The ONS Economic Statistics Classifications Committee (ESCC), a panel of experts in national accounting, is responsible for helping establish the correct statistical treatment of all the units and transactions covered by the UK National Accounts. To aid the ESCC in reaching its decisions, a small secretariat team gathers relevant information, collates the relevant guidance and presents the evidence for consideration.
In straightforward cases, two members will agree the classification on behalf of the ESCC. Cases that are not straightforward are fully discussed by the ESCC, which establishes a recommendation that is approved by the Chair of the ESCC and, in particularly challenging and statistically significant cases, the Director of Macroeconomic and Environment Statistics and Analysis (MESA). More information on how we reach classification decisions can be found on our classification process page.
Economic statistics classification decisions can have a large impact on economic statistics and so classification decisions are considered carefully and those with a significant impact are authorised at a senior level.
The ESCC is chaired by a senior member of the ONS Directorate responsible for the national accounts. The Chair appoints ONS colleagues with relevant expertise as members, including “full members” who have the additional responsibility of taking certain classification decisions on behalf of the Director of MSA.
The ESCC Chair may also appoint external experts to join the ESCC in an advisory role where their expertise will be helpful in interpreting statistical guidance in relation to a specific case.
Chair
Co-chaired by Pete Lee – Assistant Deputy Director: Corporations Division, and Katherine Mills – Assistant Deputy Director: Public Sector Division
Deputy Chair
Andrew Walton – Assistant Deputy Director: National Accounts Co-ordination Division
Economic Statistics Classifications Committee terms of reference
1. Introduction
The Office for National Statistics (ONS) is the independent UK body responsible for the sector classification of UK economic units and transactions. The ONS is the sole body responsible for these classifications in the UK and it is incumbent on the ONS to ensure that all classifications are made impartially and in accordance with the statistical rules as set out in the European System of Accounts 2010: ESA 2010, and the international statistical guidance in the System of National Accounts 2008: SNA 2008 and accompanying manuals (for example, the Manual on Government Deficit and Debt 2022).
ESA 2010 and SNA 2008 define the total economy in terms of the totality of institutional units resident in the economy of a particular country that acquire assets, incur liabilities and engage in economic activities and transactions with other units. The role of the classification function is therefore to ensure that each unit is classified to only one sector in accordance with ESA or SNA guidance to facilitate the compilation of the integrated economic accounts. The Economic Statistics Classification Committee (ESCC), which is comprised of ONS experts in national accounts, plays an important role in reaching these classification decisions.
2. Overall purpose of the ESCC
To establish in accordance with the relevant international statistical guidance, and with specific reference to the classification categories in the European System of Accounts 2010: ESA 2010, the appropriate:
institutional sector classification of statistical units
classification of transactions
asset classification of financial instruments and non-financial stocks
The prime focus of the Economic Statistics Classification Committee (ESCC) is the appropriate classification of public sector units and their transactions. This is because of their importance and impact on government debt and deficit. It will also ensure that the ONS-published Public sector classification guide is as complete as possible. The ESCC will also consider, on request, the classification of non-public sector units, transactions and financial instruments.
2.1 Transaction classifications
Ensuring transactions are classified correctly within the ESA 2010 framework is primarily the responsibility of compiler areas. However, the ESCC will classify transactions in the following cases:
when necessary to establish the classification of a statistical unit
when, in the view of the compiler and upon consultation with the “government receipts decision tree” , it is possible that the transaction should be recorded as a tax
upon a request for classification advice made by the relevant compiler area(s)
The first case is a clear part of the ESCC's role in classifying units. The second case is necessary to ensure consistent classification of taxes or levies and is important because of reporting requirements and wider impacts. In the final case, it is necessary for there to be an escalation point for transaction classifications in cases where the compiler is unable to classify the transaction itself (for example, because the transaction is complex and does not fit any ESA 2010 category well); as this is a question of “what type of transaction is this?” (rather than how should it be measured or estimated) it is most appropriate for the ESCC to perform this function.
3. Responsibilities of the ESCC
The Economic Statistics Classification Committee’s (ESCC’s) main responsibilities include:
to apply robustly the classification rules in the European System of Accounts 2010: ESA 2010, the accompanying Manual on Government Deficit and Debt (MGDD) and the System of National Accounts 2008: SNA 2008
to ensure all classification cases are discussed fully, impartially and fairly in the context of those rules
to recommend the appropriate classification to the Director of Macroeconomic and Environment Statistics and Analysis (MESA) for their consideration and authorisation
in cases where decision-making has been delegated by the Director of MSA; to assess and authorise those classification decisions
4. Decision-making authority
In general, the ESCC does not have decision-making authority and classification decisions will be decided by the Director of MSA on the basis of a recommendation presented by the Chair of the ESCC following consultation with the ESCC. The ESCC is not a voting committee; it is up to the Chair to draw out the recommendation they will make based upon the discussion heard. This may, however, involve taking a vote at their discretion. The Director of MSA may ask for further factual evidence or advice from the ESCC before taking a final decision.
