Official Report: Minutes of Evidence

The Chairperson (Mr McGlone): With us today are Dr David Marshall, director of the Northern Ireland Statistics and Research Agency (NISRA), and Dr James Gillan, senior principal statistician at NISRA responsible for economic and labour market statistics. You are both very welcome; thanks very much for coming to the Committee. Would you care to make any opening remarks, taking us through your paper or extrapolating from your data what is relevant to us? We will then have a short question and answer session.

Dr David Marshall (Northern Ireland Statistics and Research Agency): Thank you very much, Chairman. I will start, and then James will take over. Thank you for the opportunity to brief you today. We are here to discuss economic statistics, and I believe you will get a second helping of statistics on tourism later on. James and I will stay for that, and some colleagues sitting behind us will join us at that stage.

I will just give you some background on NISRA. NISRA is the Northern Ireland Statistics and Research Agency. It is an agency within the Department of Finance and Personnel. It has responsibility for statistics and social research but also includes the General Register Office for Northern Ireland, which is responsible for the registration of births, deaths and marriages. So, we have functions other than statistical ones.

The functions of the agency primarily involve coordinating statistics and social research across the public sector; carrying out the 10-yearly population census, which you will all be aware of; and collecting and analysing official statistics for Northern Ireland as a whole, not only social, but economic. James will talk about that in a minute or two. Although we are based in the Department of Finance and Personnel, we have staff in various parts of the public sector. We produce statistics on crime, health etc as well. We run to a statutory code of practice, which is statutory in a Northern Ireland and a UK context. That context is derived from a European Union statutory framework for official statistics. That helps us to make sure that we produce statistics to certain standards. One key area, obviously, is economic and labour market statistics, so, at this point, I will hand over to James to take you through the paper.

Dr James Gillan (Northern Ireland Statistics and Research Agency): I echo David's welcome for the invitation. One of the key aspects of the code of practice for official statistics is that we investigate and document users' needs. It is a really valuable opportunity for us to hear what politicians seek from economic statistics with a view to developing data to help meet their needs.

I intend to very briefly summarise the paper and hand over to you for questions, because I understand that this is a fairly short session on the economic statistics. The main point that I would like to get across is the fact that NISRA already collects a very wide range of detailed economic and labour market statistics. That runs right across the range from four quarterly measures of the output of the service sector, four quarterly measures of the output of the production sector, four quarterly measures of the output of the construction sector, and an overall measure of the overall performance of the economy — the composite economic index, which combines those with public-sector employee jobs.

In addition, we have two key measures of the non-financial business sector's financial performance, which comes out at the end of the year. We have two measures of exports, both on the manufacturing and the services side, which come out annually, and we have individual surveys of the extent of research and development and innovation activity among businesses. In addition, we have the annual survey of wages and earnings, and hours worked and earnings. You will all be familiar with the monthly unemployment statistics that we put out, the quarterly and annual analysis of the labour force survey, and the quarterly and annual measure of employee jobs.

Most of those surveys are carried out to meet our statutory obligations, whether national or the UK's international obligations, for example to provide information to Eurostat. They are regulated by the UK Statistics Authority, which is an independent body. One of the issues that the Committee was interested in was the quality of our economic statistics. The vast majority of the economic and labour market statistics were independently assessed by the UK Statistics Authority several years ago, and they have all been found fit for purpose in that they meet the conditions of the code of practice that David referred to and they have been badged as "national statistics", which is, effectively, a quality badge. The quality of what we produce reaches international best standards, as judged by an independent authority.

There is always demand for more economic statistics and more detailed economic and labour market statistics, and we are, ultimately, in the business of meeting user needs in as timely a fashion as possible and to as high a standard of quality as possible. We are very much in listening mode today. Against that, there is also a statutory obligation to minimise the burden on business. Most of the administrative sources from HMRC are not timely enough for us to use for timely economic statistical purposes, so we have to go out and do surveys of businesses. I am sure that you will have had people in front of you who say that they need less red tape from government. So, against that demand for ever more economic statistics, which we have to go to business to collect, we also have to try to minimise that burden and, every year, we publish a report on the compliance burden on businesses.

We have an independent statistics advisory committee and, before we go out to collect any more statistics, we go in front of it and say, "We think that there is a demonstrated user need for this; we propose to carry out this survey; this is the likely additional burden on businesses, and we are doing x, y and z to minimise the burden. Are you content that we proceed to collect this?" So, it is about trying to achieve a balance between satisfying the demand for more statistics and minimising the burden on business. Most of that, hopefully, is in my paper. I will stop there and hand over to the Committee for questions.

