Here is a little light reading for New Years Day. I once read a book by Van Packard about statistics which was light into the darkness of that topic for me. I receive newsletters from the ONS and the information below was included in such a newsletter recently. It also gives a light into the darkness of how the numbers that we all hear are put together. Hope you can keep on going until the end of the piece which I have summarised and edited. It is information which is worth knowing. All the best for 2015.
The Office of National Statistics is responsible for the production of the UK National Accounts and Public Sector Finance statistics and hence for applying and interpreting the guidance to the UK situation.They are compiled according to internationally agreed definitions and standards, and in accordance with guidance issued by Eurostat (the statistical body of the European Union).

The economy is composed of a large number of ‘institutional units’ such as businesses, government bodies, universities, hospitals, charities, and households; and these individual units are classified into groups according to their characteristics for analytical purposes. One of the main classifications systems puts units into ‘institutional sectors’ according to the different economic incentives they face. For example, businesses exist to make profits while some other units do not such as government bodies, charities, and households.
Each such unit engages in financial transactions, paying out and receiving money for reasons such as buying and selling goods and services, paying taxes, or collecting tax revenues.
In the majority of cases the classification of units and transactions is straightforward, but in some cases detailed investigation is required to ensure the economic reality is reflected in the statistics. The ONS National Accounts Classifications Committee (NACC) exists to consider such cases and recommend the appropriate statistical treatment. A published formal process is followed to agree the most appropriate classification of each unit and transaction. Decisions are authorised by the Chair of the NACC, or by the Director of National Accounts and Economic Statistics, depending on the nature of the decision and size of the impact on the government debt or current deficit. (for more information on ONS website from which the above text is quoted from.
Decisions regarding the following criteria are made.,
•whether a body is in the private or public sector,
•for public sector bodies, whether they are government bodies or public corporations
•whether certain transactions count as taxes or service fees

Classifications are very important in regard to public expenditure, revenues, borrowing, debt, and tax burden. This applies both domestically, and within the European Union where statistics based on the ‘European System of Accounts’ (ESA) are used in:

“•the Maastricht Treaty ‘Excessive Deficit Procedure’ measures, particularly for estimates of government debt and deficit, where they determine the ‘convergence criteria’ for potential entrants to the monetary union, and performance against the Growth and Stability Pact for Eurozone members”
also
“•the measurement of Gross National Income (GNI), one of the main determinants of member states’ contributions to the European Union’s budget.”

It is a legal requirement for European Union countries to compile specified statistical returns on the basis of the ESA. From September 2014 onward, statistics are now compiled in accordance with the 2010 ESA (which replaced the 1995 ESA).
Since 1997, the UK fiscal policy frameworks have also been based on the National Accounts; fiscal policy objectives are described in terms of National Accounts aggregates and as a result key fiscal targets are dependent on National Accounts definitions and classifications.

There is high demand for classification assessments and at any one time ONS is progressing a number of active cases. ONS often has to respond to external developments – including developments in government policy.
The published classification process allows Government Departments to seek classification advice on policy proposals during their development. As a result, a considerable volume of ad-hoc requests for advice on policy proposals and other issues are also received. These are not included in any published workplan unless details of the proposal are already in the public domain.

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Get all the tables for this publication in the data section of this publication .

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