Welcome to the 24th meeting of the economy jobs and fair work committee. I would ask everyone to turn any devices they have, electrical devices to silence so that they do not interfere with the proceedings. Apologies have been received from committee members Richard Leonard and Jackie Baillie. The first issue is item 1 on the agenda. Does the committee agree to take items 3 and 4 in private? Yes. Thank you. For our first panel of witnesses this morning in our economic data inquiry, we have in no particular order Rebecca Riley, who is director of the Economic Statistics Centre of Excellence. Welcome. Martin Wheel of the Royal Statistical Society and Professor Campbell Leith of the Royal Economic Society. Welcome to all three of our witnesses today. I wonder if I might start with a fairly general question to our witnesses, which is if they might give a brief synopsis of their take on the current provision of economic statistics in Scotland, what their views are on the statistics and data that we have available and its nature. I will perhaps start to my left with Martin Wheel. My sense is that the availability of data in Scotland, the account of it was summed up quite well by something which I think was said to this committee earlier, that seen in terms of a region of a country Scotland is very well provided relative to nation states of course for many practical reasons Scotland, the provision of Scotland statistics is rather thin, so is the glass half full or half empty, it really depends how you want to look at it and of course there are many practical reasons why the provision of the sort of statistics that independent countries have create difficulties in Scotland because it is so intimately bound up with the rest of the United Kingdom. My sense is that there are things that the Scottish Government could do to improve Scottish statistics but, fundamentally, you get what you pay for and it is not obvious to me that there is much that I am not aware of things that could be done costlessly. My understanding echoes what Martin Wheel just said, that if you look at Scotland as a country within the UK or region within the UK I believe that the statistics are relatively good but that obviously there are statistics that you would have for a nation state which are more difficult to compile for Scotland. At the same time I also understand that there are key economic data that are perhaps missing but that is related to the difficulty of providing sub-national statistics. I also think that there are quite a few opportunities to develop additional data or improve existing data and I believe that some of those are in train at the moment. I am here under the heart of the Royal Economics Society but I think that they asked me to do it because my previous experience acting as a commissioner for the Scottish Fiscal Commission for the last three years having quite a heavy user of Scottish data. A lot of the focus has been on national accounting data and constructing GDP and its components and so on. While from the Fiscal Commission's perspective in forecasting devolved taxis we did not rely so much on that national accounting data, we tended to use specific data that related to the tax base associated with each individual tax. For land and building transactions tax we look at house price data, we look at house price transactions data, we have simple models to extrapolate those, we have more complicated models to build those up into a tax forecast. The income tax forecast starts with HMRC data on the distribution of taxpayers in Scotland and scales that up with nominal wage growth forecasts. It does not really use national accounting data, it uses wage data and labour market statistics, which there is quite good data for in Scotland. When you discuss where you need to expand data coverage and so on in Scotland you need to think about the decisions that are being made, both on the expenditure side and what is happening on the revenue side, what taxis you need to forecast and what variables you need to forecast on these tax bases. It is not always that national income statistics should be the main focus of what you expand. At that centre, however, part of the remit of the Fiscal Commission is to forecast GDP and assess when Scottish GDP moves significantly out of line with the rest of the UK, because that can trigger additional borrowing powers. There is increasing emphasis on what happens to Scotland if it is hit with an asymmetric shock and forecasting that. There is a macro model that is owned by the Scottish Government, I think that they have just put out to tender a procurement of a new macro model, so there is interest in building these models to try and analyse this adjustment process. Within that, there are areas of the national accounts where you might want to expand data so that we have more knowledge of the adjustment process when Scotland gets hit with a shock relative to the rest of the UK. If the UK gets hit with a shock, monetary policy adjusts, fiscal policy adjusts. If Scotland only gets hit by a shock, there is no monetary policy to adjust. Fiscal policy is essentially a balanced budget that is quite limited borrowing powers, so Scottish wages and Scottish prices have to adjust. Scotland has to regain competitiveness relative to the rest of the UK, relative to the rest of the world, to come out of that shock. We do not really have the data on prices and so on to model that adjustment process. We do not know how long it would take, how painful it would be and that is the area where more statistics could be used in terms of macro policy. I think that my question is really along the lines of what is happening either in the UK or internationally as far as changes in the gathering of statistics and so on is concerned. Are there things changing at a UK level that will impact on us? For example, is the ONS going to be collecting more regional data in the future, but anything around that that you can tell us about would be helpful? Could I say something on that? Although I am sure that it will hardly be the whole of the picture. The ONS, in some sense, comes in cycles. There are periods when they are keen to make more use of administrative data. I have also seen other periods where they have worried that administrative data do not answer quite the right questions and they have started to think that they have had difficulty with them. However, at the moment, there is a lot of interest in making more use of administrative data, partly because of the increased computational power that is available and one particular area where the ONS is wanting to make more use of VAT returns as a high-frequency clue to what is going on in the economy. Charlie Bean, in his report, argued that those could also be used as a good regional source because for most of the people putting in VAT returns, they are relatively local businesses and you know where they are. I must say that I do slightly worry about whether the issue of the large firms and some of them may be putting in one VAT return for the whole of the United Kingdom and you do not know whether their sales are in Scotland or England or Wales or in Northern Ireland. I am a bit nervous that this use of VAT data as a guide to what is happening in Scotland and in other parts of the United Kingdom may not yield as much as, for example, Charlie Bean's report seems to suggest. Nevertheless, that is an area where at a national level there is work starting on it and it is something that I am sure the ONS will be investigating because part of the mandate of the ONS is to improve the provision of regional data and the sort of techniques that will tell you more about what is happening in the north east of England will also tell you more about what is happening in Scotland provided that this issue of coverage does not prove to be an insuperable obstacle. Can you just follow up on something that you said there? I think that the administrative data is a kind of cycle that sometimes it is more popular and sometimes it is less because last week we had a number of witnesses and they seemed to be, I got the impression from them at least, that there was a kind of international trend to use more administrative data and to rely less on surveys and that seemed to be quite convincing because surveys did not seem to be very dependable. Would you argue more that it is just a kind of fashion at the moment and maybe surveys can be quite good? No, I am sorry, it is more than a fashion. The reality is that changes in computing techniques mean that we can do things with administrative data that we could not do in the past. You have some statistical offices, Sweden and Norway are good examples which rely almost entirely on administrative data because they collect data that essentially the public will not tolerate being collected in the United Kingdom. There are some things for which surveys will always be needed. For example, if you want to measure unemployment, people who are unemployed are those who are not working and actively looking for work. Again, unless you have all sorts of monitoring of use of websites for jobs and so on, the only way in which you can find out whether people are actually looking for work is by asking them. There is a separate issue that sometimes you might find that administrative data does not quite answer the question that you want and therefore they have to be supplemented by surveys. For example, going back to the issue of VAT returns, no, VAT may tell you about a company's total sales but it will not necessarily tell you about which industries they are operating in. You may know that a firm will be classified to an industry but actually it may be operating in two or three so you are likely to need surveys at the very least as a supplement. That is helpful, thank you. I think that there are very significant developments in the use of admin data. Some statistical officers abroad do use admin data and I think that there are opportunities to exploit these in the UK which have not been done so far. I think that also this programme is supported by the Digital Economy Act which will hopefully make access to some of these databases easier to facilitate and also to a wider audience or a set of researchers who can investigate these issues. There are difficulties, as Martin suggests, with compiling regional statistics from the admin data. They are useful for producing admin data primarily because of their very extensive coverage. I realise that the Scottish Government provides a boost to many of the surveys that are done by the O&S so that you can produce reliable Scottish economic statistics. However, the admin data in some cases is almost near a census so you have many more observations and can compile relatively reliable statistics for some types of indicators. There is, of course, this issue of apportionment. How do you split a company's activity? A company does not have to report the activity that it does in particular parts of the UK and so you have to make some rule. If you are not going to collect that information directly you have to make some rule about how to allocate that to the different areas within the UK. As far as I understand, there is a programme at the O&S to use admin data to develop these regional statistics where different apportionment rules will be used and tested for whether you get different answers depending on whether you use different apportionment rules. That will be a weakness of these statistics but I think still there are very significant benefits to using these data. Also, they can help provide more timely indicators of GDP, for example, for at a sub-national level. The other development is the use of, perhaps, I do not know how to describe this, but big data more broadly defined so maybe non-traditional forms of data are being increasingly used by statistical officers and might also be used to develop regional statistics. These are data, for example, within the ESCO. We have a project where we want to explore the use of freight data or satellite images on transport to develop statistics on interregional intra-UK trade. That is something that has already been explored in the Netherlands. There are also opportunities, not just admin data, that is one of the developments that we see. We also see increasing use, or there are certainly opportunities, to use other non-standard forms of data to develop sub-national statistics. On the question of that, it seems to me the obvious thing as an outsider would be to collect that information, get the companies to break it down and feed it in separately, but that would require an HMRC change. Is that something that would meet a lot of resistance, or would it just not be possible, or can you not comment on that? I do not think that I am in the best place to comment on that. Certainly, you would not be able to take that data backwards in time. No, I am sure that I am. You would not be able to use that retrospectively. It is possible that one could conduct at a smaller cost a survey to investigate for some companies the likely error by using different apportionment rules without rolling something out more widely. If you wish to come into the discussion, please indicate by raising hand witnesses should not feel that they have to answer every question and your microphone is operated by the sound desk. Last of all, on Mr Mason's question, Campbell Leith. I agree with the points that have been made. The apportionment issue is one of the big issues in trying to either apply survey or admin data to Scotland, as companies working across the whole of the UK may not even know what is attributable to Scotland. They may not think about their business in that way. That is a big issue to be dealt with. There is also admin data in Scotland now that we have started generating our own revenues from devolved taxes. In the case of LBTT, for example, when that was introduced, the revenues were less than anticipated in the first year. There was a big debate over whether the progressivity of the tax was damaging the top end of the market. There are various reasons why that might be. It could have been because of this behavioural response or it could be that perhaps the market in Aberdeen was suffering and so on. When people do their LBTT returns, they indicate lots of bits of data. There is data there when those returns are filed and Revenue Scotland could produce that data. That would allow us to dig deeper into is Aberdeen suffering relative to the rest of the UK in terms of generating LBTT revenues. What are the behavioural responses to tax changes within that tax system and so on? Data is not coming out into the public domain? No. What we are getting from Revenue Scotland is the aggregate data broken down by tax band within LBTT. We are not getting the regions within Scotland broken down. In our last report, we resimulated the Scottish Government's model using local data for prices to forecast how much revenue should be generated by Aberdeen in the area around Aberdeen. Given what was forecast for prices and what happened to house prices in Aberdeen, that could potentially account for a significant part of the shortfall on LBTT revenues. However, we do not know how well that model works in Aberdeen unless we have the outturned data for Aberdeen. That data is in the form, but it has not been produced by Revenue Scotland. There are potentials to that. I do not want to push this too long. Was there any reason given for not being able to produce the regional data? Just resources, the resource cost of doing so. In terms of admin data for Scotland as well, the income tax forecast relies heavily on admin data. The way that the income tax forecast works is that there is something called the public use tape that is produced by HMRC, which gives you the full anonymised tax returns for Scotland. What the forecast does is that it takes