The Chairperson (Mr McGlone): Thanks very much indeed. Primarily, the reason you are here today is our ongoing inquiry. There are a couple of things that spring to mind. One of the key themes that was being developed and had been asked about, which you are probably aware of, was the requirement for subregional economic data that would provide us with a more informed level of how the economy is growing throughout the North, rather than just an overall picture. Have you given any consideration to that?

The second issue has cropped up in two guises. One was in regard to the overall potential for the new environment with a reduced level of corporation tax and the opportunities that that might open for FDI to gain access to the mainland European market. On the back of that, what about "Brexit"? What would happen if we did anything stupid, which is how I and many others would see it? Can you quantify the export market to the European mainland and to the eurozone south of the border? We will call it the border, but it might become different if they did something really silly on the referendum issue.

Dr Gillan: I will take those questions one at a time. On the subregional aspect, we are better served than most other countries and regions of the UK in the quality of our employee jobs information. Throughout the UK, we do an annual measure of employee jobs through the business register employment survey. We publish information at the district council level about the number of employee jobs, whether they are male or female and whether they are full-time or part-time. That survey is done annually. Unlike the rest of the UK, every four years — it used to be every two years — we do a full census of all businesses in Northern Ireland. So, we have a gold standard every four years that measures the extent of jobs across Northern Ireland.

The Chairperson (Mr McGlone): Every four years?

Dr Gillan: A census is done every four years but, every year, we have a survey, which gives district council information as well. So, it is a sample every year, but samples have margin of error around them, so every four years we do a gold-standard one that gives us a full census.

The Chairperson (Mr McGlone): I am a wee bit unclear; maybe I am not picking it up right. On the information that is provided by district council area — I have not seen it, so I am not privy to it — could you be a wee bit more descriptive as to the precise scale of that information and what it includes?

Dr Gillan: Sure. It gives an account of the number of employee jobs — it is jobs rather than persons, as one individual might have more than one job. It breaks jobs down by the industry sector in which a person works, whether it is manufacturing, wholesale or retail. We talk about a two-digit industry sector: it will go down to about 80 overall for Northern Ireland. It is not broken down to that level of detail annually, but we do provide it by broad industry sector for each district council each year. We also identify whether there are males or females in employment and whether those jobs are full-time or part-time. So, there are industry breakdowns available each year for each district council on an annual basis.

The Chairperson (Mr McGlone): What other economic measures does it provide? Does it go as far as looking into childcare provision to support employment and other such measures? Does it get into that level of detail?

Dr Gillan: We do not survey on that basis. In the economic statistics we would not collect that information.

Dr Marshall: We do have a range of statistics across NISRA, including crime statistics, health statistics, social welfare statistics, house prices etc. We have a website that effectively allows users to get access to that information in one place. We do detailed analysis, which James talked about, at the Northern Ireland level and the local government level. That provides high-level economic statistics and some subregional statistics. We merge that all together in the Northern Ireland Neighbourhood Information Service, which some users rely on quite heavily to understand their local economy.

The Chairperson (Mr McGlone): The reason why I ask is that this inquiry is partly about the levels of skills we have and will have in the future. The issue of skills has cropped up time and again. We know, both anecdotally and in a very real sense from our own families, that many young women — it is usually young women — with families are being forced to take economic choices to pull themselves out of the labour market to look after their kids because of the pressures of childcare costs. By virtue of the high cost and lack of provision of childcare, we are depriving the labour market of skilled people who are forced to make an economic decision to stay at home.

Dr Gillan: We do not measure that directly. You will get some information from the labour force survey but, without investigating further, it is not a standard output.

The Chairperson (Mr McGlone): I appreciate that.

Dr Gillan: We are involved mainly in the survey of businesses, and we do not ask them for that information. I am not sure whether it is included in the labour force survey and, if it was, you would not get a very detailed breakdown below the Northern Ireland level.

The Chairperson (Mr McGlone): I have called a number of businesses, as I do fairly frequently anyway, and that issue has cropped up with businesses that are trying to adapt and be more flexible to support a good, skilled workforce, many of whom are female. It is an issue that has cropped up. Anyway, thank you for your answer. We will move to other members.

Mr McKinney: Thanks very much for your presentation. It is fairly comprehensive, but you alluded to what is missing from the economic picture in your opening remarks.

