11 December 2014
Yesterday morning the Office for National Statistics published the latest estimates of UK regional and sub-regional Gross Value Added (GVA). These figures show that while GVA per head in Wales grew at the joint highest rate in the UK in the last year, it still remains the lowest among the devolved countries and English regions.
GVA is a measure of the increase in the value of the economy due to the production of goods and services. These regional estimates of GVA are measured using the income approach, which involves adding up the income generated by resident individuals or businesses in the production of goods and services.
These statistics are important as they provide an overview of economic performance at regional and sub-regional level, allowing comparison between the countries and regions of the UK. Also, GVA per head estimates are one of the outcome indicators for the Growth and Jobs chapter of the Welsh Government’s Programme for Government.
The figures are produced at three levels of geography using the EU standard Nomenclature of Units of Territorial Statistics (NUTS) approach.
- NUTS1: 12 areas in the UK – Wales, Scotland, Northern Ireland and the nine English regions.
- NUTS2: 37 areas or sub-regions in the UK– mainly groups of counties and unitary authorities.
- NUTS3: 139 areas in the UK – mainly individual counties and unitary authorities (also known as local areas)
The GVA estimates at the NUTS 1, 2 and 3 level have all been produced on a workplace basis (i.e. the GVA is allocated to the location where the economic activity takes place).
Key points from the data include:
- In 2013, Wales had the joint highest percentage increase in GVA per head of the 12 NUTS1 regions (3.4 per cent), along with the North West region of England.
- GVA per head in Wales in 2013 stood at £16,893, or 72.2 per cent of the UK average (an increase of 0.5 percentage points on 2012, relative to the UK average).
- GVA per head in Wales in 2013 was the lowest of all the 12 NUTS1 regions of the UK and has been the lowest in each year since 2001.
- At the NUTS2 level, GVA per head in East Wales stood at 87.7 per cent of the UK average, a decrease of 0.2 percentage points on 2012. While GVA per head in West Wales and the Valleys in 2013 was 63.1 per cent of the UK average, an increase of 0.9 percentage points on 2012.
- In 2013, GVA per head in West Wales and the Valleys was the lowest of all the NUTS2 areas in the UK.
- In 2013, the Isle of Anglesey recorded the lowest GVA per head of all the NUTS3 areas in the UK, with a figure of 48.6 per cent of the UK average.
Table 1 shows the changes in GVA per head for Wales, and the NUTS2 and NUTS3 areas of Wales, relative to the UK average, over the full time period for which these figures are available. Negative changes are shown in red.
One of the limitations of using GVA to understand the current health of the Welsh economy is that the figures are only published once a year and involve a significant time lag. The figures published yesterday will be used by businesses, policy makers, politicians, academics and commentators for a variety of different reasons throughout the coming year, and as the year goes on 2013 will seem all the more distant. It is questionable how much the 2013 figures will be able to tell us about the Welsh economy in September 2015, for example, even though at that time they will still be the latest figures available.
This point was recognised by the Assembly’s Enterprise and Business Committee in its recent report on trade and inward investment, which recommended:
The Welsh Government should take steps to improve the quality and timeliness of the economic statistics that are available for Wales. In particular, the Welsh Government should work with or commission the Office for National Statistics to produce Gross Domestic Product figures for Wales, on the same basis and frequency as it does for the UK.
The Welsh Government has accepted this recommendation ‘in part’ and is actively considering this issue, with a review of economic data being undertaken by the Chief Economist and Chief Statistician. The Welsh Government’s response to the report notes that the key emerging conclusion of the review is that ‘production of a quarterly indicator of GVA at low cost is feasible, but the case for such an indicator is less strong than many assume’.
It is not clear what this means with regard to the Committee’s recommendation and whether it will, in fact, be taken forward by the Welsh Government. However, in the Plenary debate on the Committee report the Minister for Economy, Science and Transport acknowledged that, given the Welsh Government’s acceptance of the recommendation ‘in part’, this is an issue that ‘we will return to’.