for services which are funded by the NHS but delivered by non-NHS providers. In addition, more consistent data sources and processing techniques have been applied (ONS 2012a). Education methods changes Revisions to education inputs estimates have arisen from changes to methods for calculating school support staff labour (ONS 2012b). Revisions to education output have arisen from extending coverage of Further Education to all ages, having previously covered only the under-19 age group. Police inputs methods changes The new method involves using data from the Annual Survey of Hours and Earnings as a deflator for expenditure. This has led to revisions in police inputs estimates, but as police has a low weighting, this has had a relatively small impact on total inputs. There is no impact on total public service productivity because we assume that output=inputs for police, so productivity growth is zero by definition (ONS 2013b). Over the period 1997-2008, the majority of revisions to total public service productivity arose from positive revisions to healthcare output estimates, which boosted productivity. The largest positive revisions to productivity growth rates were in 2003 (+0.8 percentage points), and 2008 (+0.7 percentage points). The largest negative revision to productivity was in 2007 (-0.5 percentage points). The main reason for this was a positive revision to education inputs and a negative revision to education output. Previously published reference tables provide additional detail on revisions to estimates for each service area. (ONS 2013a). This addendum contains reference tables for revisions in SSA and Other service areas compared to ONS (2010).


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Further information on revisions to education and healthcare estimates is provided in ONS 2012c and ONS 2012d.

Reference tables Reference tables provide final estimates of the following data:: Reference table 1: Output indices and growth rates by service area 1997-2010 Reference table 2: Input indices and growth rates by service area 1997-2010 Reference table 3: Expenditure weights by service area,1997-2010 Reference table 4: Public service output, inputs and productivity: current indices and previous indices 1997-2010 Reference table 5: SSA output, inputs and productivity: current indices and previous indices 1997-2010 Reference table 6: ''Other' output, inputs and productivity: current indices and previous indices 1997-2010

References Department for Work and Pensions (2010). An analysis of the productivity of the Department for Work and Pensions 2002-03 to 2008-09. Available at: https://www.gov.uk/government/uploads/ system/uploads/attachment_data/file/181242/productivity-paper-2010.pdf ONS (2014) Public Service Productivity Estimates, Total Public Services: sources and methods. Available at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/public-sectormethodology/articles/index.html ONS 2013a Public Services Productivity Estimates: Total Public Service Productivity 2010. Available at: http://www.ons.gov.uk/ons/rel/psa/public-sector-productivity-estimates--total-publicsector/2010/index.html ONS 2013b: Methods change in Public Service Productivity Estimates: Total Public Services 2010, available at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/public-sectormethodology/articles/methods-change-in-public-service-productivity-estimates--total-publicservice-2010.doc (236 Kb Word document) ONS 2012a: Methods changes in Public Service Productivity Estimates: Healthcare 2010, available at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/public-sector-methodology/ articles/index.html


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ONS 2012b: Methods changes in Public Service Productivity Estimates: Education 2010, available at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/public-sector-methodology/ articles/index.html ONS 2012c: Public Service Productivity Estimates: Education 2010, available at: http:// www.ons.gov.uk/ons/rel/psa/public-sector-productivity-estimates--education/2010/article---publicservice-productivity-estimates--education-2010.html ONS 2012d: Public Service Productivity Estimates: Healthcare 2010, available at: http:// www.ons.gov.uk/ons/rel/psa/public-sector-productivity-estimates--healthcare/2010/arthealthcare.html ONS 2010: Total Public Service Output, Inputs and Productivity, available at: http://www.ons.gov.uk/ ons/rel/psa/public-service-productivity/total-public-service-output-input-and-productivity/total-publicservice-output-input-and-productivity-.pdf (524.2 Kb Pdf) Robjohns 2006: Methodology Notes: Annual chain-linking, Economic Trends 630 May 2006, available at: http://www.ons.gov.uk/ons/rel/elmr/economic-trends--discontinued-/no--630--may-2006/ methodological-note--annual-chain-linking.pdf (58 Kb Pdf)

Background notes 1.