Dr Gillan: There are a number of things in development. The way I tend to look at it is that we are quite good at doing individual surveys. We do our annual business surveys and quarterly output surveys to meet statutory obligations. There is nothing missing from the surveys, as required by those statutory obligations. All the countries and regions of the UK have to meet that minimum standard. We meet all those requirements. Some countries within the UK go beyond that, Scotland being an example. One of the things that they have is an integrated picture of what is happening in the economy. Instead of being very survey specific or sector specific, it looks at the interrelationships between the different parts of the economy. For example, in outputs, it looks at how much of it is purchasing and what are the ripple effects. For any economic decision, it will study the impact right throughout the economy. They are called input/output tables in shorthand.

Mr McKinney: We do not have those.

Dr Gillan: We have not published them. We are working on and developing them. We have the precursor to them, which are called supply-and-use tables. We have an expert user group meeting tomorrow, as it happens, when we will provide some preliminary results, just sense-checking — quality assurance. Later in the summer, we will publish the supply-and-use tables with a view to publishing the input/output tables toward the end of the year. That is a first for Northern Ireland.

Mr McKinney: Sorry to interrupt. Will that be entirely consistent with what is happening in Scotland or part of the way there?

Dr Gillan: We have fairly good working relationships with Scotland, so it should be very close to what Scotland has. There is more work to be done on producing multipliers. There are data gaps that we are working to fill, but Scotland has similar gaps.

Mr McKinney: Can you point to any actions that Scotland or other regions have taken as a result of that more informative data?

Dr Gillan: As the paper states, we did a feasibility study and asked people whether that was something they wanted and, if so, why.

The main reason that people gave us was to measure GDP but also to measure the economic impact of policy decisions. If you have £100 million to spend, are you better spending that £100 million on tourism activities or on building the pharmaceutical industry for Northern Ireland? What is the return in jobs and in GVA? Do you want high-value-added jobs but not so many of them, or do you want less-high-value-added jobs but more of them? You get the multipliers that economists are fond of using.

That is the main output that we get from it. We work hand in glove with the academics in the University of Ulster Centre for Economic Policy, so they are keen to get our results and feed them into their models. We work closely with the departmental economists, who are also looking for it, so we try to tailor it. It is a big undertaking. The Office for National Statistics has about 200 people doing economic accounts; we have three people, and they are only recently in place. You could spend your career doing this stuff. It is difficult enough to do.

Mr McKinney: You are pointing in the direction of the value of that information in policy terms, and you are suggesting that Scotland has already made policy decisions around that information that it already has. Are there policy decisions that we are now in the process of making that would benefit from that information?

Dr Gillan: You could make the point that the tools could be there. Whether somebody actually uses them to their full effect to make policy decisions is debatable, I suppose. You would have to ask Scotland that. What I have certainly seen is economic commentators and analysts using input/output tables and the multipliers to inform economic decision-making, so you can use it for more informed decisions.

Mr McKinney: You have thrown out one example. Scotland has moved ahead reasonably swiftly around a lot of the pharmaceutical industries and has had a good return, but we have not. In fact, from a health perspective, we have rejected the opportunities that purchasing some of the more advanced drugs might give us, given our new relationship that could be established with pharma companies. I am just wondering to what extent the lack of that information is either holding us up or preventing proper decisions from being made.

Dr Gillan: It would certainly help good decisions to be made. You are into the area of policy making there, which is not my particular expertise.

The Chairperson (Mr McGlone): You just inform the policy makers.

Dr Gillan: It is making the information available to make informed economic decisions.

Mr McKinney: I have just one other point. Overall, we as a party get the sense that there is not enough economic research. The Northern Ireland Economic Research Centre (NIERC) has gone now. Would that be a valuable addition in terms of people focusing in on trends and other information maybe gleaned from your data?

Dr Gillan: There are quite a few economic commentators out there. Is it the Economic Research Institute of Northern Ireland (ERINI)? I happened to be up yesterday at the Ulster University Centre for Economic Policy at the user consultation that is going on for the development of its new model. I think it has recently come onto the scene and is starting to publish its latest economic output. That is certainly taking up some of the space that ERINI used to occupy. I know that some of the private sector economic commentators are very active in the area.

Mr McKinney: I said finally, because I do have a final one. Do we get a full picture of moneys that we pay to the Treasury and the Treasury pays back, etc? Is there a full picture emerging there of what we produce and how it relates through Treasury channels and back?