Decisions that have a significant impact on fiscal or economic aggregates, and/or are judged by the ESCC Chair or the Director of MSA to be a matter of public interest, will be taken by the Director of MSA following consultation with both the ESCC and the Director General of Economic Statistics – whose role is to be satisfied that all relevant facts have been considered and that the decision can be explained clearly and persuasively.
In certain restricted circumstances individual full members of the ESCC, or the Chair or a Deputy Chair of the ESCC, may take classification decisions themselves and these are known as "delegated decisions" and “fast-track decisions”. These are classifications where:
the facts are straightforward
there are no novel or contentious issues in interpreting statistical guidance
there are no other reasons to expect public interest
The decision on whether to delegate a decision as a delegated decision or fast-track decision to an individual full member of the ESCC or the ESCC Chair or a Deputy Chair will be taken by the Economic Statistics Classifications (ESC) Team (also known as the “classifications secretariat”). The process to be followed is described in sections 7 and 8.
4.1 Relationship with the ONS Methods Advisory Committee (MAC)
The ESCC is primarily responsible for establishing the institutional sector classification of statistical units. It is also, in the cases laid out in section 2.1, responsible for identifying correctly all relevant transaction classifications.
In relation to classification decisions; the Methods Advisory Committee (MAC) is responsible for agreeing the sources and methods, among other things, needed to implement the classification decisions emanating from the ESCC. The MAC, like others, has a duty to raise concerns over classification decisions (if they arise) with the ESCC; the ESCC Chair will ensure these concerns are examined to establish whether they are founded on new information or if the issues were understood at the time the classification decision was taken and if the decision should be revisited.
5. Membership and appointments
The Economic Statistics Classification Committee (ESCC) will comprise a maximum of 20 persons as follows:
one Chair or two co-Chairs – appointed by the Director of MSA
one or two Deputy Chairs – appointed by the Director of MSA and the Chair together
one (full) member – appointed by virtue of being the Deputy Director overseeing the Economic Statistics Classifications (ESC) Team (where this person is not the Chair or deputy)
6 to 12 (full) members – appointed by the Director of MSA and the Chair together
two to five training members – appointed by the Director of MSA and the Chair together
Members will be selected based upon their expertise, commitment to the role and what they will contribute to the group. The diversity of the ESCC will also be considered when making appointments.
The ESCC Chair may also appoint additional internal or external experts to temporarily join the ESCC in an advisory role for specific cases, where the Chair judges that their expertise will be helpful in interpreting statistical guidance and/or documentation relating to that case.
With the exception of the Deputy Director overseeing the ESC Team, no member will be appointed by virtue of their position in the Office for National Statistics (ONS).
At such a time that a member leaves the ESCC, the Director of MSA and the Chair will agree whether or not to seek their replacement through an open written procedure.
After a period serving on the ESCC, training members may become full members at the discretion of the Chair and the Director of MSA.
6. ESCC meetings
Meetings are the main means by which the Economic Statistics Classification Committee (ESCC) completes its business. They provide a forum for the in-depth discussion of the classification cases at hand to ensure the correct statistical classification is recommended. On occasion, however, a classification case may be considered by correspondence without the ESCC meeting being held.
6.1 Frequency
The ESCC will meet at least once per month, with meetings scheduled on the first Wednesday of each month. These regular meetings will be booked at least six months in advance to allow members to plan their attendance. Where necessary, additional meetings will be convened to agree classification recommendations.
6.2 Preparation
For each classification under consideration, the Economic Statistics Classifications (ESC) Team will produce a paper outlining the relevant details, classifications rules and questions for consideration. These will be circulated at least five working days prior to the meeting. Where the case is particularly complex then the ESC Team will aim to circulate the case documents earlier than five working days prior to the meeting and may, at their discretion, hold a pre-meeting with the ESCC to present the case so as to facilitate a thorough understanding of the details of the case.
All of the ESCC members will allocate time to prepare for the meeting by reading the papers and raising requests for clarification or further information ahead of the meeting so that the ESC Team can address them. This preparation is expected to take about one day. The ESCC members will treat classification case material as official sensitive and not share it outside of the ESCC or ESC Team.
