Findings

ONS should take steps to ensure the continued sustainability of its capability to make good-quality classification decisions

Collaboration and Retention

1.39 The classifications process is a very important one for users and requires a lot of close working with stakeholders, information gathering and technical understanding. Thus, there is a need for expertise that can be maintained and is resistant to the staff turnover that is common in ONS and the wider Civil Service.

1.40 Capability within the Classification Committee is important because it cuts across the full sequence of UK National Accounts; mastery of the subject matter requires a good understanding of transactions, from the goods and services account of the Supply Use and Input-Output tables all the way through to the financial and non-financial balance sheet. It also requires expert knowledge of public finance statistics. The committee currently has 19 members, including 2 co-chairs. Expertise is maintained in different ways. Since 2020, the committee has grown slightly to ensure a sufficient breadth of expertise is maintained following staff turnover. Additionally, members who have moved roles within ONS are encouraged to stay on the committee based on the expertise they already have.

1.41 In order to ensure sufficient assurance and expertise in classification decisions during the COVID-19 pandemic, the Economic Statistics Classification Committee (ESCC) and ONS’s Methodology Advisory Committee (MAC) set up an informal arrangement to work closely together. The joint working between ESCC and MAC was successful overall: it showed two groups working collaboratively and pooling expertise to solve problems, mitigate risks and consequently ensure the good quality of decision-making. Additionally, when the joint-working group was working through the classifications of the novel coronavirus support schemes, the informal advice it received through its international network was important in ensuring that decisions were taken in line with emerging international best practice.

1.42 Capability is also important for the Classifications Team because it needs to understand the technical information it receives for classification cases to decide how to take forwards the requests for the committee. It also needs to accurately communicate the requests to users and key stakeholders. The team currently comprises eight people, which, despite representing a small increase from six people before the pandemic, remains small.

1.43 When someone leaves the Classifications Team, it is arguably harder to manage the resulting gap in expertise than when someone leaves the Classification Committee. The mechanisms in place for mitigating the loss of expertise on the committee are not possible for the Classifications Team in the same way. Additionally, most of the roles in the team are more-junior roles, meaning that individuals are more likely to leave the team to pursue career progression and development opportunities. Finally, there is a question of whether, and how, ONS accesses specialist advice outside of the national accounts, for example accounting or legal expertise. Therefore, a need to actively plan succession, ensure a pipeline of new talent and encourage retention of experienced and expert individuals within the team will be crucial for maintaining capability.

Training

1.44 Given the level of expertise and the time required for newcomers to accumulate the full range of experience required by their role, ONS needs to be constantly alive to managing the development of staff in the classifications work area.

1.45 New Classification Committee members are supported by a mix of formal training, informal training, independent reading of relevant guidance to build knowledge and learning by doing by applying this knowledge to cases. New members must build the research skills necessary to identify the relevant information needed for completing cases against the relevant guidance. They are supported with additional meetings ahead of complex cases, where they can ask questions and check their understanding. They are also provided specific training ahead of a case which they may not have encountered before and which has very specific and different international guidance (for example, the case of Public-Private Partnerships has specific statistical guidance set out in this manual).

1.46 There is a learning pathway in place to help new Classifications Team members accumulate knowledge, including a programme that breaks up an 18-month period into 6-month chunks of learning and development. The Classifications Team also offers training on classifications across ONS. However, the time taken to accumulate expertise emphasises the importance of retaining expertise once acquired.

ONS should ensure that it has the relationships it needs to access technical advice, and engage with and influence international guidance and best practice

1.47 While maintaining capability within ONS is very important, enhancing trust and ensuring quality in the classifications decision-making process also involves ensuring that there are clear links with international guidance and clear routes to seek independent, expert advice on especially complex classifications cases.

1.48 When the UK was an EU member, it had a close relationship with Eurostat, the EU’s statistics agency. This relationship had its roots in the UK’s legal obligation, as an EU member, to meet its rules on deficit and debt. This obligation was monitored by Eurostat, which was the designated independent body that oversaw the UK’s (and other member states’) approach to its national accounts, including classifications.