Dr Gillan: You will be aware of the net fiscal balance report. It is not produced by the statistics agency, so I would not want to intrude on its domain by saying that. It is produced on similar lines to what is produced in Scotland. There are limitations. Some of the data necessarily has to be modelled, because the Treasury does not make it a point to produce regional economic statistics. There is a separate publication on it, but a lot of it is subject to modelling assumptions. In the absence of hard data on that, you have to use the modelled approach.

Dr Marshall: We have worked with our colleagues in public expenditure division in DFP who do this net fiscal balance report, and we have provided them with as much statistical information as we hold to help them. Fundamentally, we do not have all of the data that they would want to produce the best possible statistics, but that is the best that can be done with the information that is available.

Mr McKinney: What is the margin for error?

Dr Marshall: You would have to ask them.

Mr McKinney: It might come down to some substantial figures.

Mr Agnew: Thank you, gentlemen, for the information so far. As has been said, you provide the information and it is what is done to it thereafter that will, to some extent, inform policy decision-making. Even when I did my A-level economics, we used to write essays on the problems with GDP as a measure of the economy. In your work, have you looked at any alternatives, or is your role to provide the statistics and for government to decide what to do with them? In your research, are you coming up with any alternatives to GDP for measurement?

Dr Gillan: Yes, colleagues in NISRA have been doing quite a bit of work on the measure of national well-being, which goes beyond GDP.

Dr Marshall: That is a fundamental point. Is GDP the best measure of the economic performance? Clearly, there are things that society could develop further without necessarily economic growth, and that is one particular view. Internationally, that has grown a bit. The UK Government have looked at this. We have included various well-being questions in some of our social surveys and published some information on the social statistics side to do with people's perception of how things are going for them as individuals. It turns out that, economically, Northern Ireland is not necessarily performing on GDP measures as well as some other parts of the United Kingdom, but, on well-being measures, it is. You will have seen in the newspapers that Fermanagh is the happiest place in the United Kingdom.

The Chairperson (Mr McGlone): We had better tell Phil.

Mr Agnew: Phil is an exception to the rule, perhaps.

Dr Marshall: We are looking at other things to do with the green economy. We have some surveys around that, and we are working through those. What is the size of the green economy in Northern Ireland? That has not been published to date, but we hope to publish that. We are trying to work those sorts of areas through, including well-being and the green economy, over the next year or two, but there is still a significant demand for GDP and for economic performance using the standard approaches.

Mr Agnew: You mentioned the green economy, but what is included in well-being? For example, presumably health is in there. Is the health of our environment — carbon outputs and things like that — measured as part of that?

Dr Marshall: There is a range of indicators. We can come back to the Committee with a range of them. Those sorts of things, how people feel and the perception of their neighbourhood is in there, from memory. We can furnish the Committee with a list of the indicators.

The Chairperson (Mr McGlone): That would be helpful.

Mr Agnew: Dr Gillan, you mentioned maybe going beyond what you are required to produce. How much independence do you have to decide? OK, you have your core business of what you are required to do, but, if you are looking to go beyond that, is that internal decision-making? Do you have to discuss that with DFP? What is the level of independence between you and your sponsoring Department?

Dr Gillan: We are a Next Steps agency, so we are arm's-length from the Department. Ultimately, our budgets are subject to the moneys that the Department gives us. In my paper, we were talking about filling data gaps. That is subject to funding from the Department. The way that we approach it is that, ultimately, we are driven by user needs. We run regular user groups with the academics and some of the business community with our Statistics Advisory Committee. We are trying to glean what it is that they think is most important. We know that we will not meet all user needs, so our obligation is to investigate and document them, and then to transparently set priorities for what our objectives are. That is in the NISRA business plan. So it is looking at it in the round and at what our national UK obligations are. It is looking at what our users tell us they think is most important. Then, within all that, we have a set budget which is not likely to increase, so we are trying to prioritise and do things as efficiently as possible. We are trying, by osmosis, to kind of —

Mr Agnew: So the Department certainly does not try to set your priorities, but it sets your budget. If you are looking to go into a new area of data collection or whatever it might be, do you put in a bid for additional moneys to fund that? I am just trying to work out, I suppose, who pulls the strings.