Chain linked Laspeyres volume index A methodology paper by Robjohns (Robjohns 2006) explains how ONS annually chain-links data series. This technique of annually updating the base period weights produces a rate of change in volume terms over the reference period for the data series. ONS uses this technique to produce estimates of the volume of output and inputs for public services. See ONS 2008 for more information on this method and how Laspeyres volume indices are calculated for the estimates in this release.

2.

Interpreting estimates of public service productivity It is important to recognise that the productivity statistics published in this release are based on a concept of output as measured by government consumption expenditure rather than government or state production. This follows from the submission of the estimates of the volume of government output that are used in this release (prior to any quality adjustment) to the GDP (E) (expenditure) side of the UK national accounts. This means that we are using a measure of government purchased output, regardless of what type of business unit produced the output. Most expenditure is used to fund state providers of public services. There is, however, a growing component of expenditure on private or voluntarily-provided services, such as healthcare services delivered by non-NHS providers and pre-school education delivered by private and voluntary providers. This is counted as a component of government output in our estimates, even though it is provided (or supplied) by business units which are classified as private business or ‘non-profit institutions serving households’ (NPISH) units in the National Accounts.


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Traditional measures of productivity, including those published by ONS, use a supply or production framework. These measures of productivity use Standard Industrial Classification (SIC 07) categories of production as the measure of output, and are on a gross value-added (GVA) basis. Inputs measures count the labour (jobs or hours) used in the production of these goods and services to estimate labour productivity series such as those produced by ONS. Multi-factor productivity estimates include labour and capital services as inputs. See ONS 2012c for an article on estimates of multifactor productivity for the UK economy. The interpretation of the expenditure-based productivity estimates presented in this release should therefore be taken as a measure of the technical efficiency with which government is enabling the provision of public services for individuals in the UK (from whatever type of business unit), not producing that service itself. Caution should therefore be used when considering the differences between productivity measures published using the expenditure approach and those using the traditional production approach. Papers by ONS (2011, 2010b) describe some of these differences in approach in more detail. 3.

Comparison with the UK National Accounts Blue Book 2012 The estimates of output and inputs in this release are generally consistent with the Blue Book 2012. However there some exceptions on the output side; the main differences are: • •

• 4.

There is no quality adjustment for healthcare in the Blue Book, whereas this release includes a quality adjustment from 2002. The Blue Book applies a quality adjustment for education which increases output by 0.25% per year. This release uses GCSE and equivalent scores to calculate a quality adjustment factor for each year in the period; therefore the amount by which output is adjusted for quality varies from year to year. The Blue Book does not include the experimental method for the output of children’s social care used in this release.

Quality and methodology information (QMI) The QMI publication will describe the intended uses of the statistics presented in this release, their quality and a summary of the methods used to produce them. It will also present a sensitivity test for productivity, that is, productivity estimates which exclude the three service areas for which output is not measured directly. The main result is that annual average productivity remains at 0.0% as presented in this release.

5.

Pre-release access A list of persons receiving pre-release access to Public Service Productivity Estimates: Total Public Services 2010 at the time of release in April 2013, is available on the ONS website.

6.

The new ONS website The launch of the new ONS website in August 2011 has brought changes to the design and format of publications. The release main body is available in html and pdf format with detailed


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data tables available as Excel spreadsheets. You can follow ONS on Twitter and Facebook and watch our videos at YouTube/onsstats. 7.

Contact details Statistical contacts: •

Fiona Massey +44 (0)1633 651552

[email protected] Media contact details: Telephone 0845 604 1858 (8.30 am - 5.30 pm weekdays) [email protected] Emergency out of hours (limited service): 07867 906553 8.

Release information Details of the policy governing the release of new data are available on: www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the media relations office: [email protected] These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority. Issuing body: Office for National Statistics Planned date of next release: Autumn 2014

9.

Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: [email protected]

Copyright © Crown copyright 2014 You may use or re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected].


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This document is also available on our website at www.ons.gov.uk.
