Enterprise and Skills Review report on Phase 2: Data, Evaluation and Performance Management

4. Implementation

Action 1 - Developing a New Analytical Unit

Based on discussions with the Ministerial Review Group and wider stakeholders, the Scottish Government's view is that a new unit should be established to provide a focus for analytical activity to support the Strategic Board ^[1] . This section outlines the key actions required to drive this process.

We recognise the need for analytical capacity to remain at agency level and that as a principle of the unit it should be able to draw on the resources and expertise of the four agencies and Scottish Government. In both, the immediate and longer term analytical support to the Strategic Board will involve collaborative working between the unit, government and agencies. However, the unit will need a core staff to performs its functions in support of the Strategic Board.

We will appoint a head to lead the new analytical unit. The person will provide a strong figurehead to inform the decisions of the Strategic Board, working collaboratively across the enterprise and skills system to draw together evidence and intelligence to support the Strategic Plan and Framework for Delivery.

• The head of the analytical unit should in principle attend every meeting of the board and have the right to contribute to its discussions with respect to the available evidence.
• The head of the analytical unit will initially be supported by a small team as they undertake the work necessary to quickly establish a programme of analytical activity.
• Appointments to the unit will be made by Scottish Government and jointly funded by Scottish Government and the agencies.
• The final size and structure of the unit will be determined by the unit head in consultation with agency partners and based on further consideration of the unit's operations, and the Strategic Board's requirements.
• The analytical unit will initially be based within the Scottish Government linked to the Office of the Chief Economic Advisor and reporting to the Strategic Board.
• The unit head will work with the appropriate senior analytical leads of the Agencies to help co-ordinate analysis across the enterprise and skills system.

The unit and agencies will develop a shared analytical plan setting out the activity that they will undertake both individually and collectively. This should flow from the shared outcomes and priorities set by the Strategic Board.

Further, this plan will make clear how the activities and responsibilities for the unit and agencies will join up to provide the right focus and impact for each level without duplication. This may involve a model in which some analytical activities are delivered by the unit alone; some are delivered in close collaboration with one or more of the agencies as appropriate on a project basis; and some specialist activities are contracted out.

There are a number of important principles for the operation of the unit and its interaction with the Strategic Board. These are:

• A core principle of the unit will be openness. One example of this will be that the unit will consult widely on the content of its plan of work. We envisage the unit operating a rolling three-yearly plan with greater detail provided on each annual plan. One of the advantages of adopting this open approach is that it should reduce, if not eliminate, duplication of activities across the system.
• In the spirit of openness and demonstrating impartiality, the analytical plan will be published with clear timescales of when work will be completed.
• Reflecting the unit's openness, the presumption will be that all work carried out by the unit will be made publicly available to help transparency with the Strategic Board decisions and to ensure there is a shared evidence base for wider stakeholders.
• As the board reports on substantive decisions it has taken it must outline how the evidence has helped to shape these decisions.
• The unit will work with and be able to draw on the wider analytical resources across the four agencies and the Scottish Government.
• The unit will develop a reputation as being respected, trusted and objective - providing challenging advice which will improve the Enterprise and Skills System.
• The unit will work with local and regional structures to ensure a coherent evidence base for the system as a whole. For example, the unit could provide advice on research methods; lead a programme of knowledge exchange at which professional skills and knowledge can be developed; offer development opportunities to national and local partners through secondments.
• The unit will draw on a range of intelligence from across the public, private and academic sectors, within and beyond Scotland, building on current strengths which already exist in the system.
• While the unit will report to the Strategic Board, it would be supported in its work by an Advisory Panel, membership of which will be drawn from academia, governments, the agencies and other experts. Among other functions, the Advisory Panel would provide peer review of the unit's activities, including its methods and outputs. Minutes of the Advisory Panel meeting will be published.

Action 2 - Data Improvements

The unit will work with the SG, Agencies and Local Authorities to improve the use and sharing of administrative data across the enterprise and skills system. This should in time support the development of economic data in Scotland.

Effective economic data is key to the understanding of the issues affecting the economy and to determining ways to improve performance. Our consideration of the new analytical function for the enterprise and skills system has also considered ongoing work to improve the data informing economic policy decisions in Scotland.