this distribution of tax returns, splits them up into the age groups of the Scottish population, because you find that people of middle age are earning the most, the peak of their careers, that they are paying more higher rate tax, so a lot of the revenues are coming from this age group and you forecast taxes by age group. However, what you find is that for this 17-18 budget forecast, the only available public use tape was using 2013-14 data, so there is quite a long lag between the generation of that admin data and the revenue that we are actually trying to forecast. Part of that is because self-assessment comes after the tax year, so it takes a while for this data to settle down, but you could have earlier rounds of pay-as-you-earn data generated by HMRC, which would be more up to date and could inform the forecasts just prior to it being produced. There is scope to liaise with HMRC and get your hands on that admin data in a more timely way to improve forecasting. Thanks a lot. Before I move on to my question, the topic of VAT returns in the use of it was somebody who completed VAT returns for the best part of 30 years. There was a change about 20 years ago on the VAT return, where previously only asked for total turnover and then asked for turnover within the UK and turnover outwith the UK on the face of the VAT return, so changes can be made if there is a political wall for them to be made. My question was going to be, can you outline the key recommendations in relation to the Beane review? You have already touched about possible use of the additional administers of data, but what other recommendations did they make and what impact would they have on Scotland? Perhaps Rebecca O'Reilly? One of the key recommendations, I believe, for things that I was picked up on, was the timeliness of GDP data for Scotland. I think you produce quarterly GDP estimates, but these are provided with a much longer lag than for the UK as a whole. I think from user engagement that was something that was picked up on quite strongly. I think that we will be working to improve the timeliness of these indicators. One of the projects within the ESCO being conducted by Strathclyde University and Work Business School is to use admin data, survey data, other indicator data more broadly, and possibly also that returns data to try and align more the subnational GDP release, the timing of the release, with the UK as a whole. Whether that will work, I mean this is research that's being undertaken and the objective is to try and align those release dates. It's being done because there is a worthwhile pursuit that there is an opportunity here to draw those release dates closer. That is the hope that we can do that. One thing that has been reviewed suggests that the UK statistical authority should perhaps produce a more nuanced assessment of the quality of what counts as national statistics. At the moment, they give a seal of approval to data that's produced according to certain standards. The BEAN reports suggest that they strengthen that role and give more of a quality assessment alongside the data. That would be particularly useful for the economists producing the Scottish data to have that more nuanced and stronger assessment. Martin Weal. Can I mention one other thing? Of course, the BEAN review led to the Digital Economy Act, the Digital Act and paragraph 81 of that makes the UKSA the conduct of administrative data being used for statistical purposes. It makes then the conduct to other users, including the Scottish Government, for the production of Scottish statistics. To the extent that the powers of the Digital Act are used and they give the national statistician the power to require administrative data to be made available for statistical purposes, it does mean that the Scottish Government, the Scottish statisticians, will have to work through the UKSA to the extent that they need to use the powers in the act to obtain their data, at least as I understand that was my reading of the law. Campbell mentioned the issue of giving a more nuanced view. Of course, for some Scottish statistics, the providers do give quite a good view of the quality of the statistics. Certainly, if you look back historically at the UK national accounts, variables used to be given codes A, B, C and D, and it was said what A, B and C and D meant, that you find this if you look at the book on sources and methods that was published by Rita Morris in 1968, that's rather gone away. Charlie Bean didn't say this explicitly, but the implication of the recommendation that Campbell just mentioned is perhaps more of a move back towards trying to be more quantitative about what you know and what you don't know. Another issue that Bean raised was to, and this was a part of it, of course, on accuracy, was trying to improve the governance processes affecting statistics. There, of course, it wasn't mentioned in the Bean review, but certainly to an observer from outside Scotland, what really does stick out is the five day advance notice that some users have of official statistics, whereas even in countries where there is, where pre-release data are still made available to some people, typically it's only a few hours less than a day, so I think Scotland there is very much an anomaly relative to almost the whole of the developed world now. You touched upon the Digital Economy Act, but reading some of the evidence that we've got, the suggestion is that devolved administrations won't get direct access to the data. Is there any reason for that? I suppose the answer is that what I'm inferring is that Parliament appointed the national statistician who is the national statistician for the whole of the United Kingdom. I wouldn't say you won't get that. I mean, I didn't read it as saying you won't get direct access to the data. What I read was that if Scottish statisticians want to use, want to make use of the powers to require administrative data to be available for statistical purposes, they need to work through the UK statistical authority. Now, to my mind, that's very different from saying that Scottish statisticians won't get direct access to the data. I'm just reading the evidence of the Royal Statistical Society. Maybe it's their interpretation of the same thing, but the way I read it is that the Scottish Government will have to work through the UK statistical authority. In the paper, it says that the DEA will not provide devolved administrations, so that's quite straightforward. It says that they should, so maybe the word should change that they will, so that there's some compulsion, a statutory entitlement. I think that from the outset that there is this need for the Scottish Government and other devolved administrations apart from Northern Ireland to actually almost beg to get the information, so if this is a new act coming in, we're kind of back where we started, are we not? I mean, that's what my view is, but I wonder what your view is. A new act has come in. It became law just before the general election, so it has come in, but perhaps it's too early to ask whether there have been any difficulties in using the process that's described in the act, but as I say, as I read it, the conduit is the UK statistical authority, and perhaps that's what the authors of the RSS paper meant when they said won't have direct access, but being practical, the question I would want to know is whether there have been any problems in interacting with the UK statistical authority to make use of the powers that are there, and since the act became law at the beginning of June, presumably it's currently too early to say. Anybody else get an opinion on that, whether it should be statutory or... There's one thing to test it and see if it produces the data easily, then it's okay. If it's a struggle, then it needs to be revisited. I don't think anyone questions the quality of the data, and I don't think that what we haven't heard is... No, it's not as easy as accessing it. Yes, accessing it, and in Scotland, it's a quantity, I would think, is the problem that starts somewhere because it's so low in number that it's meaningless, so it's these aspects of it. I'll echoing some of the things that have been said that it is a very new act, and it will probably take a little bit of time to find out how this process is going to work. There's a law that's been passed, but there will be a process for getting these data from other departments into a form that the ONS will be able to use and to work with other researchers to develop into national statistics. That, I expect, will be a not-an-immediate process. Just before we move on for that, do you have any other views on how relevant this is going to be to Scotland and the benefits that we're hoping would flow from it? Could you maybe speak about that a bit further? Insofar as the Digital Economy Act, I think it will be very important for making access to admin data easier and other forms of data as well. It is an important development for national statistics, broadly defined, and therefore also for Scottish economic statistics. Anybody else? I already gave the example of the admin data that's used in income tax forecasting. I mean, if this allows the Scottish Government and the Fiscal Commission to get access to that underlying admin data in a more timely manner, then it's to be welcome. Another point, please, of course. No, this discussion has focused on the letter of the law and the powers of compulsion. As I understand it, a lot of the point of the act was that until it was passed, holders of administrative data, like, for example, HMRC, thought that they weren't allowed to release them for statistical purposes. The mere passing of the act and the fact that it's perfectly clear that they are allowed to release them may, of course, and I would expect it to mean that in practice the actual powers in the act don't have to be used. So it's not only a question of whether the conduit through the UKSA works, but whether Scottish statisticians can build the relationship with the holders of administrative statistics that's needed to create the data without making any use of the formal powers in the act. Thanks for that. Just before we move on to another aspect, you mentioned the issue of pre-release of data. I'm just wondering how the system in Scotland compares to other countries that might have a comparable setup. Is there anywhere that would have a comparable setup? The other question is, do those other systems have a way of an independent check on the manner in which the data is presented before it is publicly released? As I said earlier, I'm not aware of other countries where some people in Government have five days' warning of data before they're released. As I say, in the United Kingdom it used to be short of that, as I think went completely in July. In other countries it may be a few hours, but to my knowledge, and I'm not saying that I've looked at everywhere, to my knowledge there isn't anywhere else that has anything remotely as long as Scotland has. In terms of independent release of data, one of the aims was that there should be a single website through which all official data were released, the gov.uk website, and of course Scottish data and Scottish data releases do appear on that, I assume at the same time as they appear on the Scottish Government website. In that sense, in terms of standardised presentation, the process is working in the way that it works for other Government departments that produce data in the United Kingdom. Sorry, you asked an additional question about independent. I was wondering if there's any system in other countries to have an independent check on how the data is to be presented prior to its release? I would think that in other countries, as I assume is the case in Scotland, that the data release is the responsibility of the statisticians rather than other civil servants, and to the extent that that is true, the statistical service for the United Kingdom as a whole is independent. Of course, it's questionable what independence means for a body that is intimately wound up with the process of government. It's very different from independence of the Monetary Policy Committee, but I think that the guarantee has to be the independence of the statistical civil servant rather than having a separate body. Do any of the other panel members see any difficulty with the current system in terms of pre-release of data? It's increasingly seen as good practice to avoid the pre-release system, so it would be best to fall in line with UK practice, I think. I wanted to comment on a separate question, the bean review question. I don't know if there's an opportunity to come back to Gordon MacDonald's question. Perhaps briefly both that question and mine then. I'll focus on Gordon MacDonald's question. You asked about some of the key points coming out of the bean review, and there are some which are particularly relevant to subnational statistics, but I also just wanted to mention that, of course, there are many recommendations for UK national statistics more broadly defined, which will of course also be of benefit to Scottish economic statistics. One of those key areas is the recommendation to undertake research into what it is we are measuring, so a key issue is that we have a changing economy and our statistics need to be changing to continue to reflect accurately the economy as it changes. One example of that is, for example, the increasing reliance on the service sector. The economy is made up of different sectors of activity, of course. The service sector is a very, very broad sector, and probably a lot of the price indices we collect, which enable us to measure real activity in the service sector, are not as well developed as for some of the other sectors, which were more important decades ago and perhaps less important in terms of size these days. There are recommendations to improve those types of statistics, and I believe there are developments in that area. Also, to try and better understand implications of the digital economy or the increasing digitisation of the economy and what that means for what we measure, the shift between what we produce in the marketplace, what we produce at home, does that matter for our interpretation of statistics as they are compiled today, or should we actually be revising how we compile some of these things. Again, the deflator issue there is very important for some of these areas, and also there's a feeling that in the digital economy there are factors of production that we don't measure very well. One of his recommendations is to try and explore the importance of these changes for economic measurement, and that's, of course, not specific to regional or country level or sub-national level statistics, but it's something that should lead to an improvement throughout the system. On that point of the digital economy, would it be right to read through the evidence that there was an example given that said that if somebody previously booked a holiday through a travel agent, that would count towards GDP, but if they then subsequently booked it online via the internet on their own, that wouldn't count towards GDP, and GDP of the country would actually go down because the ONS doesn't measure that. Is that correct? I think that GDP will typically measure market activity, so if activities move from the market into the home, they may no longer feature in GDP statistics. There are exceptions, so some activities, if they are of particular large in size, for example, I don't know what the threshold would be, but if something's deemed to be very important economically, it might then feature in the national counts in somewhere another or in satellite accounts. I guess at the moment there's a sense that there's quite a few of these types of search activities or arrangement type activities that have moved from