The Office for National Statistics (ONS) would like to thank the Office for Statistics Regulation for its review of GDP, the recommendations of which we support.
The review called for clearer communication of where uncertainty exists as well as better explanation of the cause of revisions. The ONS published a blog on the 22nd December 2023 explaining how we will improve the way we communicate uncertainty in GDP estimates. We have already started to adapt the language within the GDP publications to improve the clarity of communication of uncertainty and are continuing this evolution by trialling some possible new graphics in the Q4 2023 publications.
We are also working closely with data visualisation experts in producing new ways to explain the GDP revisions process, which will be published along with our other revisions materials in a new GDP landing page, which will include articles, previous revisions performance, time series data and visualisations.
We have begun to include response rates for our source data in the GDP publications and are looking to develop real-time response rates for the expenditure and income approaches to GDP to help show the data content at the various vintages of GDP. We will also publish the annual revisions article at the same time as the Blue Book publication each year, some 9 months earlier than currently.
The report further highlighted the importance of intermediate consumption (the costs facing businesses) data. We are building on previous research work, which looked at Value Added Tax data as a possible source of intermediate consumption information for each industry. We will be working closely with the ONS Data Science Campus to investigate using this to improve the measurement of changes in the types of costs firms have faced, how this contributes to changes in expenditure and consequently how it impacts our measure of VAT gross value added.
In addition, we are investigating innovative data sources to measure industry-to-industry payment flows within the UK that have the potential to provide granular insights about UK supply chain -- the PAY.UK and Vocalink datasets were discussed in a recent ONS paper and are another possible source of intermediate consumption estimates. While the use of administrative datasets like VAT need potential conceptual adjustments to be consistent with the turnover data collected via the monthly business survey, a further possibility is the inclusion of detailed purchases questions on to a sub-sample of the Monthly Business Survey on a quarterly basis. As part of our work plan, we will be assessing which of these options will give the best detail in a timely and accurate manner.
The OSR also called on the ONS to further enhance the early estimates for components of the income and expenditure measures of GDP. We are already working closely with the Turing Institute to use real time indicators to improve our measurement of these. We are also going to investigate the use of debit and credit card datasets, Real Time information from Pay As You Earn data to improve the estimation of earnings and other innovative data sources such as payment systems data to measure components of profits for private companies. The improvements will enable us to produce a more balanced early estimate of GDP, giving more weight to expenditure and income data, rather than relying solely on the production approach based on turnover, thus reducing the scale of future revisions.
These developments will feed into a wider feasibility study, which will assess whether it is possible to create fully supply-use balanced measures of GDP on a quarterly, rather than a lagged annual basis, albeit on a less detailed basis than is possible on the annually.
We continue to make good progress in improving the quality and timeliness of our GDP estimates, which have already seen significant improvement over the last decade. We will be working with other public sector bodies and government departments in the coming years to deliver the next stage of transformation for UK national accounts.
We will provide regular updates on our progress by publishing a series of articles on our changes in the coming months.