Pre-election date likely for review of public sector

Growth figures may be revised upwards after Atkinson review
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Controversial economic growth figures based on better measures of public-sector output could be published ahead of a likely general election next year, it emerged yesterday.

Sir Tony Atkinson, the Oxford University academic charged with reviewing the way public services are measured, said the final results would be ready in January. He said the Office for National Statistics would decide when to adopt his findings but said he hoped the "timescale [would be] not too far beyond the end of the review".

His final report is expected to show the economic value of services such as hospitals, schools and social services have been under-recorded, allowing the Government to say the economy is growing faster than first thought. The Government has repeatedly said the figures fail to capture the true value to society of public services, which in turn reduces the reported productivity of the UK economy.

Sir Tony published his interim report yesterday, which laid out the foundations for his review but did not include any new figures. He said: "Public services output should be measured by the incremental contribution to individual or collective welfare. That implies measuring and including the quality of services."

The review will lead to accusations of political interference if the new figures allow ministers to say the billions of pounds pumped into frontline services have been well spent.

Oliver Letwin, the shadow Chancellor, attacked the review yesterday. "The role of the ONS is to provide reliable and robust economic statistics in which the public has trust, not to act as a propaganda tool for the Government."

The first results emerged three weeks ago, when the ONS unveiled a preliminary revamp of its figures for health spending and output based on the initial conclusions. It found NHS output had risen 29 per cent between 1995 and 2003, rather than the 19 per cent previously calculated, adding as much as 0.1 per cent to annual GDP.

The Atkinson review will cover about 60 per cent of total government spending, of which health makes up half. The next largest sector is education, which takes up 17 per cent of state resources.

Sir Tony said detailed work had not begun but hinted that this too would lead to an upward revision of GDP. "If you believe the quality of services has been improving like you have seen in health or as some people say in education, then you should see an improvement," he said.

He acknowledged that the improvement in exam results had been confused by accusations that exams were simply becoming easier. "If one is relying on GCSE performance one would want to ask what is the evidence that exams have become easier," he said.

Sir Tony acknowledged that the subjective judgement that statisticians would have to use to measure the quality of outputs in the public sector would become a crucial issue.

Until 1998, statisticians assumed the output of state services was equal to the amount of money going in. Since then the ONS has made attempts, such as including an assumption of a 0.25 per cent annual quality improvement when measuring numbers of state school pupils.

Now it has until 2006 to meet new EU rules that will outlaw any use of the "output equals input" rule. Sir Tony's task is to establish a rulebook to allow statisticians to measure outputs of a range of services such as schools, hospitals, prisons, police, social services, fire brigades and the legal system. Sir Tony outlined five "principles" yesterday, such as ensuring output measures the "value added" to the individual from the service. He said he was confident the transparency of the process would ensure it would not be "dominated by the UK domestic agenda".

But Mr Letwin said: "The idea that quality improvements in the public services can be objectively measured and that such a fuzzy concept should be captured in the measurement of national output is absurd."

Sir Tony must also ensure input costs arerecorded. He said figures provided by government departments had a "poor match" with the classifications used by the ONS. He said more resources would be needed although the ONS said its budget in the latest three-year spending review included the cost of implementing Atkinson.

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