The ONS has just released its latest statistics on gross disposable household income (GDHI) at a regional and sub-regional level. The new figures are for 2012 and they reveal some interesting facts about the structure of our regional economy.
In SW England as a whole, GDHI was £90.3 billion in 2012, broken down 45% in Gloucestershire, Wiltshire and Bristol/Bath, 25% in Dorset and Somerset, and 30% in Devon and Cornwall and the Isles of Scilly. It is more interesting, however, to look at the GDHI figures in terms of a ratio to the size of the population: it would be silly to compare the rural Dorset total to that of urban Bristol without considering the number of people that the income totals are spread over.
At a regional level, in 2012, the SE average GDHI per head was £19,126 whereas the SW total was £16,914. These compared with an England average of £17,066 i.e. above and below average respectively. Across South West England, the range was from a GDHI per head figure of £18,237 in Dorset (not including Bournemouth and Poole) to £14,564 in Plymouth.
In index terms (UK average = 100), SW England’s GDHI per head ranked fourth out of twelve in the United Kingdom and was very close to the average (100.7). However, again, the range is wide from 8.6 points above average in Dorset to 13.3 points below average in Plymouth. The indices for the twelve SW areas are shown in the table below.
|SW places 2012||GDHI per head index (UK=100)||SW places 2012||GDHI per head index (UK=100)|
|Bath&NESom, NSom, & SGloucs||106.1||Cornwall & Isles of Scilly||93.2|
|Bournemouth & Poole||99.9||Plymouth||86.7|
We need to bring out the economic stories behind the raw data. There are two main ones.
1. The more rural areas tend to outperform their neighbouring conurbations on the income measures: on this data, populations in more rural areas can appear ‘richer’ than those in neighbouring towns and cities. This is at odds with the equivalent output data (gross value added or GVA per head) for which urban areas usually outperform more rural areas. It can also seem odd intuitively – surely, most of the high paying jobs are in the cities? We square this circle by considering commuting and employment status.
a) In many places, there is quite a lot of commuting in and out of local conurbations. In simple terms, high earners often work in town but live in the country. Hence, GDHI per head, which is measured at the place of residence, can bias the numbers one way (towards rural) whereas GVA per head, which is measured at the place of work, can push the other way (towards urban).
b) The employment structure is often very different in urban and rural areas. There are high and low paid jobs in both but the mix may vary significantly. Moreover, from the unemployment statistics, we know there are proportionately more jobless living in towns and cities and there can be more low earners at the two ends of the age range – proportionately more low income young and old people in the towns.
Both of these factors (commuting and employment status) tend to bring GDHI per head down in the conurbations relative to their rural hinterlands. To see how common this is, just look at the comparisons in the table above for a) Torbay and Plymouth versus Devon County, b) Bristol versus Gloucestershire and Somerset, c) Swindon versus Wiltshire and d) Bournemouth and Poole versus the rest of Dorset. Across our patch, rural hinterlands have higher GDHI per head than their urban centres.
2. The other story has yet to be revealed by our look at the statistics. There are interesting contrasts in the way the series move across SW England over time. In Dorset county (DCC), for example, the latest 108.6 index was the highest since 2006 and four points above the 2009 low. In contrast, the 99.9 index for Bournemouth and Poole (B&P) was the lowest since 1996 and 5.6 points below the peak of 2006.
These contrasting trends are stark, suggesting the Dorset conurbation is slipping down the relative incomes league whereas county Dorset is rising. Please note, this does not mean B&P’s GDHI per head is falling (although, in real terms, incomes have not increased much in recent years). It means incomes in B&P are not rising as fast as elsewhere – i.e. B&P residents are relatively ‘poorer’ whereas DCC’s are relatively ‘richer’. The long downturn since 2008, when some wage and non-wage earners have been under severe pressure, is bound to be part of the explanation for this divergence.
A range of such patterns have occurred across the region (see charts below). Although relative rankings change slowly if at all over the years, some urban areas have struggled to hold their relative positions against their hinterlands – e.g. look at the narrowing gap between Swindon and the rest of Wiltshire. One exception to that is Torbay, where the index has increased a little over time, although the town remains second lowest overall. Cornwall’s relative index has also gone up, but its ranking is unchanged.
SW gross domestic household income (1995-2012, UK = 100)
To conclude, we hope an upturn is now underway. If so, it will be interesting to see whether the SW’s conurbations regain recent lost ground. Normally, this would be my expectation… but not much has been ‘normal’ recently. Given the structural and rebalancing changes still needed, it may well take some time to feed through. Moreover, we are not going to know for some time: 2013 data will not be released until spring 2015 and any bounce from the incipient upturn may not be ‘known’ until 2017!. Yet again, we are driving the economy by looking in the mirror.