the market into the home when we do our own search for all kinds of things on the internet, obviously, where previously we would have gone out into the marketplace. The question is then how important are those activities? We don't really have a sense of the magnitude of these changes, how important they're likely to be. Maybe the sum of these changes is important, and even if we don't change the national statistics, we would maybe want to appreciate what they imply for our interpretation of national statistics. On that point, we could move on to Gillian Martin's question. I have a very related question to what you're just talking about. There is a debate about whether what we measure represents progress towards a Government's economic aims or a country's economic aims and whether we should actually be measuring different things in order to ascertain whether those aims have been met. For example, non-market activities, things that maybe there isn't a figure going into any kind of HMRC or whatever, but there is actually an economic impact. What alternative measures do you think that there could be to measuring that kind of economic activity? For example, things that happen in the household that have an economic impact, such as caring, for example, or the voluntary sector where work is done, but there's no money change in hands, but it's having an economic impact on the success of the country. Could I make some observations on that? The UNS does do—I mean, it's for the whole of the United Kingdom, as far as I know it doesn't specifically identify Scotland—a study that looks at the way people use their time and produces as best they can estimates which do value the sorts of activities that you're describing, so that has been looked at on the issue of things moving to and fro between the market sector and the non-market sector. I suppose I'd caution us against believing this is a new phenomenon. I remember reading somewhere people used to buy their furniture ready made and make their sandwiches themselves. Now perhaps they tend to buy sandwiches in shops and buy flat pack furniture and put it together. So these sorts of things have always been going on and in that sense the replacement of a travel agent by a website is the consequence of technical progress, but it fits into a pattern that's always been there. What I would caution against thinking that measured GDP necessarily goes down because of that, because the people who used to work in the travel agents know whose labour income and the profits on the travel agent were counted towards GDP will in all probability be doing something else now, even though we don't know what it is, and that something else will be counted towards GDP. So to the extent that resources are saved because of digital developments it doesn't necessarily mean GDP will go down, what it may mean simply is people are doing other things which we are measuring. So yes that it's important to observe this that this is not a new phenomenon so for example childcare is a very big activity actually which isn't reflected as economic activity and that has been changing over time. We've moved childcare increasingly out of the household into the market. So I think the key thing is to try and understand how these developments affect overall output and whether you incorporate them in one way or another is a separate issue, but you'd want to understand how these changes if they're very rapid over time for example. So we have digitisation is a development which has happened very quickly recently. So if some of those activities are actually significant it could affect the time profile of measured growth and we simply just want to understand what those patterns look like. Modern economies are big complex things with lots of things going on all the time and there's no single silver bullets policy that's going to have a big measurable effect on GDP growth so you're not really going to capture the success or failure of the package of policies by looking at GDP growth or a revised measure of GDP growth. The kind of policies that are pursued in advanced economies are small micro policies. They're focused on individual groups. There are policies which introduce free school meals to all children and you want to assess through microeconomic data whether that has an effect. Does that improve performance in schools? Does that affect behaviour in schools? You need this very small scale microeconomic data. Ideally you want randomised control trials so you introduce the policy in some schools but not in others and see what the differential impact was and that's the way you do evidence based policy and across the board you hope that collectively you do good policies and this adds up to something. So that kind of micro data that you're talking about that is available effectively in a devolved nation like Scotland that we have the mechanisms to measure that. It's just a case to come back to the very first point about spending money on it. My family takes part in one of these data collection exercises. We're one of the objects of data. The growing up in Scotland survey periodically someone will come to my house and interview, test my children and their cognitive abilities, ask us questions about our income and various aspects of schooling and so on. This will build up into a profile of microeconomic data on education in Scotland so we're a data point in that and that's the kind of collection of data that allows you to evaluate these policies. I'd like some of my colleagues to come in the back. Yes, I think a number of members want to come in Andy Wightman followed by Ash Denham and I think John Mason also so perhaps Andy Wightman and Ash Denham then perhaps. I want to move away from this question at the moment. I don't have anything to follow up. Yes, I mean I wanted to speak about GDP. I'm kind of fascinated by this idea of what you measure counts and I think even recently the economist which is obviously known for being fairly conservative concluded after an online debate that GDP is a poor measure of improving living standards and the OECD said that this assumption that growing GDP meant life must be getting better. I think we've all moved on from that and we know that it's not quite as simple as that so I mean this is touching on what Gillian Martin mentioned if we want to measure progress but our version of progress and particularly in Scotland that definitely includes things like environmental sustainability social inclusion things like that. Professor Campbell you've just said that there isn't a way to use a big measure to capture progress and do you think that's definitely true? Other countries you know are or other economy foundations like the NEF are developing indexes I don't know if you've heard of things like the happy planet index or the living planet index and so on. Do you think there is a place for a big measure that could possibly in the future replace GDP? Well I think you can construct these big measures the whole range of assumptions needed to build it up into an aggregate measure of welfare which you may or may not like those underpinning assumptions but in terms of evaluating the very large number of individual policies so that number may be driven by policy it may be driven just by external events which policy makers have no control over whatsoever so if you're using this as a means to evaluate the success or failure of policy it's probably not going to there's not going to be a strong link even in terms of more economic questions and forecasting to devolve taxes we rarely find a robust link between our forecast for these taxes and GDP so we don't use GDP as a driver of our forecasts for income tax we use nominal wage growth it's a far better predictor of where income tax revenues will go so it's a big headline measure which there's lots of debate over there's a big narrative around it we can talk about the impact of brexit on GDP and so on but in terms of evaluating policy predicting tax revenues this doesn't it's not used a great deal and yet government seem to be judged on it you know they seem to be judged on you know how effective their economic choices have been based on how GDP is performing I mean we're still doing that at the moment yeah but policy will be only one of the factors affecting the GDP number I mean could I just say that you know some of the problems with GDP no many of the issues that you mentioned of course have been known for a very long time GDP is a measure of output and that's the beginning and the end of what it is it's a gross measure and as GDP has been periodically redefined software investment has been put in and so on all these very short-lived items of capital have the effect of increasing the gross measure of output but they have much less impact net of depreciation and simply looking at net rather than gross would be a considerable improvement the capital that depreciates you have to replace and you don't become better off by having more depreciation going on in your economy so moving to net rather than gross would be a very big improvement secondly even in real terms there's a distinction between product and income income is measured relative to the costs of consumption the things that people buy directly and the government buys on their behalf whereas product reflects no the prices of imports and exports and it would be better to look if we want a measure of performance it would be better to look at real national income rather than real GDP then you have other issues that GDP into as a measure of people's living standards is a plutocratic measure it gives more weight to the growth of people with the growth that people with high incomes experience than the growth that people with low incomes experience and one of the things that we're doing at the ESCO is trying to look at ways that might give of producing alternatives that might give equal weight to everyone's growth experience spring and Dean Lockhart for supplemental and Rebecca Riley may have something to comment on both of these aspects. Thank you very much. I'd just like to elaborate on this point and get views on the availability of statistics to effectively measure the Scottish Government's 4i economic policy which is inclusive growth, innovation, internationalisation and investment because there was a report last year by Audit Scotland that seemed to suggest it's quite difficult to measure some of these factors because things like innovation there might not be readily available statistics to benchmark what's happening with innovation. So do you have views as to how we can effectively measure the success or otherwise of the 4i economic policy? Okay so just with the GDP question which touches on the inclusive growth so I mean I think there's definitely room for additional measures as Martin was alluding to and in the ESCO we are producing these inclusive growth measures for the UK as a whole whether it would be possible to take that down to a sub-national level I don't know if the data is the sample sizes would be adequate for that I just don't know but you would want I think you know when GDP is just one it's an important figure and I think there's plenty of space for these additional measures like that like the inclusive growth measures or to look at other things like sustainability etc in conjunction with GDP in terms of the 4i so inclusiveness is one. Internationalisation is important I think you have for Scotland you have data on exports to the UK you have a separate survey to collect this information and also to the rest of the world and my understanding is that what's missing there from the Scottish perspective is information on imports so and that's complicated by the fact that it is a sub-national area and so it's difficult to collect information on imports so that's a missing bit of the internationalisation picture for Scotland so that's one area where one of the partners within the ESCO is trying to develop new measures or certainly investigating the feasibility of developing new measures of internationalisation for Scotland it could be applied not just to Scotland and Scotland is a good place to start because there already are quite a lot of data but you could in principle maybe roll some of these things out to do other areas sub-nationally so I mentioned this earlier what one of the things that we're looking into there and this is led by the Fraser of Allander Institute and there we're looking at novel forms of data to try and better proxy these trade flows across Scotland and the rest of the UK so it's possible that there's and this is taking place over the next 18 months so there hopefully will be some recommendations on what might be feasible in terms of improving statistics on internationalisation for Scotland innovation I mean they're just from my own experience there's an innovation survey of course that's done for the UK and which is a community innovation survey it may have a slightly different name now but it's it's a survey that's conducted in a similar way across European countries so that you can compare the innovation activities of the different countries you do have in that survey which which has about I think 15 000 observations or something like this you do have for the UK you do have the regional information as well obviously you'll be ending up with a relatively small sample if you're trying to look sub-regionally so there may be limitations in that way but there is there is a survey to try and and measure innovation activities in the UK and you would of course again if you were able to use those data to to look at area specific innovation which it may it's possible that this is done I just I don't have the answer you obviously have the same issues that you have of apportionment with all of these types of surveys and admin data in that if you have a large innovative company well did their R&D unit operate in Scotland or did it operate somewhere else in the UK you may not know so you'll know where the employment was and you may also from the industry coding that you have of plants that underline these big companies you may be able to make some assumptions about where the R&D activity took place but you have these additional complications as with as with other data coming from these surveys thank you wonder if other members of the panel might have views on this okay I think that the kind of for I this is kind of very large high level concepts but I understand there's a kind of list of targets by which the government wants to be assessed on these associated with these these targets so clearly there must be data to evaluate these these targets there's maybe a slight danger in specifying exactly how a kind of high level concept is going to be assessed with a very specific target just as if you want to assess the quality of the school system by introducing a test for literacy at certain age there's always the danger that teachers teach to the test in order to improve achievement of the target without necessarily fulfilling the wider higher level objective of improving literacy throughout the school system so you may not want to be too tied to specific targets or make sure they're not targets that can be manipulated easily they actually do capture what's happening to that specific area I think you also this goes back to a conveyor point that the individual policies that will be introduced to achieve these higher level objectives will be a kind of there'll be lots of them they'll be looking at very specific things hopefully contributing a little to the higher level objective and perhaps you're more interested in the micro data that assesses that specific policy a higher level objective may or may not be achieved it may be achieved because of policy it may be achieved just by good luck it may have been blown off course by bad luck the policies were good but just the