1.49 Eurostat’s oversight in classifications meant that the UK could seek its advice and guidance in the following ways:

• speaking to a Eurostat contact – called a desk officer – who would have been allocated to the UK and would be familiar with the UK context and the broader EU picture on classifications. This officer would act as a sounding board to inform recommendations for individual classification cases.
• engaging with Eurostat as part of its periodic “Dialogue missions” to ONS. These missions would have covered ONS’s criteria and processes for making decisions on classifications and could have discussed a range of issues of particular interest to ONS. The discussions that could have taken place during the mission covered broader issues than the dialogues with the desk officer, which often focused on a specific transaction or change of circumstances.
• attendance at key international meetings relating to classifications, such as the Excessive Deficit Procedure Statistics Working Group, which focused on discussing methodological and challenging classification issues.

1.50 The arrangement between the UK and Eurostat had been beneficial during EU membership in the following main ways:

• Having access to an extra pool of experts with awareness of the EU-wide context helped maintain both the quality of classification decisions (from an international comparability perspective) and the assurance to users, especially in complex cases. The Classification Committee cited a recent classification review of a complex policy proposal for which it would have used Eurostat in the past.
• The engagement between the UK, Eurostat and other member states allowed the UK to shape international engagement in a way that ensured it was part of the conversation on the methods and standards that they collectively used.
• The independence of the classification decisions from the UK Government or devolved administrations was reinforced.

1.51 The Lievesley Independent review of the UK Statistics Authority recommended that the Authority develop an international strategy and discuss the arrangements between itself and Eurostat, in line with the UK-EU Trade and Co-operation Agreement of 2020.

1.52 Our review found broad support for ONS developing and enhancing the use of its international relationships, especially regarding the development and implementation of new standards. Another benefit is the ability to learn and better inform its work through organically discussing common classification themes with peers in other countries.

1.53 In addition to strengthening international connections, there is also broad support for the Classification Committee to have access to technical expertise that can help to inform individual classifications decisions and ensure that quality of decision-making is maintained for the most complex, precedent-setting cases.

ONS should review its communication of classification decisions to maintain trust and better meet user needs. It is important that the Economic Statistics Classifications Team communicate its work openly and effectively, both to key stakeholders and to the wider public.

1.54 Key stakeholders are, overall, very happy with their direct interactions with the Classifications Team. Regular stakeholders like HM Treasury and the devolved administrations have reported improvements over the past five or six years in the regularity and depth of engagement. Other government departments or public bodies making requests via HMT have also reported positive feedback with the Classifications Team’s engagement during the process for classifying a case. That said, there remain individual cases where engagement can still be improved, for example with the OBR or with statistical producers outside ONS whose publications rely on classification decisions.

1.55 ONS publishes the following classification outputs monthly for the wider public:

• The Public Sector Classification Guide (PSCG), which is a spreadsheet log of classification decisions taken, going back over a decade. The PSCG is updated monthly and was improved in 2023 after user and stakeholder feedback and a period of parallel running; it now produces more-comprehensive information about the decisions taken than it did before and separates out transaction classifications from the classifications of units more fully. Users overall welcomed the engagement during the PSCG development and the changes that were made. However, despite these changes, the PSCG can still be hard to navigate and unclear in places, and the name is ambiguous in the sense that it might be interpreted as a guide on how to classify, rather than a guide to classifications made.
• The Forward Work Plan (FWP), which is a forward-looking log, focused on cases expected to come before the Classifications Committee in upcoming quarters of the year. The log gives an indication of the impact on government spend but does not say how complex the decision is (it does not say whether it would go through the fast track, delegated case or full discussion route).
• Economic Statistics sector classification – classification update and forward work plan, which is a monthly release of key classification decisions taken in that month. This is being merged with a separate but related release, Recent and upcoming changes to public sector finance statistics, from July 2024.

