Impact case study database

Their extensive body of research has enabled King’s researchers to partner with key authorities in national statistics. As a result, their work has influenced the production of economic and migration statistics in both the UK and Ireland. It has had a substantial impact in changing the thinking and operational parameters of the nation’s official statistical body, the ONS, with consequential benefits for the management of the world’s fifth largest economy and public understanding and debate. This influence has extended beyond the UK to the Central Statistical Office (CSO) of the Irish Republic.

Improving the operational parameters of the ONS

GDP is, along with inflation, the most widely used economic statistic. It plays a crucial role in the deliberations of the Bank of England’s Monetary Policy Committee, for example, and affects the basis on which key policy decisions are made.

King’s research estimating GDP from VAT turnover data was specifically commissioned by the ONS via its research body, ESCoE, to tackle a challenge they identified – namely, that the time period covered by the VAT system does not match well with the period over which official monthly and quarterly statistics need to be generated. This issue is complex and far from easy to resolve and relates to the concept of “staggers” around the timing of VAT returns, which complicates how aggregate estimates are derived. The initial use of VAT utilised a simplified method; however, the ONS was aware this would potentially limit the use of VAT data and/or reduce the quality of the statistics produced.

The research represented the first systematic exploration of a key issue for the use of this data source and the resulting recommendations have been of high importance to developing ONS practice and policy. As noted by Jonathan Athow, Deputy National Statistician at the ONS “a strong collaboration approach, underpinned by regular exchange of information between the researchers and ONS staff, have led to an improvement in the use of VAT data for official statistics” [A].

The findings are currently used to decide on the best methods to deal with the existing issues with VAT data, with the intention of using these methods for the regular production of estimates of monthly GDP. The use of the technique should reduce businesses’ reporting burden and deliver more accurate data accounting for about GBP500 billion of economic activity annually.

There is currently strong public interest in indicators of financial well-being and, in particular, the need to address the failure of the conventional measure of GDP growth to account for changes in the distribution of income. As such, the ONS has worked to improve their calculations in this area.

King’s research, again commissioned by the ESCoE, has contributed to the development of distributional national accounts, providing a new indicator of aggregate income growth that treats each household’s experience equally, to be used by the ONS [2]. This contrasts with existing measures, which give greater weight to the growth experience of high-income households.

The rapid development of the new indicator has been facilitated by King’s research, which “ clearly sets down the theoretical and practical issues that need to be addressed” [A]. Athow of the ONS explains that “ without this work our plans to develop distributional National Accounts would take longer, and perhaps would not be possible” [A].

King’s research [3] has provided valuable inputs to the ONS work on human capital, which is at the core of the ONS’s ‘beyond GDP’ agenda. An accurate measurement of human capital is essential to understand and expand the ONS’s role as a driver of inclusive economic growth.

King’s collaboration with the ONS ‘Well-being Team’, responsible for producing the estimates of Human Capital Services (HCS), began when O’Mahony was appointed as an ONS Fellow in 2015. O’Mahony subsequently produced an evaluation report on the existing HCS measures. A series of joint projects with ESCoE followed. These involved extending HCS to include dimensions such as health and regional mobility and developing a framework for incorporating HCS in national accounts, as requested by key government users [3].

As a result of this work, ESCoE requested O’Mahony to evaluate various estimates of exports in services generated by university education of foreign students. This work resulted in recommendations to the ONS on changing the methods and data sources to improve measures of education exports in the national accounts. As stated by Athow, “ it marks a useful contribution on this path, and links to our wider developments as set out in our public workplan” [A].

King’s research on migration has had two major strands of impact on the work of the ONS.

First, analytical research [4] resulted directly in a major work programme by the ONS to investigate the discrepancies between immigration statistics collected using the IPS and the National Insurance records. The work led to significant revisions to the published data and, in August 2019, to the quality assurance arm of the Statistics Authority withdrawing the National Statistics designation from the published long-term immigration statistics.

National Statistics designation is an indicator of the quality and reliability of published statistics, and King’s work reduced misguided reliance on data that would otherwise have misinformed policy. Indeed, these statistics are among the most high-profile and politically significant, and form the basis for the government’s target to reduce net migration: by making them more robust, policymaking is improved.

Ed Humpherson, Director General for Regulation at the Office for Statistics Regulation, considers this “one of the most material and important decisions made in [his] time as head of regulation, and has been heavily influenced by Professor Portes’ analysis” [B].

Secondly, King’s research [5] led the ONS to review its estimates of numbers of migrants from the EU, which were traditionally based on methodologies that were becoming less suited to measuring modern migration patterns. Athow of the ONS stated that “this work’s value is helping us understand and explore the way in which this data source could potentially be used in the future as part of our transformation work” [A].

Producing new productivity estimates for Ireland’s Central Statistical Office

Reliable productivity estimates at the industry level are important for a country such as Ireland, which depends highly on multinational corporations. Not only is this information critical for policy makers: these figures are also essential for anyone who uses statistics to inform their decision-making. O’Mahony has also been working with statisticians in Ireland’s CSO to develop and publish productivity accounts [6].

O’Mahony has had significant engagement with the CSO team to advise on how to improve methods and data sources. According to Michael Connolly, Head of National Accounts Integration, “O’Mahony’s expertise and insights were extremely helpful in providing alternative approaches for certain areas of the project where we had encountered difficulty” [C]. Based on her recommendations, a first set of productivity estimates were produced in 2016 with further publications planned. Her contributions are also acknowledged in the ‘Productivity in Ireland 2017’ report, published by the CSO [D].