way the world evolved at that point in time just the fate was against it so you want to hone your data to actually assess the thing you have control of okay sorry because I just make one further observation on that not only do you want to hone your data but you have to be rather careful about the way in which you do it and the example that sticks in my mind was when the well it was the UK government but it was applied it was applied to GCSEs so obviously wasn't relevant to Scotland the target was the proportion of children getting five grade A to C GCSEs and because the target was defined in that way teaching tended to focus very much on the children who were on the boundary between four and five to try and push them over five if you had had some target defined instead say of the average GCSE score with some scoring metric then teaching resources would have been devoted rather differently now obviously it's a question for policymakers whether they do want to focus resources at the four five GCSE margin but my guess is that that was simply adopted as a quick and easy target without anyone having thought of the consequences so when you do try and assess performance the performance relative to the four eyes using specific target you actually need to think rather carefully am I doing something that no am I choosing my target in a way that actually achieves the policy that I want to achieve or is it no going to deliver an outcome the text post I may not be very happy with thank you one very quick follow-up if I may is there an internationally recognised definition of inclusive growth for example OECD or is it one of those concepts that tends to mean different things to different people I'm not aware of an internationally agreed definition I don't know maybe colleagues are thank you very much thank you and now on to Andy Wightman I think that that acts convener I mean a question has arisen in this debate around Scottish data as to whether Scotland should have more autonomy in the collection of data I mean that the moment doesn't have statutory powers to collect data as we heard there may be issues with the digital economy act observations in the Royal statistical studies evidence here that RSS does not believe it's an appropriate time for Scottish government to move away from the current system in which ONS produces economics just for the whole of the UK I think the problem we've heard not just in this inquiry but in previous evidence sessions is that the data we have that relies on UK data relies on subnational samples relies on perhaps additional surveys being done in Scotland is not actually terribly reliable so I'm just wondering why RSS is so clear that this is not the appropriate time given that the Scottish government's not like other UK government departments I mean it's an executive that reports to a parliament that's trying to grow the whole of the economy using a variety of measures like improving education etc to have an impact on the economic performance of a whole jurisdiction sorry since no that was a question asked with reference to the RSS could I say something on that first of all of course there is one area where Scotland does have no its own statistical authority and that is with the registrar general and I think for people who want to understand what's happening to the population in the whole of the United Kingdom that actually is a source of problems which people would feel uncomfortable with about being replicated elsewhere if you look at the you know ONS website for example it's often quite a lot of work to find statistics that relate to the whole of the United Kingdom rather than England and Wales there were issues I remember from the 2001 census how you treat very small numbers of returns you can't publish data which show only one person in a particular cell because statisticians regard that sort of thing as disclosive even if it's only the people who can identify themselves and the Scottish registrar general adopted as far as I remember a different solution to that problem from the solution that was adopted in England and Wales and you know we ended up with two censuses that at a high level fitted together but when you went into the detail didn't fit together and no didn't allow people to make the sorts of comparisons between what was happening in Scotland and what was happening in England as easily as they would have liked so with that sort of warning you know I must say I do feel rather nervous about it the issues that you mentioned over the quality of the Scottish data though I should say I see very much as being a consequence of you know someone's assessment of benefits relative to cost rather than a problem with the statistical powers of the Scottish government and you know if you want better quality data and you know it's a particular problem that arises in a relatively small jurisdiction you know the performance of a survey depends only very slightly on the proportion of the population that you survey it depends mainly on the number of people in the sample so if you wanted Scottish data to be as good as date no the Scottish data from your sample surveys to be as good as the data you get for the whole of the United Kingdom you would need a Scottish survey with a sample size much the same size as is used for the whole of the United Kingdom and to my mind that's the fundamental trade-off you face it's not a problem of whether the Scottish government has enough powers or not or put it another way no if I wanted no to investigate that further what is it that the Scottish government would like to be able to do and is prepared to pay to do that it finds it can't do because of the legislation because of the current statutory arrangements. I tend to agree I think I'm quite happy with the UKSA being the kind of overall regulator of the statistics and assessment of the quality and then I would want the Scottish statisticians to be active partners with the ONS in generating the data for Scotland so piggybacking off the surveys that are already done the data is already generated augmenting them where necessary and where funds are available to improve quality or scope of statistics. Another question related to you mentioned the registrar general I mean we have other agencies that collect data like the registrar of Scotland for example but their data is all you would pay for three pounds plus that for every bit of data in general terms do you believe that all all data economic data should be open? I think you need to be very careful I mean there are two questions what you mean by open and whether you charge people for access no I do remember hearing the view that no data should just be collected and made available and users should make of them what they want now that seems to me completely to ignore the role of statistics as a science which is how to draw inferences from what I would call raw data. I think the statistical science has developed over the last what 100 150 years and it focuses people's attention it no saves a lot of work so I certainly wouldn't want that sort of openness on the question whether users of public data should be expected to pay for them I'm afraid I don't know what it is one is charged three pounds for but over the last 20 years there or so there has been a move away from the ONS no wanting to charge people wanting to collect money to making statistics freely available over the internet and I think that's been thoroughly a good thing so my while I don't know the specifics of no the example you're giving my general view is that official data prepared by statisticians so that they show the answers to questions that no the answers to material questions rather than just being an amorphous mass of statistics of numbers statistical data prepared by statisticians in general I would think should be freely available but you may have some circumstances where people do want very bespoke things safe from the census and you know I certainly wouldn't say that it's never appropriate to charge people particularly if they're asking for a piece of ad hoc work I think that obviously statistics are official data are public good and that's very important on the the issue of paying three pounds I don't I don't know exactly what what what's the example is but there has been a move towards making micro data available at no cost much more widely and I think that is a very good thing it's an enabled researchers to ask new questions and analyze the data in different ways that the statistics office maybe isn't focusing on and so so I think it is important to to make data available so people can look at the range of questions you might address with those data at the same time I think when you do that it's important that users are using the information I mean I think at the moment when you use those data it has to be for a public good purpose so that there is there is that that's an important aspect of having access to those data that it has to be for the public good but one of the things I would I would point out is that when users are using these micro data they may use them in very different ways for good reasons than the statistics office but it's important then that we have information on what these data actually are so that people can use them in a educated way so that we don't draw incorrect inference from from those things so I think it's important when you are provide I think it's very useful that these data are provided through things like the virtual micro data laboratory to allow projects for the public good and it's important that that is accompanied by explanation documentation of the underlying data so that it can be used in the best way possible okay thank you I would agree right thank you I'm afraid we're going to have to move on to another area because we're running out of time here perhaps a very brief follow-up from Gordon MacDonald and then a question from Jamie Halcro Johnston just a very quick question and Andy's original point about whether there should be a separate Scottish statistics authority given that Northern Ireland has its own statistics and research agency with a staff of according to its last accounts 412 with 301 statisticians why is it necessary for one part of the UK to have its own statistics authority and yet you feel that it shouldn't be the case for Scotland sorry I mean could I answer that you know partly with reference to what you know I was seeing when I was a member of the statistics commission and you know this was in the early days of devolution soon after 2000 and one of the big concerns we had was that the united kingdom was you know tending to fall further apart statistically that no it was particular particularly with reference to Scotland the Scottish health service was collecting a different administrative data from the English health service no for very good reasons it wanted to do different things and that was the purpose of devolution after all to allow it to do different things but in terms of wanting to know what was happening throughout the United Kingdom it it of course made it harder no in the 2007 act I think it was recognised that you know the statistics and registration service act I think it was recognised that an important part of the statistical service was producing comparable statistics for the whole of the United Kingdom now of course Northern Ireland's history is different from the history of Scotland my preference would be no to you know I don't I don't know the Scott the Northern Irish statistical arrangements and the way in which they work but my preference would be to try and you know run as much as possible on a UK wide basis so as to maintain comparability so as to ensure that you know the same approaches are you know the what superficially look like the same data actually mean the same thing for the different constituent parts of the United Kingdom so at the very least I know would be reluctant to follow the Northern Ireland model simply because it's what history has delivered us for Northern Ireland I mean you do already find that there are some surveys that are only for Great Britain and not for Northern Ireland as well and you know a lot of users just tend to ignore that or may not pay enough attention to know to know that this is the case but I would know in statistical terms I think there's a lot to be said for having a picture a good picture of the whole of the United Kingdom and then you know meeting the needs of the devolved administrations within that rather than what could easily turn into something of a patchwork quilt and of course in economic terms Scotland is much more important than Northern Ireland so if one were to go down to this path the risk of disruption to statistics which are representative of the whole of the United Kingdom would seem to me to be much greater but surely the question should be is Scotland well served by the ons given that the ons is over 3000 staff and in many cases we don't get as much Scottish sub data from UK subsets surely that should be the question whether we're getting value for money from the ons well as I say I would have thought that a lot of the issue with subsets is the no particularly from survey based data is the issue of how much one is prepared to pay that no to boost the sample and going back to what I said right at the beginning it's easy to see how you could have better statistics but better statistics do cost money but that effective will be us paying twice because we're already paying to support the ons not to provide the service we require and therefore you're asking us to pay it for it twice well as to as to how the no ons no how the ons is financed relative to contributions from Scotland is an area I'm afraid I'd rather not get into because it's something on which I certainly don't regard myself as expert but no I mean you might say that sorry to interrupt I think we're we're running up against our time limits here so I just wonder if the other two panel members on that point I think have a very brief opinion to express look at the kind of cpi statistics for example I think the kind of sampling done in Scotland is more or less proportional to the population of Scotland so it's in order to get representative data for the whole of UK you have to spread out your sample with appropriate weights throughout the UK now in order then to produce statistics for Scotland that size of sample may not be enough so the then the question is do you want to augment that sample by just enough to create the quality statistic separately for Scotland and ask the cost benefit analysis you need to think through right thank you and finally a question from Jamie Halcro Johnston thank you it's largely actually been answered throughout this discussion this morning but it was really just to look at I represent the Highlands and Islands obviously a large and diverse area diverse economy with different sectors and I'm sure most members too I was just wondering about the local nature of data basically how whether there is data that we can use at the moment that give us better local picture within within the regions of Scotland or within even the council areas and how that can play a role in providing perhaps there's a scope for that providing more a role in producing a national picture so you're right I mean this goes back to the admin data that's available so I think there are plans certainly I read something by the group at ONS who look at subnational statistics that there are plans for developing local area statistics and I think also that was one of the recommendations in the BEAN review and if you have a near census that the admin data provide you should be able to create statistics at lower level geographies in different with different types of boundaries obviously all of the questions that apply to or all of the issues that apply in creating subnational statistics for