All of the ESCC members (excluding the Chair) will provide written provisional responses to the questions posed in the classification paper ahead of the meeting (including those members who will not be in attendance at the meeting). These provisional responses will be used to inform and focus discussion at the ESCC meeting.
6.3 Attendance and quorum
All of the ESCC members are expected to attend all meetings of the ESCC. However, it is acknowledged that attendance will not be possible in some limited circumstances (for example, because of annual leave or attendance at important international meetings). Where any member is unable to attend (for any reason) they will advise the ESC Team in advance of the meeting.
Where the Chair(s) is unable to attend the meeting they will delegate to a Deputy Chair. The Chair(s) and Deputy Chair(s) will ensure their availability for all meetings.
A minimum of 50% of full members, plus the Chair or a Deputy Chair, must be in attendance for the meeting to be quorate and able to proceed.
Attendance will be recorded and monitored. Where attendance falls below 75% in a four-month period (that is, if the member misses more than one meeting in four), the Chair will address the issue with the member and their line manager with the aim of ensuring they can remain an active member.
6.4 Alternate full members
Where an existing full member is unable to attend a meeting, they may with the approval of the Chair appoint an alternate full member for that meeting.
The alternate full member shall be an existing trainee member and for alternate membership to come into effect, the appointment must be explicitly accepted. If a trainee member does not accept, the full member has the option to nominate a different trainee member.
Upon acceptance of the appointment, an alternate member may be counted as participating for the purposes of determining whether a meeting is quorate but only if the appointing member is not participating.
Alternate full membership shall be effective only for the particular meeting the trainee member is appointed for. The appointing member shall still be subject to section 6.3 of the terms of reference.
6.5 In the meeting
The Chair will facilitate discussion of each classification case by the ESCC and will at the end of discussion summarise the main points raised and the recommendation of the Chair. Where the Chair concludes that there is insufficient information or agreement to reach a recommendation then the Chair may request for the case to be considered again at a future meeting of the ESCC after the ESC Team has conducted further investigations.
Minutes of meetings of the ESCC will not be kept and the discussions in the meetings will be kept in confidence. However, the conclusions reached in the meetings of the ESCC will be written up alongside details of the arguments that led to the conclusions. The ESC Team will be responsible for writing up the conclusions. To preserve the collective responsibility of the ESCC the conclusions will not mention individual members of the ESCC by name.
6.6 After the meeting
Following the meeting, the ESC Team will record the main points of discussion and the recommendation reached in the case management system. These will then be circulated to the ESCC Chair for authorisation and the ESCC members for information.
Within five working days of the meeting, the Chair and the ESC Team will present the recommendation to the Director of MSA for challenge and authorisation. If the Director of MSA is unavailable (for reasons such as being on leave), the Chair and the ESC Team can approach the Deputy National Statistician, Economic Policy (also referred to as the Director General) to seek approval for a classification decision.
Once a decision is reached and authorised it is essential that all members of the ESCC fully support the decision and do not undermine it in anyway, either with colleagues or externally.
The ESC Team will communicate the decision to the affected bodies and the decision will also be published in the updated Public sector classification guide (PSCG), which is usually released on the 15th working day of each month (or, occasionally, on the 16th working day) in line with the Public sector finances publication.
The ESC Team will also table discussion of its implementation at the Economic Statistics Classifications Implementation Group.
7. Delegated decisions
Where a classification decision is "straightforward" (as defined in section 4), decision-making can be delegated to individual, full members of the Economic Statistics Classification Committee (ESCC) with the process as detailed in this section.
The Economic Statistics Classifications (ESC) Team produce an initial draft of the classifications paper (which recommends the "delegated" treatment). This draft is initially appraised by a member of the ESCC (normally a training member), who works with the ESC Team to address any issues they identify. From this:
if the appraisal is completed by a training member then they work with a full member to reach a recommended classification decision
if the appraisal is completed by a full member then they may by themselves reach a recommended classification decision
Once a recommended classification decision is arrived at, through the previous steps, then the ESC Team will circulate this to all members of the ESCC to allow them a chance to comment prior to authorisation. Normally, members of the ESCC will be given five working days to comment.
If all members of the ESCC accept the recommended classification decision (and a null response will be recorded as acceptance), then the decision is recorded by the ESC Team as authorised and communicated as described in section 6.5.
If one or more members of the ESCC do not accept the recommended classification decision, then it will be the responsibility of the Chair to decide whether the case should be brought to a meeting of the ESCC, or whether a decision may be reached through further written dialogue between members of the ESCC.
A summary of all delegated decisions of the ESCC made in the month will be presented as a standing item at monthly meetings of the ESCC.