Dr Gillan: As I understand it, we put together our corporate plan and our business plan for the next three-year period. That is ultimately signed off by a Minister. It gets approval for that. If there are individual initiatives, we will bid like any other part of the Civil Service. For some of the initiatives that we are looking to do, like this purchases inquiry which gives us the supply chain within Northern Ireland, or to boost the living costs and food survey, which helps ultimately to measure consumer expenditure, if we want to boost the sample sizes of those, it is ultimately subject to DFP supply. Is the business case that we put forward value for money for Northern Ireland? Is it value for money to have the work done? That is assessed by economists in DFP. Like everybody else, we are subject to those constraints.

Mr Humphrey: Good morning. How independent of government is NISRA?

Dr Marshall: We are a Next Steps agency within government. The chief executive of NISRA is a senior civil servant in the Department of Finance, so we are not an independent organisation; we work within the Civil Service. The rules and procedures that we use are, by and large, Civil Service procedures. That said, and I mentioned this at the start, there is a code of practice. The code of practice is a statutory code brought under 2007 legislation. It allows us, effectively, in certain aspects of what we do — specifically those around official and national statistics — to operate outside a political framework. Granted, the funding control is still retained within the political domain, but we are responsible for how the statistics are produced. That is seen as the good practice part of the code.

Mr Humphrey: You mentioned being outside the political framework, and that is the point that I wanted to get at. You are not politically interfered with, and the statistics and information are produced independently by your organisation.

Dr Marshall: Absolutely. It is seen like that, as well.

Mr Humphrey: That is important.

Dr Gillan, you mentioned minimising the burden on business — I think that that was the term you used. Can I ask what collaborative work has been done between your organisation and business organisations such as the CBI, the Chamber of Commerce, the Assembly Business Trust and so on in the history of your organisation?

Dr Gillan: I mentioned that the Statistics Advisory Committee was set up under the Northern Ireland legislation. We are required to consult it on any new questions that we ask, or any additional burden that we place on business. At one of the recent meetings of the committee, at the beginning of April, we issued invitations to all the main business organisations, and we had attendance from the Northern Ireland Chamber of Commerce, Manufacturing Northern Ireland, and the Federation of Small Businesses. The invitations went more widely than that. At that meeting, we presented the uses to which the business statistics are put, such as the short-term measures of output, employee jobs, the annual performance of the business economy and exports. I think it would be fair to say that there was recognition that there is a burden on business; there is no doubt about that. However, businesses themselves would say that they found the information very useful in making their case to Government or to inform their own economic decision-making. There was a sense that it is almost a necessary evil. For us, the ultimate aim would to be to get administrative data sources, such as those in HMRC, but that is not going to be a silver bullet that magically removes the burden on business, because by the time businesses make their VAT returns and so on the economy has moved on. We have difficulty getting the forms filled out in time sometimes. Better access to business administrative data would help reduce the burden on business, but there are always going to be business surveys, unfortunately.

Mr Humphrey: The tabled paper that we have here talks about business, labour market, exports and an economic accounts project. Quite a lot of that is business-centred and whatever, which is good. I welcome that. More independent research around business in the economy is to be welcomed. At the start of his questions, Mr McKinney talked about what is missing: what is missing is agreement on welfare reform, and what will potentially be missing is agreement on a Budget for Northern Ireland. What work has been done by your organisation on the cost or the opportunity cost of the failure to agree on welfare reform or a Budget?

Dr Gillan: I am not aware that we have done work in that area. Perhaps it goes more into the economic impact analysis and the public sector finances, which, as I said, reside outside the statistics agency with our DFP colleagues. Our colleagues in the Department for Social Development have been very active in producing scenarios about the value of the options for welfare reform. That has helped inform decision-making, so they have brought together a lot of the —

Mr Humphrey: With respect, it has helped inform decision-making for some people, but they have been criticised by others. I asked if you were independent, and you said you were. Do you not think, given welfare reform and the implications of it being agreed or not, that work should be done by your organisation on the cost or the implications of not agreeing on welfare reform?

The Chairperson (Mr McGlone): I am conscious that, at this moment in time, doing that might stray from the realms of fact, which NISRA deals in, into the realms of potential issues. That might not be the sort of thing that NISRA normally deals in.

Dr Gillan: That is a fair point, Chairman. I sometimes say, "We don't really do the future. We kind of concentrate on the past", but it is a valid question that Mr Humphrey asks in that there are options, and the economic impact of those options should be assessed in an objective and independent way. It would be for us to try to make available the information for researchers and economists to come to conclusions. Does that help?

Mr Humphrey: Not really, but I appreciate you are constrained.

The Chairperson (Mr McGlone): Gentlemen, thanks very much for your time on this.