Implementing Atkinson in Scotland

Sandy Stewart

Office of Chief Economic Adviser

31 January 2006

History

Interim Report – July 2004 Final Report – January 2005 Implementation Strategy for Scotland – April 05 Action Plans – updated quarterly Working teams set up in Scottish Executive. Established strong links with ONS.

Working Groups in Scotland

GDP Health Education Social Protection Public Order and Safety

Relevance

FEDS – emphasis on productivity Spending Review – emphasis on VFM Gershon – Efficient Government UK National Accounts – move to output Scottish GDP – Quality Improvements Allsopp – Drive to improve regional economic

statistics

Actions

Supply data to ONS for UK National Accounts. Replicate productivity analysis for Scotland. Ensure UK assumptions make sense for

Scotland. Consider inclusion in Scottish GDP system. Consider policy relevance to improve our

understanding.

Definitions

Value Added = Outputs – Inputs Real Value Added = Real Outputs – Real

Inputs Productivity = Real Outputs/Real Inputs Efficiency = positive change in Output/Input

Public Services in Scotland

Public Services – 21% of GDP– Of which:– Health – 32%– Education – 30%– Social Protection (PSS) – 12%– Public Order and Safety – 10%– Other – 16%

Health

GDP – number of employees (proxy input measure)

Inputs – consider all input costs Outputs - cost-weighted activity index Considering value-weighted activity index Quality – adjustments – health improvement,

York/NIESR study

Education

GDP – Number of teachers (inputs) Move to pupil numbers adjusted by attendance Quality adjustments – based on attainment Considering adjusting output to real earnings

growth Issues – extra curricular activities

Inputs to the Education System

0

20

40

60

80

100

120

140

1999 2000 2001 2002 2003

Year

Deflated Inputs Non-Deflated Inputs

Output Index for Education Using Different Quality Measures

80

85

90

95

100

105

110

1999 2000 2001 2002 2003 2004

Year

Standard Grades Standard Grades Adjusted by Real Earnings

Combined Threshold Combined Threshold Adjusted by Real Earnings

Implied Productivity Index for Education Using Different Quality Measures

84

86

88

90

92

94

96

98

100

102

1999 2000 2001 2002 2003

Year

Standard Grades Standard Grades Adjusted by Real Earnings

Combined Threshold Combined Threshold Adjusted by Real Earnings

Emerging findings - Output

Looked at different quality measures Prefer combined threshold rather than

standard grades Need to justify increasing output by real

earnings growth

Emerging findings – Implied Productivity

All output measures produce a fall in Implied Productivity due to:– Substantial growth in Inputs to Education (e.g.

53,000 teachers commitment– Fall in pupil numbers limits output growth despite

steady increase in quality.

Social Protection

GDP – staff numbers (input proxy) Move to cost-weighted treatment. Financial data a problem due to complexities in

service provision. Policy issues – Free Personal Care, Direct

Payments, Supporting People.

Public Order and Safety

GDP – employment based Cost-weighted activity indices for outputs Quality adjustments – recidivism, benefits of

alternatives to custodial sentencing Costs of crime prevention Home Office modelling work

Scottish Issues

Costs not uniform – providing services costly in rural and remote places.

Demography Political differences Divergence