8. Fast track decisions
Where a classification decision is "straightforward" (as defined in section 4), decision-making can be delegated to the Chair or a Deputy Chair of the Economic Statistics Classification Committee (ESCC) with the process detailed in this section.
The Economic Statistics Classifications (ESC) Team produce an initial draft of a short classifications paper (which recommends the "fast track" treatment). This draft is appraised by the Chair or a Deputy Chair of the ESCC.
Once a recommended classification decision is arrived at, through the previous steps, then the ESC Team will circulate this to all members of the ESCC to allow them a chance to comment prior to authorisation. Normally, members of the ESCC will be given five working days to comment.
If all members of the ESCC accept the recommended classification decision (and a null response will be recorded as acceptance), then the decision is recorded by the ESC Team as authorised and communicated as described in section 6.5.
If one or more members of the ESCC do not accept the recommended classification decision, then it will be the responsibility of the Chair to decide whether the case should be brought to a meeting of the ESCC, or whether a decision may be reached through further written dialogue between members of the ESCC.
A summary of all fast-track decisions of the ESCC made in the month will be presented as a standing item at the monthly meetings of the ESCC.
9. Policy proposals
Policy proposals differ from other cases as they are forward-looking rather than concerned with existing organisations or transactions that have already taken place. Such proposals might involve the creation of a new organisation, the restructuring of an existing organisation or the creation of a new type of transaction or financing vehicle. The Economic Statistics Classification Committee (ESCC) approaches policy proposals in the same way that it would any other classification case. However, any classification of a policy proposal is, by the nature of policy proposals, based on the information provided by the department formulating the policy. Therefore, all decisions based on policy proposals will be deemed as “provisional”, qualified and dependent on the proposal being implemented as described. The classification will be reviewed by the ESCC once the policy has been enacted.
The ESCC will only consider alternative versions of the same policy proposal exceptionally and only if substantial and significant changes have been made. The Office for National Statistics (ONS) does not publish or otherwise make publicly available details of classifications decisions in respect of policy proposals. However, when a final classification decision is published for a case that was the subject of a policy proposal then the classification announcement will note that the ESCC considered one or more policy proposals, specifying how many versions of the proposal were considered.
10. Responsibilities
All communication on classification issues, with the media and other external bodies (including the HM Treasury classification unit), will be managed through the Economic Statistics Classifications (ESC) Team and members of the Economic Statistics Classification Committee (ESCC) should not engage directly in external communication on classification issues other than through the ESC Team.
10.1 Director of Macroeconomic and Environment Statistics and Analysis
The Director of Macroeconomic and Environment Statistics and Analysis (MESA) is responsible for:
appointing members to the Economic Statistics Classification Committee (ESCC)
removing members from the ESCC if their attendance falls below the expected level or they do not abide by other aspects of the terms of reference
considering or challenging recommendations of the ESCC and subsequently taking classification decisions based on these recommendations
10.2 Chair
Responsibilities are:
reading all papers
attendance at all meetings (subject to Section 6.3)
facilitating fair and open discussion (including advancing their own views as required)
drawing robust conclusions
presenting recommendations to the Director of MSA
considering "straightforward" cases and taking delegated and fast track classification decisions as required
maintaining confidentiality of case material (that is, not sharing any details of cases outside of the ESCC, the ESC Team and the Director of MSA)
supporting final classification decisions (regardless of own views advanced in meetings or papers of the ESCC)
approving changes to the terms of reference, after consultation with the ESCC members
10.3 Full members
All full members of the Economic Statistics Classification Committee (ESCC) are responsible for:
reading all papers and providing evidence-based responses to questions ahead of meetings
attendance at all meetings (subject to section 6.3)
participation in full and impartial discussion of cases
considering "straightforward" cases and taking delegated classification decisions as required
maintaining confidentiality of case material (that is, not sharing any details of cases outside of the ESCC and the Economic Statistics Classifications (ESC) Team)
supporting final classification decisions (regardless of own views advanced in papers or meetings of the ESCC)
considering how ESCC membership should be reflected in performance assessments and responsibilities
10.4 Training members
All trainee members of the Economic Statistics Classification Committee (ESCC) are responsible for:
reading all papers and providing evidence-based responses to questions ahead of meetings
attendance at all meetings (subject to section 6.3)
participation in full and open discussion of cases
performing initial appraisal of "straightforward" delegated cases and working with the Economic Statistics Classifications (ESC) Team to ensure any issues identified are addressed
working with full member to appraise case and authorise the classification decision
maintaining confidentiality of case material (that is, not sharing any details of cases outside of the ESCC and the ESC Team)
supporting final classification decisions (regardless of own views advanced in meetings or papers of the ESCC)