countries like Scotland would be possibly even magnified I mean that they're not they won't go away that'll be they'll be an issue and maybe also magnified when you get a smaller a much smaller unit of economic activity maybe just in terms of forecasting devolved taxis as well there's a sub Scottish regional element to those as well and certainly in terms of LBTT they'll be focused on the big cities will be the major generators of those those tax revenues the higher rate taxpayers as well will tend to be concentrated in the same areas so it's kind of regional breakdown can help forecast these taxis as well so you probably want different breakdowns for assessing policy interventions on different groups and then other breakdowns for forecasting revenues which depends what decisions you're making all right well I'd like to thank our witnesses for coming in today thank you very much I'll now suspend the session to allow our next panel of witnesses to take their places thank you well welcome to our second panel of witnesses today in no particular order we have Russell Gunson director of IPPR Scotland gill donald who's a member of the economic advisory group reform scotland craig ddial head of research at common wheel and Graham Macston who's a secretary general of the club of Rome I wonder if I could start with a fairly general question which is about what each of you would view as being the strengths and weaknesses in the current suite of economic statistics or data for Scotland and how these might be addressed and I should say that the sound desk will operate the microphone so there's no need to push any buttons and indeed if you want to come in on the discussion at any point just indicate by raising your hand so I wonder if we could start who would like to start matters off here Russell Gunson in terms of strengths so I think it's clear it depends what you're looking for from the data so as a sub-state part of the UK a nation within the UK we're clearly stronger than most other parts of the UK at most of the data that we collect and can use and have access to however compared to an independent country or UK level where we have weaker in general data to draw upon I think in terms of the strengths and weaknesses within that it's clear that at the macro level there's some big gaps so imports exports inflation there's whole government accounts that we're missing clear weaknesses there and I think actually the biggest weakness for me but this is perhaps my perspective coming from the organisation that I do would be around the analytical side of things so in in terms of the remits for the committees looking at this in terms of interpretation and in terms of scrutiny so yes we can improve collection yes we can improve the sharing and linking of that data but most of all I think we can improve the analysis and the capability within government and outside of government to be learning lessons and developing solutions from that data I think I should have went first Russell stole all my lines yeah Paul Hart had to agree with everything that's just been said there I think when we're looking at data we do need to look at why we're looking at it we need to be asking the question what is the purpose of the data and sometimes we will go out asking a question to form a policy and find the data is lacking or insufficient sometimes we might even find we're gathering data and it's just being gathered as a matter of routine and it's not being not much is being done with it at the moment and so there's while we're looking at the strengths and weaknesses of the data I think we do need to have a broader look at the overall strategy of basically why we're doing all this thank you I can't I can't talk specifically about Scotland's policies because I didn't live here any I mean I was born in Scotland but I didn't live here now I live in Switzerland and we take a global perspective but what I can talk about is what you measure and what you should measure because what you measure determines not just your policy but the opinions of the people in your country and measuring GDP and tracking GDP is a very bad measure of social progress as I'm sure most of you know there are many better measures of economic development and social development and if the Scottish Government is going to set up some sort of separate statistical organisation then you have a very rare opportunity to redraw the boundaries about what is being measured and then you can influence policy in a fundamentally different way and you can also change the opinions of Scottish people about what they want from their economy and their society so you have an opportunity to I think lead the world to some extent by setting up a new statistical organisation only if you choose to measure the right things yeah I agree with Russell's point that there are there are gaps whole of government accounts being one of them however I would defer to Graham Roy who said that jazz provides a pretty accurate picture of where Scotland is economically it is not definitive it cannot be definitive no statistical model can can ever be so no dataset can be a strength I see that I probably hadn't realized was that the objectives are in place there are basically Scotland has the economic strategy it has purpose targets that's national indicators and it has the four eyes that's a strength because the structure exists where it it's weak in my view is that the statistics need to be applied to these different objectives if we want economic growth to happen then by what percentage and then we should measure ourselves against that it seems to me there's an amorphous mass of data and we can run around looking all the trees in the forest but what is the direction of travel what are objectives annually and over three to five years against those criteria of growth against innovation against those four eyes and then we measure according to that and if there are shortages and gaps then we fill them according to those objectives but the objectives comes first in the day to come second in my view and I think there's a bit of a gap between that at the moment thank you I think that leads on to question gill Patterson had say what are the key gaps in coverage for Scotland and what are your priorities when filling them who would like to address that yeah what are the key gaps in coverage for Scotland and what are your priorities when filling them yes well again I'm like great I'm not a data expert I think that there's a regional gap you know Aberdeen's economy is very different to Glasgow's is different to Edinburgh's is different to the highlands each have different priorities if you identify the objectives for economic growth in each of the areas that be completely different that's a gap because we don't have that at the moment we have a macro picture across Scotland the objectives that we've got tend to be very general I'm not sure we're tying in the local data and having synergy with local data that matches in with that particularly the local Scottish local government financial statistics which are pretty detailed so I think there's a regional gap that needs to be addressed I just want to pick up on something that gill said because I have a quite a different view on this the idea of trying to stimulate economic growth is exactly what I'm talking about as being the wrong policy Europe does not need growth if you take the GDP of Europe and divide it by the population there is enough economic wealth income and work for everyone the problem is one of distribution that it's not evenly distributed now we have a basic idea most of us have a basic idea that economic growth creates jobs that economic growth reduces inequality that economic growth reduces poverty all those are false assumptions economic growth does not create jobs it does not reduce inequality and it does not reduce poverty what you need to do is focus on wellbeing the overall standard of living for the Scottish population and how to boost that which is down to education and health and a whole bundle of different measures of happiness and satisfaction economic growth is not the key and that's what I mean about measuring the right things and about having an opportunity to change what you measure because it changes what you do just to add to Graham there yes I think one important point is we can't boil an economy down to one number like GDP or even down to something like wellbeing or happiness you will need a full suite of measurements to do this adequately I definitely agree that we're quite weak on some of the regional data especially when it's derived from UK subsets or even Scottish subsets that said some of the data that's being generated from local authorities directly can be quite good because they're quite focused they know exactly what they're asking the question and they're going and looking for it for a direct answer another big weakness weakness that I know folk in other sessions have picked up is data on trade that we've got very limited data on Scottish exports and almost no data on Scottish imports so we can't really to talk about Scotland's balance of trade particularly within the UK and that's maybe just a consequence of Scotland being a part of the UK intra-UK trade isn't so important from an economic point of view it can be from a politics point of view this is maybe another another step that we could come across in in these conversations is are we looking for data to make an economic point or are we looking to looking at it to make a political point both might be valid but both might be different questions for me so I mentioned a couple already around the imports exports the trade statistics that craig refers to inflation again looking at a Scottish measurement inflation seems to me to be more more pressing as for example social security powers are devolved we already have other payments that inflation rate in Scotland would probably be more relevant for I think aside from those things I mentioned I think productivity is a key a key issue that needs to be measured and we need to get underneath productivity I think this came up last week in a much better way not just within Scotland actually this is something that is a challenge across the world to understand what the key constituent elements are and what sits underneath both our success and productivity in parts of our economy and our lack of success in other parts so in a way there's some if you like core macro measures that are missing to the side of that I think where our focus should be is around and it probably leads on from Graham's earlier point around what do we need for our policy making specific to Scotland so there will be core things that need to be comparable with the rest of the UK or internationally but there are things that matter just for Scotland and for policy making in Scotland which probably stem from the economic strategy and equally stem from the national performance framework which I know is currently being reviewed but it may well stray much more into the territory of inclusive growth or wellbeing but those I think are missing and I think we can have a look at what would make sense there and I think again a previous point from Gill around the sub Scotland level we have so many different we've regionalised everything in a way but without the same borders often or boundaries should I say so we have city deals we have local authorities we have regional college areas we have so on so forth the new education regional improvement collectives for example all on different boundaries developing young workforce finding ways maybe with micro data to build up from the bottom should allow us to have data that works for all of those regions because that's incredibly important to make sure that we can scrutinise the impact from for example city deal investment from example the regional changes that we're making policy wise so I think regional or at least sub Scotland to the side of macro and then there's some clear macro data that we're missing too there's a I think there's kind of three options open to us that way does the Parliament push for a devolved a totally devolved system like Northern Ireland or do we look to the ons to have a statutory involvement with him so that it's not it comes automatically or do we just stick with what we've got at present time and put more resources into the subsets and you know so you're just you know homing in in some parts of it rather than getting it across the board you start with what you need what do we need and I've already said I think you know Aberdeen needs is different from Glasgow so we that job needs to be done then it needs to be done on a Scottish level and then being cynical I would work with anyone to get the best data from wherever we can get it and it might be on energy we might be wanting data from Norway or Denmark on clean energy for example might just not be ons but the available sources that we have that they're excellent in their fields then we should use them but we need to define what it is we need I'm not sure that we're doing that because as this continues focus on well we want you know two point was it we've got to keep our purpose target to raise GDP growth a rate to a UK level which is why we find ourselves in this debate on jars that's just too general needs to be far more scotish specific and regionalised and that everything spills from there and you go and collect the data that fits I suppose it's a chicken and egg thing though isn't it like running a business act I mean yeah with the the stats that we see that in my view you couldn't run a business no I can figure that so I think about you yeah yeah but you know so from me I would look at exactly how I'm performing in present time analyze that and make my decision yeah so is it not the case that you would need the stats first quality stats or quantity it looks like in Scotland it looks like quantitative rather than quality before you make your move well okay can you do it in a different way I think so well look at Aberdeen let's take Aberdeen we know there's a looming crisis up there in oil and gas once the decommissioning money's spent what happens to Aberdeen what do we do with Aberdeen that you're not going to get any statistics maybe the answer to that you guys need to get the answer to that now to me we've got an energy resource in terms of talent and a great university up there why don't we look at doing something where that is Britain's centre of excellence in energy now that requires investment in education requires focusing to attract young talented people that businesses will then come like Cambridge and Biotech and go we want to invest in this that comes first not the data and the question of whether we need a separate and new powers in order to do so statistical agency I think I the outcome you want is to retain a core of statistics that you can compare across the UK and internationally and then equally as I've said a set of much more Scottish specific statistics to the side of that that allow us to do policy making that's much more specific to us now just I know this has happened this has come up earlier today and last week but the risk in going fully over to the full devolution independent statistic authorities that you risk the comparisons the risk in the status quo is that we can't get the data that we want for our own policy making so I would guess that there's there's a middle way there I say it that allows us probably yes with new powers to ensure that we can get the data we need for the Scottish specific data but to keep whether that's through a voluntary arrangement or not to keep in with some of these UK wide and more international comparative data arrangements too even within your range of options there if we we did move to a model of creating a Scottish statistics agency this could be a model that is very centralised one body