Select Committee on Treasury Minutes of Evidence


Supplementary memorandum by the Statistics Commission

SPECIFICATION FOR SCOPING STUDY ON THE USE OF PRICE INDICES AND DEFLATORS AT THE OFFICE FOR NATIONAL STATISTICS

Background

  1.  The Statistics Commission has been set up to advise on the quality, quality assurance and priority setting for National Statistics, and on the procedures designed to deliver statistical integrity, to help ensure National Statistics are trustworthy and responsive to public needs. It is independent of both Ministers and producers of National Statistics. As part of its quality assurance role it will be seeking to commission pieces of methodological audit and other work from academic and other experts to inform its judgments.

  2.  It is still testing out different ways of working but intends that its choice of areas for substantial pieces of work should be informed by initial "scoping studies" which will assess the case for further work and provide clear terms of reference for the main studies. Some of these will be undertaken by its own small secretariat and some by external experts. It is envisaged that all the scoping studies will be published, perhaps as a series of occasional papers, in line with the Commission's commitment to work openly and transparently.

  3.  It is envisaged that this scoping study can best be carried out by the secretariat with some external advice/consultation. A fuller follow-up study is likely to require the commissioning of external expertise.

  4.  Price indices and deflators are important constituents of National Statistics, and are widely used in the construction of many important economic indicators. The Commission is aware of a number of concerns about price indices and deflators. Such concerns range from very technical issues relating to the adjustment of prices for quality changes in areas such as information and communications technology,[5] to the role of the Chancellor of the Exchequer in determining the scope and definition of the Retail Price Index (RPI).[6]


Purpose of study

  5.  The scoping study shall assess whether, prima facie, a useful purpose would be served by a substantive study of methodological and other issues relating to price indices and deflators produced by ONS.

  6.  The study shall also take account of recent and planned internal quality assurance work in this area.

  7.  A full study would need to take into account the international perspective but in this limited study, the international dimension must necessarily be restricted to any feedback from users, and relevant information thrown up by the desk research.

  8.  If the report does conclude that there is a case for further investigation, it should give an estimate of the time that would be required to do this thoroughly and guidance as to the issues, which would need to be addressed. The Commission would then put the main study out to tender.

Method of working and timing

  9.  The study will have three phases as regards information gathering:

    —  obtain from ONS information on the prices indices and deflators, being produced, and where they are being used in the production of National Statistics and official statistics. In addition, details of relevant current and future development work needs to be made available;

    —  interview a sample of users in order to ascertain their views on the price indices and deflators which they use. Such users should be drawn from HMT, and the Bank of England, and other users within and outside government. Issues raised should not be restricted to methodological ones;

    —  conduct desk research of publications and web sites, which will supplement the interviews, in order to help establish the main issues in the construction of price indices/deflators. This stage to be determined following study of information from ONS. It may require some consultation with price index expert(s) including but not necessarily exclusively ONS.

  10.  The study will be initiated on 4 June with a meeting between representative(s) of the Commission and key players from the ONS when required information will be provided (or arrangements agreed for its provision). It is expected that the study will take no more than 20 days of secretariat time. The report will be produced by 30 November 2001. Apart from any small costs due to travelling/publication purchase, there is a possibility of utilising a consultant albeit, at this stage, for a relatively limited consultation.

Outputs

  11.  The report will:

    1.  List the price indices and deflators covered by the study.

    2.  Summarise user views.

    3.  Make recommendations on the need for further study of methodological and/or other issues.

September 2001


5   For example, ONS, Review of short-term output indicators (NSQR report No 1), 2000: recommendation R 4.4. Back

6   For example, Treasury Committee, Second Report 2000-01, National Statistics (HC 137): recommendation (h). Back


 
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