1.56 Users were pleased with the improvements made to the PSCG. However, we noted that some classification decisions taken during the COVID-19 pandemic weren’t included in this guide. While we recognise the exceptional circumstances that the ONS Classifications Team encountered, with limited time to manage the classification of a significant number of new government policies, we see transparent explanation of the decisions as vital for both public-facing communication and team knowledge management. Therefore, ONS should dedicate sufficient resources in due course to bring the PSCG up to date with all classification decisions.

1.57 Additionally, the latest month’s decisions should be made more prominent in the monthly release, and the linking from the PSCG and FWP to the monthly release should be enhanced to aid user navigation. ONS should consider whether the Public Sector Classification Guide could be more clearly named to reflect that it includes decisions rather than guidance.

1.58 Similarly, users welcomed the openness and transparency of the Forward Work Plan. In the monthly release, it is stated that “The forward work plan does not cover all cases that will arise over the next 12 to 18 months. Cases that are likely to have a smaller statistical and policy impact will be assessed as resources allow. The cases scheduled in this article have been prioritised because of the impact they will have on important statistics, and their importance to public policy.” We suggest that this clarification is also added to the FWP itself.

1.59 ONS also publishes supporting information, including a media statement communicating the highest-profile decisions to the wider public, more targeted technical articles on specific topics (such as taxes and fees for sales of services) and compendia on wider themes (such as the financial crisis). Users found this supporting information useful, and some would support more targeted technical articles and compendia where these are appropriate and add user value.

1.60 Finally, ONS should consider international good practice in communicating classification decisions. As a particularly good example, Canada has an online tool which the public can use to see the classification of any public unit.

ONS should improve the communication and transparency of classification decision implementation

1.61 In addition to the classification decision-making itself, the implementation of the decision is important. While the majority of classification decisions will be implemented in a timely manner, implementation might be delayed in several cases by a range of factors, including required data and methods work, revisions policies, prioritisation of scope in the UK National Accounts and the grouping of related revisions for a policy or change which may have offsetting impacts.

1.62 Users told us they would benefit from more-transparent reporting of which classification decisions have and haven’t been implemented across different statistics, particularly in complex cases where implementation may be comparatively slower. There is some existing communication, including in the Recent and upcoming changes to public sector finance statistics release. However, users who observed that a decision had been taken but wanted to know when it would be implemented in order to make forecasts on government spending reported that they didn’t have sufficient information for their needs. Therefore, communication needs to be improved. One simpler solution discussed was to have an identifier of implementation status, such as an implementation “flag”, in the PSCG, showing whether a decision had been implemented yet or not. This identifier should also include information on when decisions may be implemented if they have not been already.

1.63 Some of the work associated with data and methods could be considered early on, for example during the “information gathering” stage. The implementation of some of the most complex, precedent-setting cases is also likely to be difficult; anticipating this complexity as soon as possible could yield benefits. In other cases, the classification decision itself may be contingent on estimates of repayment of a transaction, for example, and therefore progressing it early could be beneficial.

1.64 Users respected the role of the Classification Committee in making classification recommendations purely on statistical grounds using the guidance available to them. Therefore, the implementation work described in paragraph 1.63 should take place outside of the remit of the Classification Committee itself, so as to preserve the Committee’s focus on statistical (not practical) factors.

1.65 Finally, once a classification decision has been made, various groups with ONS have a role in fully considering how the decision will be implemented through the suite of affected statistics. These include the ONS Implementation Committee, the ONS Economic Statistics Methodology Advisory Committee and the Public Sector Finance Revisions Group. Some users have asked if decisions could be implemented more quickly. This is a complex question, as sometimes it is better to introduce changes in a coordinated or synchronised manner to group revisions that may be offsetting. These changes also have to be prioritised above other planned changes as part of the publication cycle; this is particularly relevant for the UK National Accounts. The implementation of classification decisions is often part of a package of updates to key statistics, but this necessarily involves balancing speed with such coordination of implementation.