that does all of the stats that Scotland needs it could also be a fairly decentralised network of groups of specialist organisations looking at very specific areas both of these models are valid countries move up and down that spectrum Scotland right now is a fairly hybrid system where we have a relatively decentralised statistics network pulling in stats from different bodies but we're also quite reliant on a fairly centralised UK system so I think if one of the ideas that commonwealth is developing at the moment is if we are developing a Scottish statistics agency then maybe it could it could take the view of a more overseer role that provides the ons provides things like a methodological kite marks to say that this piece of statistics is worthy for policy making if Scotland is wanting to go above and beyond that standard maybe we need to think about a Scottish specific kite mark for these these decentralised bodies to say that their work is is worthy of post worthy of examining for policy making purposes you could also think about going beyond just government organisations you could have groups like commonwealth Fraser of Allander if they produce research maybe if it is adhering to the appropriate levels of methodological standards they could get a secondary kite mark so that you can pull in data from more than just government sources thank you I think Jamie Halcro Johnson wanted to ask about this aspect of regional data collection yes thank you very much computer I mean it's it's interesting that there seems to be a kind of wide widespread acceptance that one of the gaps is in this regional data or this local data I just wondered kind of what what data there is currently available is there enough to form either something focused on say the northeast or Aberdeen or within council areas and if not what can we do to kind of what can we need to get that administrative data or micro data to decide particularly around business there's a business survey that gets almost a census level as we move on with income tax and VAT VAT is particularly problematic but income tax should provide or HMRC should have and hopefully provide data at a very household very individual level for us that should be very useful for this and beyond that it seems with the city deals with local authorities again those regions I mentioned there's a lot of collection happening within those entities and actors if you like and I think it leads to an overall point for me which is there may well be a lot of data out there already I'm sure it's not enough and I'm sure it could be improved but where we really are lacking is the ability to analyse that data learn the lessons from it and begin to develop solutions for you and for others at different levels of decision making or at least options so I think there's a lot of data right there right now we can improve it but actually where the where we've got the furthest to go is around that independent analysis and scrutiny of what's happening so that we can learn the lessons and we can develop solutions to those we would start our recommendations start with the Scottish local government financial statistics which we just see as not being optimised against the chairs and government statistics so that there's a good start point there that would take us forward from where we are at the moment okay and we have a follow-up from Gordon MacDonald before we move on to a different area with John Mason a very quick couple of questions in terms of the the two issues I see so far is the point about the lack of regional stats for Scotland and also some kind of Scottish inflation measure if I understand is correct so two points on that one is is the ons capable of providing that for Scotland or is it a need of change in political will I mean basically and secondly if there was a separate Scottish statistics authority I accept the point that we need some commonality between what's measured in Scotland which measures in the UK but is there a set of international standards for economic statistics that everybody has signed up to I'm thinking about the likes of the OECD where there is a lot of what 75 countries compare various measurements I mean is there a set of international standards that everybody would sign up to last question yes there's a fair few of them as I understand it I couldn't describe myself as an expert in it but there's UN there's OECD there's EU and we can continue to adhere to the EU regulations around it even if we're outside the the point being though that they are so you heard from the previous panel they're at a high level by their very nature so you would at the very micro level still potentially see differences that get in the way of analysis but like you know the implication and the question is there's nothing to stop us keeping that comparability across the UK and internationally even with an independent statistics authority that would be the case I think it's down to behaviour culture for all of this it also comes down to funding though so whoever you know whether it's an independent agency in Scotland whether it's O and S doing it take inflation for example it will cost a lot of money it will cost more than 10% of their budget to do a population equivalent for Scotland for inflation and where does that money come from you can make a case UK government given we have devolution it's a you know a UK decision in essence for that to happen you can make a case for Scotland to fund it because it's something that we want as a bespoke package but either way the money must be found almost regardless of where the power lies although that said the point of gathering this data is to try and I would hope improve the economy of the country so you should always be looking at a view of yes it will cost money but what are the benefits would you make that money back just through the benefits of it via economic growth or better well better well be here yeah I don't think it's an o s o n s issue my my priority and you i'm gonna get very boring today is regional is regional data and how we improve that with these different economies that we have within scotland thank you and john mason thanks convenient if I could just start with a supplementary I mean we've previously one or two folk have mentioned whole of government accounts as being something that's missing could you just explain to us why that's important you know what what we haven't got because we don't have whole of government accounts one of the main things is around what there's a few there's liabilities there's there's also assets there is imports and exports but most of all there's just a very much more accurate understanding of what is being spent in and on behalf of scotland and what equally is being brought in in and on behalf of scotland so it would be a much more accurate way of measuring our performance as an economy and as a spending and income raising government okay and to avoid sort of balance sheet trickery pfi being a classic so you can park that into the future it remains a liability but might not appeal on your appearance it won't appear in jars but it is a liability in the long term and the whole of government accounts allows you to pick that up and market as something you owe in the future okay that's helpful thanks very much and my main question then we've had slightly different evidence I think from different witnesses one is that users and producers of data should be talking to each other so that the users are producing what the sorry the producers are producing what the users want or need and then there's also been the idea that well maybe it's not a good idea that the government is both producing and is a user of the data so I'm just trying to get my head around this as to how we get this balance right between a bit of independence but a bit of working together I don't know if anyone's got any thoughts on that yeah I would I would definitely say that if you're forming a scotland statistics agency it would have to be kept at arm's length fairly independent from from the government I think we saw the other the other week when the the ONS had some comments towards Boris Johnson the the kind of benefits for that being able to speak truth to power right but I mean if there's this kind of kite mark thing and whoever produces the stats be it even private sector third sector whoever has to get this stamp yeah I mean why is it actually matter who produces them then um well it might it might not if you're wanting a fairly decentralized model looking at people who have specific expertise in a specific area then you go to whoever can produce that data and this is the point you you you you simply ask for them to produce it at a sufficiently high level and it would be the Scottish statistics agency's role to set that level to regulate data and to gather the data and be able to combine it in a way that to allow communication between between the different groups to allow people to gather and process the data. So is it how the data is being used and potentially twisted rather than who's actually producing the hard core? Interpretation is always the the side problem that goes along with this data anyone can can pull out what they can sometimes pull out exactly what they want to make their political point for instance um and there are ways of addressing that as well by by potentially demanding that whenever someone produces a body of statistics they also publish the methodology behind it so it can be properly scrutinized. I think with um so this independence almost within government independence is what we're talking about within the sphere of government if you like so should we have an independent statistics authority here that separates out the as you say the producing of the data and the using of the data within government and I think that that um you know what that's trying to tackle is whether there's any undue influence even inadvertently of the people that are producing from the people that want to use that data I would guess that you know by its very nature you would struggle to avoid that but there were benefits that you alluded to around making sure that what's produced is useful for example and I don't think that it's a big uh you know maybe again this is um a view based on you know just my perception but I don't see that as a big issue in terms of undue influence where I see a big issue is around if if what we're trying to do through having an independent statistics authorities have much greater scrutiny of government decisions and much more support for potential options that isn't the route that you would achieve those things down in the rest of the UK in other countries that independent scrutiny comes from journalists and newspapers it comes from stakeholders and civil society organisations it comes from the likes of the organizations around here um and it's in that territory if you're trying to achieve greater scrutiny greater support for decisions that we need to to see greater capacity I would argue so it depends what you're trying to achieve I don't see it as a big issue that you know hammer to crack in that territory but where the big issue is I think is around outside of government and the independence and scrutiny capability there okay it's interesting that we have the talent up here Graham Roy has taken on that the Fraser of Ander Institute role and he's outstanding you'd need you only need to look at the IFS and how the regard in which it's held as an independent body doing some excellent work across a range of economic subjects in the UK to see what we could do with the likes of the Fraser of Ander to me a Scottish IFS and using Graham Roy and his team would be would give you that level of independent data inquiry that perhaps is missing at the moment because I relative to the UK it's completely underfunded but the UK is 10 times the size of us I mean we just can't afford to copy everything that they do no it's not a case of copying but I think when you look at the IFS and the credibility that the IFS gets and the quality of the work that they produce we could do with some of that and there's no point in having a Fraser of Ander Institute that's funded for a few hundred grand when IFS has funded at four million and making an impact across the UK if you would not mind me coming back in is not new money so there are there's a great deal of money that goes out the door through the Scottish Government and through the SFC for example around academic research and it's going for very good impactful things no doubt but there is a decision I think for you all and beyond your colleagues as to whether any of that should be going more towards helping you make decisions around the economy for example helping other committees make the decisions around Brexit around demographic change around these big issues that we know are coming that we can begin to analyse the problem but we're not getting near to developing solutions to so some of this may not be new money and ultimately it comes down to not copying everything that exists in the rest of the UK or internationally but working out what we need and what's missing and I'd argue maybe an IFS equivalent maybe wider than that actually would be necessary in something worth copying from existing funds. Okay thanks so much. I wonder before I bring Gillian Martin in for a supplementary on that point about international experience. Graham Macston I appreciate we're perhaps a bit scotocentric in this committee which is unsurprising since it is a Scottish parliamentary committee and that's our job but I'm just wondering if you have any examples from your international experience or points to make about how different regions or areas gather useful data if there's international practice that might be relevant here that we could look to? I mean there are there are some bodies that are clearly very good at this the UN the OECD there are some countries that are better than others but if I can just make an observation just listening to the conversation before and now it seems to me that that this is being approached from a bottom up way rather than a top down way that you're saying to yourself because we need to collect data how do we organise a collection of that data where should that data be collected should it be regional should it be Scottish should it be London and the first conversation should to me be about what are we trying to achieve what are we trying to achieve as a nation and once you've answered that question you say okay how do we measure whether or not we're achieving that and then you say to yourself okay how do we collect the data to measure that and where do we collect the data but setting up a statistical office because it is a political decision it sounds like what's the discussion around here about about creating a Scottish office for for statistics but that's not what I'm here to talk about really because I don't understand that what I can tell you about is that if you want to achieve something different as a nation then set your goal work out what measures you're going to have to to to track progress with that goal and then measure those that's the most important part if you're going to if you're going to move Scotland forward from from where I'm sitting and is there a nation that you could give or an area as an example of where that has been done there are lots of people have been trying to do this the the butanese government of course is very famous for trying to set up a national happiness index the french government have looked very hard at trying to do something similar there have been studies done in london um I mean there are there are governments around the world who are looking at this in various half-hearted less half-hearted ways um the EOECD is coming out with a whole new series of measures which which cover everything from housing to income to jobs