Understanding what goods and services businesses purchase, and from whom, is essential to building an accurate picture of the economy. ONS uses its Annual Purchases Survey as the basis for estimating the value of goods and services that businesses use as part of their production processes – in the National Accounts called ‘intermediate consumption’.
ONS previously ran a Purchases Inquiry, with the most-recent usable results relating to 2004. The survey was suspended in 2007, but this suspension became permanent. There followed a ten-year period where no data were collected on intermediate consumption patterns, following which ONS introduced the Annual Purchases Survey to collect data from 2015 onwards.
The hiatus meant that ONS was relying on outdated information about purchases at a time when substantial changes are taking place to purchasing patterns and production processes, not least in the light of the global financial crisis in 2008. ONS mitigated the effects of this to some extent by adjusting its modelled estimates of intermediate consumption based on additional data from the Annual Business Survey, HM Treasury and the Ministry for Housing, Communities and Local Government. In addition, ONS boosted the resources dedicated to manual balancing using staff members’ specific knowledge and broad economic experience. Estimates of intermediate consumption also fell short of EU best practice of updating the supply-use information at least every five years.
We recognise the significant challenges and costs that ONS faces to collect purchases data, and the significant work that it has done to date. We also recognise ONS’s ambitions to achieve National Statistics status, which means that the statistics meet the highest standards of public value, are high quality and are produced in a way worthy of trust and comply with all aspects of the Code of Practice for Statistics.
This report documents the findings of our assessment, which has focused on key elements of quality and value.
Letter – Ed Humpherson to Jonathan Athow (December 2019)