Scotland has a range of economic data providing evidence on macroeconomic and microeconomic issues. This range of data has been considerably improved since the 1990s through improvements to data collection and boosts to sample sizes. Our understanding of the issues informed by the data is also much improved as a consequence.

However, it is recognised that the economic data we have could still be improved and that this improved data would be key to providing high-level evidence on issues of interest to Strategic Board, and to wider stakeholders.

To help with this an improvement plan has been put in place to deal with some of the issues which have been raised around economic data. This work is being led by Scottish Government and will improve the quality of the data available to the analytical unit and wider stakeholders. Examples of work in the improvement plan include:

• Improvements to trade data
  HMRC has recently updated its methodology for producing regional trade in goods statistics and is now allocating trade to a region based on a company's proportion of employees in that region rather than the location of their head office. These changes have improved their estimates for Scotland and using these data, in conjunction with our own collection of exports data and data from other sources, will improve our overall estimates of Scottish trade.

• Improvements in National Accounts
  There are a number of projects underway in 2017/18 to improve the range and quality of Scotland's National Accounts statistics.

1. We are looking for alternative data sources and improved extrapolation methods to allow us to produce our quarterly real-term GDP estimates earlier. The 2016 Q4 estimates were published 95 days after the end of the quarter. This was the first time this has been done in under 100 days. In time, we shall investigate whether VAT turnover data can be used in addition to the sales data collected by monthly and quarterly surveys.

2. We are extending the range of economic data available for Scotland. This will include producing quarterly Gross National Income figures to complement the GDP nominal estimates. Also, we will aim to produce annual Balance of Payments estimates for Scotland.

3. We are working on a satellite account relating to Scottish economic activity currently assigned to the Extra Regio part of the UK. This will complement our Onshore Input-Output tables to produce a set of economic accounts for the whole of Scotland.

• Improvements in Scotland's Public Sector Finances statistics
  The GERS publication will be updated in August 2017. We shall consult users on how best to present Scotland's public sector finances to take into account the new fiscal framework and its consequences. Possible developments might include producing quarterly aggregates for total managed expenditure so that quarterly fiscal balance estimates can be derived. The annual publication could potentially be re-worked to provide users with more transparent information about how public services in Scotland are funded and how the funding is allocated to different services, rather than focussing narrowly on the fiscal balances.

The improvements described above will take time to materialise and in the meantime it will be important that we use the existing data available in the most effective manner.

Additionally administrative data is still a largely untapped source of intelligence. Each of the agencies collects this data as part of its operational activities and some of this is published in line with ONS guidelines, for example Modern Apprenticeship data and college performance statistics. However, outside of the data which is published the agencies could do more to share access to the data they collect as the deliver services and interact with clients. This would improve the consistency and coverage of the evidence base available to the Strategic Board.

In addition, this workstream notes the significant interest that Local Authorities will have as both providers and users of economic data and intelligence. Management information collected by the local authorities about individuals and businesses in relation to the operation of services such as Business Gateway and local employment services will continue to be a vital component of our intelligence systems. Indeed, Local Authorities are already working with Scottish Enterprise to establish systems for the effective sharing of data. The unit and agencies will work closely with Local Authority partners in any future work to improve data quality and access.

Restrictions apply to agencies external to Government in granting full access to some official Government data such as that held in the IDBR or by HMRC. Nevertheless, the new unit should work closely with Scottish Government to allow access to this data where possible and to develop formal data sharing agreements to facilitate this.

Next Steps

The work carried out during this workstream has helped to shed light on some of the issues which are relevant to improving analysis for the enterprise and skills system. It has identified some really positive practice which is already being carried out by the agencies and Scottish Government but has also identified areas where there is a need for new work or an increased focus on action to improve things.

The majority of the recommendations in this paper should be taken forward by the new analytical unit (apart from those relating to setting up this unit) however, they will need the support of the new Strategic Board and the staff of the individual organisations.

The collaborative working which was apparent during the work of the project group suggests that there is a willingness to work together to make the most of the available analytical capacity. Drawing on the wealth of talent across the analytical services of the agencies and SG will be key to making a success of this new analytical approach.

The timing of taking forward the recommendations of this paper will be highly dependent on when the Strategic Board, or the shadow predecessor, is in place. In the meantime, continuing to engage with the staff who supported this workstream will help to ensure that the new unit will hit the ground running when in place.