to civic engagement health which are internationally comparable uh so I mean that I think there are plenty I mean there's also and I can give you a list of them 20 or 30 different alternative measures of economic development or social development I should say other than GDP and economic growth which you could measure about well-being I mean one very simple thing you can do which has been done regularly in Norway is simply to go and ask people how satisfied they are with life and how much they feel optimistic or pessimistic about the future a very simple way of measuring tracking every year whether or not people are feeling better or feeling more optimistic I mean the very simple measures you can take it doesn't have to be very very complicated I come back to my main point though it's it's what are you trying to achieve you have to answer that question before you can work out what you want to measure Julian Martin yeah I want to come in around that there was a couple of people in the panel last week in the summit submission papers that were quite critical of the discourse around the economy in the media and in politics where we're focusing in on things like growth and not inclusive growth and not the things that you've been talking about Mr Maxson around happiness satisfaction social well-being how do we I mean every time a report comes out on the Scottish economy and we're going to be putting a report together ourselves our next our next investigation will be into the performance of the Scottish economy what do you think we in our next investigation should be focusing on which doesn't feed into the discourse which is very limiting and sometimes very depressing yeah exactly and that's why I said at the beginning I think you've got an opportunity here the the club of realms view on the world stems from a book which was published in 1972 called the limits to growth and it was the club of realms started by a Scotsman and an Italian and basically it said if we carry on increasing our impact on the planet as we were doing in the 1970s we would hit a crisis around our own 2030 now we would argue that crisis is already underway but we we focus today on two major areas social problems and environmental problems and both of those all stem from the same basic cause which is our economic system our economic system increases inequality it doesn't count the value of nature or the planet it increases unemployment it increases poverty so the economic system is the cause of all our problems now if you're going to go away and think about a new statistical system or a new economic system then that's where to begin how do we change the economic system and how do we change the views of the people so that they understand it's not just about economic growth it's not just about jobs it's about a much broader level of social welfare and well-being that we're trying to achieve in particularly in the rich world so this is an opportunity for Scotland to take a different path to realise that the economic system is the main cause of your problems all the social and environmental problems we have are because of the current economic system I could talk about it all day if we wanted to but basically that's the root cause of all our problems and now if you think about what you measure you can think about what you value and then you can change the system and change the way people view their economy and what's the economy for it's not about growth as one famous economy said the only thing that wants to grow forever is a cancer cell happy to hear other people's views as well about around a discourse around the economy so you very rarely get the opportunity to to start from scratch so even when the new powers come to the Scottish Parliament there is a legacy from them not being devolved there is a legacy in terms of the education of the citizens and the journalists and the culture that we have around the economy and what people value whether that's correct or not so I'm not sure if I'd be all the way over to where Graham is as much as I actually agree with a lot of what Graham says and that there are things that we will continue to need to measure and produce and publish I think the key point though is making sure that we're not focusing on one thing so the idea that GDP is to be all and end all has been totally really disproven over the last 10 years in a way you know we've had a growth back to sub-average but sorry growth in GDP back to sub-average levels for a lot of the last 10 years but life chances quality of life pay rates tax revenue per head all of these things are not going with it and quality of work underneath that so I think not having one measure firstly secondly measuring the things that you do value whether they feed into a GDP whether they feed into quality of life measure or a wellbeing measure so employment rates are interesting but getting underneath that what's the quality of work what's the security of work how volatile is that work I think getting into that territory is a really interesting place for your next inquiry which in essence is describing what we value is Scotland's economic model and what is the economic model we wish to achieve in Scotland what are its constituent parts and can we begin to measure them and some of that is possible now so that volatility of work or you know the the level of zero eyes contracts we get snapshot measures there's data right there that I would be itching to look at that would tell us in a much more flavorful way what's happening in the labour market right now but we don't have the capacity to look at it so so it's a really good example there on terms of quality of work data exists right down to Scotland level underneath that but we don't have the capacity at IPPR elsewhere to be looking at that and to let you know and to develop solutions so really one of the things we should really be looking at is what's actually happening in people's homes what's actually happening in terms of the the household itself yeah and there's perception measures of that that Graham talked about that are really valuable and there are harder measures that isn't a better I'm not saying hard is better but there are harder measures around pay rates around you know family experience etc etc that yes bring that together and you get a much better picture of the individual or the group or the neighbourhood etc etc experience of our economy I would like to make I think I think to some extent you're a victim of your own purpose targets your purpose targets are to raise gdb growth to the UK level and to match gdb growth the same the same rate as a small European countries and then there's a productivity target and we all know the dangers of productivity so as long as as your objectives are set as broadly and as basically as that then over the discourse around growth yeah and that will be it there are four eyes there innovation inclusive growth we're the policies directly relating to that we're the targets relating to that this is what we're going to achieve we're going to have five percent more IEDs you know innovative internalised enterprises next year than we had this year then you begin a narrative of success and positive and progress as long as we're stuck with the purpose targets then this this discourse in the papers will just continue yeah thank you discourse discourse starts with communication quite often if the discourse is bad in the media it's just because you know you can talk about gdb because it's quite a simple number and people kind of think they know what it means and you can just quote a single number it makes a good headline if you want to have a broader more comprehensive set of wellbeing factors it takes time and effort to explain that but it's time and effort worth putting in and had a follow-up on this yes I mean I agree that GDP is disproven has been for decades I think you described it as disproven Russell so I suppose my question is why does the Scottish Government and the UK Government still use it and should we be abandoning it as a key purpose target as Gil describes it so in terms of disproven I mean certainly for the last 10 years GDP has not been linked to those things that used to be linked to in the government's minds so if we've got GDP growth we'd get employment rate that has linked but we'd get tax revenue in we'd get quality of life happiness etc we'd be popular to bring it down to the electoral I suppose arithmetic in this that hasn't happened so for the last 10 years I'm not saying it's disproven beyond that it may return who knows why do we keep using it I think it's very difficult to get other measures you know if you shift from GDP there's a real risk that as a government or a parliament it looks like you're just trying to cook the books and what you need in order to avoid that accusation is a whole heap of education to show that no what we're actually doing is measuring something much more important to you and then there's a little bit of faith I would argue and this is maybe speaking more to Graham's view that there's an opportunity for Scotland to try something different to push for different measures and different headline measures that you set yourself as a test going with that and seeing if the electorate will more generally public opinions ready but it's a big risk and it probably takes consensus across parties rather than one party going for it alone there are two reasons that we still think that GDP is a good measure first of all after the second world war between 1945 and the late 70s it was a good general measure because as GDP increased the general well-being of the population of the developed world increased in parallel they moved together it was a very different political system there was a much greater welfare state at that point which was one of the buffers so I think one of the reasons is we've got into our heads that post-war era era where GDP was a good measure of of social progress but if you look since then I mean happiness indexes have stayed pretty much flat inequalities gone up unemployment's gone up and it's become much less a good measure the second reason is that we have been we've been persuaded by a group of economists if you look for the Mont Pelerin Society a group of economists that started the Chicago School who persuaded us systematically from the 1970s onwards that that we need to do something very simple for economic progress we need to have a small government we need to have open markets we need to have less regulation all of those have become common thinking we believe all of those things even although we have a system which benefits the rich more than anybody else even though that between 1919 2010 GDP in the in the rich world in the OECD was the fastest level in human history and yet unemployment went up and yet inequality went up so we've got this this wrong picture in our heads which we've had for the last 30 years and I mean it's very difficult once you have that system of beliefs to change that and that's where the where the problem really lies we become used to something which is fundamentally factually incorrect yeah it's asking an interesting question we need GDP growth because of the bond markets fundamentally who's going to buy your bonds if you if you don't know your GDP growth now as long as the capitalist system stays in place much as you may disagree with it or I disagree with it that has to be the way because otherwise you're not going to get sell your bonds but let's put it in context it's one measurement there are far more interesting aspects that the Scottish government could look at particularly around productivity productivity fascinates me I watched the the session the other day when John Claren described it as peeling an onion it is the great intangible and when you peel that onion back you do get to the magic and the magic always comes back to people motivated people at work if people are happy at work they will produce more it's not just a case of throwing less money and creating efficiencies and with the automation that's coming down the line we have an opportunity to put a line in the sand about what productivity means in Scotland as opposed to what it means elsewhere because I suspect our archetype is I certainly ran my business in London with a higher degree of investment in people than any other agency in my business because I reckoned I'd lose less people and I have a happier workforce now that flies in the face of common views on productivity but it worked so I think productivity on the purpose target is something that needs to be drilled down before we get caught up in this idea of well you know and this is how it'll come at you all productivity that just means we we pay the living wage in mcdonalds while the automation is going to come in quicker that's the answer you're going to get right well I would argue you've got happier workforce in mcdonalds and there are things in place like bonus targets if we exceed level x then the staff participate in y and the government puts incentives in place for staff to do that the business is encouraged them to reward staff in that way then you've got a different model because london will only ever go down that route of hardcore productivity and I don't think that's a scottish way and then Graham maxed and remember that scotland's not the only country that's wrestling with this problem was it last year that Ireland so it's GDP grow by something like 26% essentially because a bunch of multinational companies bought a bunch of multinational companies overseas so the GDP figure just didn't reflect anything to do with the Irish economy they are now having to have this have this exact conversation of what they what else to do um you can argue the the limits of any any single economic measure and you can even try and game them if you want which is just goes back to why you need to have a broad suite of them you can't rely on a single number I just want to come back in this issue of productivity because Gil's right it's been really really important there are basically two sources of economic growth one is productivity improvements and the other is population growth now in the rich world both of those are tending to zero and no matter how much money you spend no matter what you do productivity will not increase if you look from the 1960s to today productivity GDP growth per head has been trending down every year throughout the rich world it's gone down particularly fast in places like Japan but it's now coming down in Europe and it will come down particularly in the US now why is that happening because the economic system is going into a fourth stage the first stage of the economic development was the industrial revolution now if you if you try and improve productivity by taking people off the farms and putting them into factories you can boost productivity dramatically the next stage was to put them into the service sector now you can improve productivity by putting people in offices but the this opportunity for improved productivity declines now we're moving into the next stage which is this which is the care sector where everything that will be automated or can be automated will be automated and the jobs that are going to be left are those that are in services and care where it's very very difficult to improve productivity you can't cut hair faster than than than somebody else you can't look after somebody who's elderly faster you can't do it more improve productivity you can't play a Beethoven symphony faster and so you get to an economic situation where there will be no economic growth if you have a stable population you cannot improve productivity and that's where we're heading to and that's why Japan has had no growth for 20 years and that's why the European Union's growth rate is falling progressively you're going to hit a stage where for the next 30 