Joint note by the Office for National Statistics and NHS England, February 2025.

The Office for National Statistics (ONS) publishes annual public service productivity analysis for all service areas in the UK, including healthcare. The methodology used for annual productivity analysis is considered ‘gold standard’ and is the most robust productivity estimate available.

ONS, NHS England, the Department of Health and Social Care (DHSC) and University of York have been working to develop these methods further, as part of the National Statistician’s Review, which commenced in 2023.

In a bid to drive transparency, NHS England regularly publishes in-year productivity reporting to help drive service improvement. This work has started with the productivity of the acute sector and is now being expanded for non-acute productivity reporting later this year.

This will enable the NHS to track productivity movement in a more timely way. To assist this process, ONS and University of York have worked together with NHS England to make improvements to all these measurements in the last nine months.

The ONS’s recently published experimental quarterly productivity estimate also uses a different methodology to the annual approach. This simplified methodology was used for the first time this month as ‘statistics in development’ to launch a more timely quarterly time series.

This is the first time ONS has released quarterly data at the sector level, and is dependent on the data available at a point in time, and includes adjustments at an aggregate level to align to the annual series. ONS is in the process of reviewing the new methodology under the Government Statistical Service Code of Practice to ensure the robustness and usability of the new quarterly estimates, including benchmarking to the annual statistics.

In particular, ONS and NHS England have worked together to ensure consistent acute productivity measurement aligned with the ONS’s annual approach, including weighting methodology, and application of adjustments (such as inflation).

In addition, NHS England has been able to make a number of methodological improvements to its own estimates (for example, the treatment of advice and guidance and outpatient procedures) through better access to data, as well as more in-depth adjustments that more accurately capture the value of NHS services.

However, the ONS and NHS England metrics do differ in important respects (particularly scope), relating to inclusion and exclusion of outputs and input. In summary, NHS England’s current acute productivity focuses only on acute sector and England. In comparison, ONS productivity measurement covers all sectors and the whole of UK.

ONS and NHS England are collaborating closely to ensure productivity measures that are produced for different purposes and with different scopes are coherent and can be used appropriately by the relevant stakeholders. NHS England’s current in-year productivity methodology for acute sector provides a robust assessment, which aligns to ONS methods and ONS have been closely involved in the development of the non-acute productivity reporting.

These – in particular the acute reporting – are broadly aligned with ONS’s non-quality adjusted annual productivity reporting. ONS is also committed to making continued improvement to annual and quarterly productivity reporting, working with NHS England and DHSC, through our ongoing collaboration.

As stated in ONS’s bulletin, the annual estimate is considered the highest quality estimate while the quarterly estimate is experimental in its current format and ONS welcome comments to support further work to develop these into accredited statistics.

ONS and NHS England will continue to work closely to improve the measures and reconcile the data.

Detailed backing note

A number of key factors explain the difference between the NHS England and ONS quarterly estimates for the year up to July-September 2024. These include:

• Correction for data quality within NHS England data. On the output side, NHS England is able to adjust for data quality issues whereas ONS would not be able to do so in the quarterly estimate. Notably, this is a particular issue in the admitted activity data. NHS England applied an adjustment to account for missing or under-reported data to non-elective (emergency) admissions, accounting for 3.8 percentage points added to the data initially published, and 1.8 percentage points added to elective admissions data for July-September 2024. This is a routine process for NHS to correct previously reported data when errors are identified, which can happen when using very up to date monthly data. This would in aggregate lead to 0.5 percentage points of the difference in output, which ONS would account for later via the annual benchmarking.
• Treatment of high-cost drugs. ONS’s annual statistics include high-cost drugs as an additional component of output, but these are excluded from the quarterly, although the input costs are captured in both. NHS England takes account of both input and outputs related to these high-cost drugs. This would explain 0.4 percentage points of the difference between the two estimates of output.
• Different methods to reflect growth in treatment intensity and case mix in output growth. NHS England calculates outputs to reflect intensity and complexity aligned with ONS’s annual methodology. ONS’s quarterly estimates applies average costs as weightings, which do not reflect variation in intensity or complexity. NHS England estimates case-mix adds an additional 0.5 percentage points to the output growth compared to just using activity counts in isolation within the reporting period.
• ONS’s public sector healthcare productivity analysis covers the whole UK, whereas NHS England’s analysis only reports English data. The ONS also include changes in output of non-acute services, (e.g. GPs and primary care, community mental health and community prescribing etc), whereas NHS England’s measure presently focuses on the productivity of the acute sector.
• There is a small adjustment ONS apply which takes account of seasonality in the data.
• For the quarterly statistics, ONS only have access to England’s output (activity) data, rather than other devolved administrations; but does have access through national accounts to all UK healthcare input (spend) data. At an aggregate level, ONS make adjustments to output trend to be aligned with previous years’ annual trends, including accounting for issues such as the treatment of high-cost drugs described below. On this basis, NHS England’s output could be materially different from ONS’s estimates of the UK numbers and the England component of these reported in the quarter.
• One significant scope difference on this basis is the inclusion by ONS (or exclusion by NHS England) of Covid-19 vaccine activity. In the reported period, vaccine activity had fallen significantly in line with the changes to eligibility criteria, during the period July-September 2024. This led to a material difference on output compared to aggregate NHS output across all sectors (where vaccination isn’t typically counted). A similar drop has been picked up on the input side. The exact relationship of the changes between inputs and outputs could reduce productivity growth but it will take time to work through the precise impact.
• The estimated aggregate impact of these 2 bullets immediately above is 2.1 percentage points on output, over the year compared to July to September 2023.