years you will not be able to have any productivity improvement which means that you cannot have any economic growth and that's why you need a different economic system and different perspective okay thanks for that putting aside the question of what we do measure and that is fundamentally important in this inquiry about economic data common will you produce the suggestion that for example Estonia is doing very well just on kind of data capture data sharing and so presumably leading to more intelligent decisions I don't know maybe you could reflect on that and Gil you say in a press release this morning that reforms Scotland calls for more reliable data to reduce risk of bad policy decisions I wonder if you gave us an example one or two examples of what you regard as bad policy decisions yeah Estonia is quite famous for having a very developed digital sector very developed IT sector so one of the limits that we've been finding over the course of these discussions is if you're relying on survey data for your statistics especially at the subsample level it becomes prohibitively expensive to to to get your sample sizes high enough to make decent policy decisions based on them whereas if you're looking more at the just gathering the data directly through administrative data just gathering people's income and tax data for instance directly to the near census level resolution then if the infrastructure's there to do that automatically then quite often the work's already done for you so what would you say in Estonia they have a very good system of capturing administrative data is that the essence of your question essentially yeah it might not you know you I don't think you would be able to take a system from any one country and just simply transplant it into Scotland but you can certainly learn the lessons from them we think they should be more regional responsibility for likes of business rates and so on more devolved powers to local government and we think that the data they have is insufficiently used and if we used it more they only control 14 percent of the spend the data is very good that decisions might be reversed in their favour so that's the reform we're coming with that one no I can understand that that's the substantive part of your written evidence but I'm sure that you talk in the headline of your press release to reduce the risk of bad policy decisions do you think that that's just a risk in the abstract or do you have concrete examples no I okay defer to jeff motton on that okay just in terms of bad policy decisions I'm not taking up the invitation potentially within Scotland but I think you can look at the UK wide including Scotland culture around decision making public policy making and compare that to some other countries so New Zealand is often cited as a very very long term view in terms of its public finances every single policy decision has a 25 30 year view in terms of its impacts on public finances for good and for bad and what that's got you to I'm quite intrigued by this albeit they've just had an election so we'll see where they end up government wise in the future but you've had a quite centre right right wing government investing in welfare because albeit maybe with a discredited model maybe not in terms of neoliberalism they were investing early because over the long term it saves money so there's a really good example of where not blaming a particular political party but our culture is much shorter term in terms of our spending decisions they've got to a much longer term horizon which seems to be in my view leading to better decision making we would need much better data and again analysis of that data and again options development using that data to get to their position thank you and follow up from Dean Lockhart yes this question about strategic alignment which cuts across some of the issues you've discussed the Scottish government spends over 2 billion pounds a year on skills and enterprise development and a new as you know a new strategic board has been established to align the activities of the enterprise and skills agencies which I think is a good thing so a couple of questions on this what to achieve that alignment what's the best data to use to have consistency across those agencies because in my mind some of the objectives of the four eyes are very difficult to measure for example inclusive growth I think is quite difficult to measure innovation is quite difficult to measure so I'd like to get your thoughts on how do we measure inclusive growth how do we measure innovation in terms of what policies will encourage this and then a separate or supplemental question might be do we need a new set of KPIs detailed KPIs to track the four eyes and to measure what policies might be effective and measure progress against the four eyes me I agree that there is a necessary alignment of the data needs across the enterprise and skills bodies I think this is a really good opportunity to get there there's a balance again a bit like with the previous question around independent statistics agencies and that there are some data required to ensure that you're running a system correctly and in a in essence performance data that you will absolutely enough to need to keep the interesting I suppose opportunity from this is around what you alluded to around different ways of measuring the outcomes if you like of the spend of that two billion plus investment so what type of things I think I haven't quite given up to ghost on productivity but maybe I'm behind the the curve on that but I think looking at pay rates I think looking at career progression is a really really important precursor if you're trying to tackle a more poverty if you're trying to look at the quality of work I think it's a really important measure and a really important measure for our skill system I think productivity likewise and yes do we need KPIs around the four eyes yes I think is the the short answer to that a much longer answer would be around you know how can you measure innovation how can you measure some of these inclusive growth for example a very very short small thing on that is that a node jr sorry dros of rentry foundation are developing a diagnostic tool around inclusive growth and I think likewise within government there's moves to develop a tool that allows you to tell and no doubt as part of that allows you to define what inclusive growth is so it might be useful for you to to contact both just to take up on that point on the inclusive growth I think one of the previous members of the previous panel had suggested that there isn't really a good definition of what inclusive growth actually means it does feel a little bit like one of these political phrases that can be pulled either way depending on how you want it to go but we can also say if we take on Graham's point that the growth is not going to come because we are hitting the limits of that economic model then inclusive growth really just means inequality um so perhaps we need to reflect on what the four eyes actually will mean and maybe they need maybe they need adjusting that's maybe another conversation to be had just picking on craig's point there I mean there are ways of measuring inequality I mean the two most famous ways of the genie coefficient and the palma index which measures the top 10 percent versus the bottom 40 percent in terms of wealth distribution but but just getting back to this inclusive growth I mean to some extent that's an oxymoron I mean Thomas Piketty's book capital in 21st century I mean is the best selling economics book that nobody's actually read because it's so complicated but but it explains the basic message is economic growth increases inequality that's what it does it moves the wealth from the poor to the rich it increases the the the gap between rich and poor because those with the wealth at the beginning are able to invest it and therefore get the returns from it and the entire system it's another fake belief that we've got that that inequality is reduced with economic growth economic growth increases inequality if you look at the genie coefficient of the rich world over the last 200 years from 1820 to 2000 the OECD numbers the inequality has gone up despite all this economic growth all the industrialisation inequality has gone up and if you look at the gap between the rich world and the poor world from 1820 to 2000 it's three times bigger today than it was in 1820 so so economic growth is not a source of greater equality if you want to have inclusive progress you have to do something different yeah i'll just pick up on the innovation point if that's okay ding um r&d investment clearly is is central to that um and it's quite interesting looking at the national indicators on that where i think there's a sort of graph and it looks very successful but and it suggests that spending in the EU on on r&d generally EU is 1.8% yeah but generally spending three Denmark spending three in Austria spending three in the cbi recommendation is it is that the UK should spend three UK only spends 1.8 so r&d spend to me on innovation is is is the central measurement there and i think we spend enough back in on inclusive growth um so i think whilst the overall picture is as Graham describes and that across the globe we've we've improved and then regressed back to 200 years ago levels of inequality the more hopeful optimistic part of me points to in history that hasn't always been the case and equally in some countries you've got far lower levels of inequality than others so i think where we are um as an organisation where i am is thinking through what economic model would drive equality rather than inequality now that may or may not be a capitalist one and i can hear craig and and Graham's view on that for us we're a little bit more dispassionate as to what principles that underneath it is much more the outcome and again there are countries that are closer to this than others we at the UK level have been closer to this than we are now in the past so for us through we've got a commission on economic justice um which is looking afresh at the economic model across the UK we'll be looking at Scotland as part of that um and we'll see what comes out of that but we haven't quite given up entirely on inclusive growth or you know improving economic prospects for the country i keep being portrayed as an anti-capitalist here i'm not i'm not anti-capitalist i'm not anti-market at all there are countries that have achieved high levels of growth and high levels of equality Japan particularly Sweden Austria where i used to live and they do it because they have a balance between the welfare state and business it's not that they're totally one and totally the other they simply it's an observation they are able to achieve a balance because they set their political priorities to achieve that balance they're not just going for the open market growth oriented objectives they're going for a broader range of measures the Japanese in particular have been very clever at this the Austrians too and those are the countries to look to if you want to be if you want to reduce inequality and if you look at inequality in the last 30 years it is not increased in these countries and in France it's gone down for the same reasons it's about inclusive policies and a balancing welfare state thank you and ash denham i think had a question that related to this area as well i was going to ask about the four eyes but i think dean has covered that one off um i should also probably declare an interest i used to work for common wheel um so i'll just come back to something that Russell you raised earlier so you said that we potentially aren't lacking data we're lacking analysis of the data that we actually have and and that did come up on um the panel last week um so i was wondering if the panel could maybe reflect on ideally what that might look like so i mean would that be an independence stats agency would it be you know more Scottish specific think tanks perhaps or maybe just um academics spending more times you know in the Scottish universities looking at the data we have should i kick off um i think so again the independent just in my view the independent statistics authority may or may not be useful but it won't be useful in this territory right so if we're looking for independent analysis and independent scrutiny and equally independent options development that is not usually anyway the role of a statistics authority what i had in mind in that is around more your think tanks in essence your ecosystem around policy making so that could be journalism that could be civil society that could be stakeholders that could be think tanks that could certainly be academia do we need more think tanks i think the more the media speaking as a think tank we're two years into our existence in scotland um and we've we've heard you know reform freezer valander and a few others common wheel included that have developed over a similar period of time or redeveloped and i think more um the media on that i think what's lacking is around funding and that's always a tricky thing um so in the rest of the UK and in other countries of a larger scale private sector funding comes in trust and foundations come in to help fund that independent activity in smaller countries often they have to provide public funding arms length and i wouldn't be as bold to suggest that that would be what we would want because it's very self-interested of me to do so but certainly looking at the funding that comes through the Scottish budget for research purposes and whether we can bring that or at least a part of that into a nearer term focus and and really align it with the priorities of the parliament or the government i think would be a really interesting idea so more than Mary in terms of organisations but it's actually probably funding streams that are the key to this again the question kind of speaks to what kind of statistics agency you would have if you're having a very centralised body producing the bulk of the stats then you will need outside scrutiny on that if you're providing a if the the ssa is a an overseer of a network then it will almost be performing that analytical role to to gather that data and combine it and then communicate it but yes you will then need to scrutiny on top of that again so as Russell said i completely agree with everything there you can also speak to the the communication side how do you present that data so that other organisations can reach it and look at it someone who is a professional statistician will be looking for one level of depth to the data a politician looking to form a policy a different depth a member of the public just wanting to know what's going on will need another another degree of depth again and you need to be able to speak to to all all of these people so you do need to break down sometimes very complicated statistics into a way that is easily understood for the lay person and there are good examples of this the the late hands ruzzling produced a website called gap minder which looks at overall global demographic data but it does it in a really user friendly way you can go in you can say right i want to see countries by geographical size and population density over time and you just plug away at the graph and it's there it shows you so a really user friendly front end to the data portal that still then provides you if you want to download the raw data and manipulate it yourself you can do that that would be very valuable like other other places like euro stat well not quite as user friendly as gap minder does provide that sort of level of accessibility so it's maybe lessons to be learned there yeah i think russells and craig have made good points the only point i'd make on that specifically is i think you've got an excellent potential body in in the fai an