Office for National Statistics: Regional & Local Statistics Dev Virdee Deputy Director, Regional & Local Division

PRESENTATION WILL COVER: Drivers for regional and local data What we currently produce Regional Accounts Wider range of regional/local outputs What should be used for particular purposes - fitness for purpose Future direction: Allsopp review of regional statistical framework National Statistics Quality Review of Regional Accounts

DRIVERS FOR REGIONAL & LOCAL DATA DEMANDS European requirements eg ESA Devolution - Scotland, Wales, NI, London, other English regions More policy emphasis at local level eg Neighbourhood Renewal, Urban & Rural policies Need for more efficient and effective targeting of need and resources Citizens want to know more about their area

Drivers 1 - European Union Structural and Cohesion Funds European System of Accounts (ESA95) Urban Audit Other information needs UK proposals for future of Structural Funds “A modern regional policy” consultation paper Methodologies, timeliness Challenges of comparability - different issues in different countries

Drivers 2 - UK/England Regional Policy Public Service Agreement targets Regional requirements: Regional Accounts - nominal vs real, output/income/expenditure Cost of living, prices Inflation Wages Employment, unemployment, productivity

Drivers 3 - “Regional” Regional Policy Devolved countries requirements Regional Development Agencies (RDA’s) delivering the strategy and policy Core set of statistics for the region compare with others Additional statistics specific to the region eg tourism More detailed information for within the region

Drivers 4 - Sub-regional policy RDA’s tier 2 and 3 targets Data for specific policy initiatives Drivers of productivity Local Authorities’ needs Local targets and indicators Neighbourhood Renewal and Neighbourhood Statistics

WHAT WE CURRENTLY PRODUCE (1) REGIONAL ACCOUNTS: Regional Gross Value Added (GVA) (NUTS-1) Sub-regional GVA (NUTS 2 & 3) Household Accounts (NUTS 1, 2 & 3) Gross Fixed Capital Formation (GFCF) (NUTS 1 & 2) Individual Consumption Expenditure (NUTS 1) Government Accounts (experimental) (NUTS 1 & 2)

WHAT WE CURRENTLY PRODUCE (2) REGIONAL ACCOUNTS - CURRENT DELAYS NUTS 1 GVA estimates published in August 2003 Estimates published in November 2002 had to be withdrawn problems with sources and some errors in systems Major programme of work to deal with problems GVA and GFCF at NUTS 2 published in October 2003 NUTS 3 GVA to be published December 2003 Considering timetable for Household Accounts

WHAT WE CURRENTLY PRODUCE (3) OTHER REGIONAL/LOCAL STATISTICS Labour Market Statistics employment, unemployment Population essential as denominator Business statistics VAT registrations, Business size analysis, Household Surveys Labour Force Survey, Expenditure & Food Survey, etc etc ….

WHAT WE CURRENTLY PRODUCE (4) OTHER REGIONAL/LOCAL OUTPUTS (a): Sub-national Reporting - bring together publications eg Regional Trends, Region in Figures, Focus on London, etc The lead point of contact for users of area-based information Co-ordinate Statistics for Regional Policy across government Identifying available data for regional policy purposes and disseminating, improving signposting Identifying gaps in data, prioritising and taking action Identifying and supporting key geographies

WHAT WE CURRENTLY PRODUCE (5) OTHER REGIONAL/LOCAL OUTPUTS (b): Co-ordinating statistical needs for European purposes EU Urban Audit 2 Urban/Rural definitions (being developed) “Morphological” and “Context” approach, hierarchical Urban/rural, rural subdivided into towns, villages, dispersed settlements also into remote, non-remote settlements Consultation Dec-Jan, agree and publish by April 2004 Travel to Work Areas (Labour Market Areas) Neighbourhood Statistics, including Census

WHAT WE CURRENTLY PRODUCE (6) OTHER REGIONAL/LOCAL OUTPUTS (c): Area classifications socio-economic classification of local authority areas (NUTS4/LAU1) considering development at lower geographical level - LAU2 and lower Indices of Multiple Deprivation Different aspects of deprivation, as well as overall index LAU2 level, considering lower levels

WHAT WE CURRENTLY PRODUCE (7) NEIGHBOURHOOD STATISTICS Very local level - Wards and Census Output Areas Wide range, priorities currently driven by Neighbourhood Renewal needs Domains: Access to services Community well-being/social environment Crime / Community Safety Economic deprivation Education, skills & training Health Housing Physical environment Work deprivation plus denominators and cross-cutting information such as urban/rural indicators

The Information Deficit “The absence of information about neighbourhoods has produced a series of failings at national, local and community level ... policies can easily be mis-designed or mis-targeted” Policy Action Team18, Better Information

DIFFERENCES WITHIN AND BETWEEN REGIONS Large differences between regions But …. greater differences within.. eg Inner London - highest GDP per head in EU, but contains some of the most deprived areas in UK

Manufacturing vs Services Manufacturing more significant in East London Services dominant in West London

Nitrogen Dioxide concentrations Focus on London 2003 Higher concentrations in: Central London Heathrow Airport, and around M25, M4, etc Higher proportion of Londoners express concerns over traffic fumes than UK as a whole

What should be used for particular purposes (1) Measures of regional “prosperity”: Current headline indicator: Gross Value Added (GVA) Available in current prices only GVA per head of population Also as Index, UK = 100 And as Index, EU = 100

What should be used for particular purposes (2) Historic & current key uses of GVA: Eligibility criteria for EU Structural Funds Objective 1 (NUTS 2) RDA Targets (NUTS 1) Public Service Agreement Target Comparison between Regions and against the national series

What should be used for particular purposes (3) Problems with this measure: In Current Prices - users would like “Real” GVA (constant prices) as a measure of growth Measures economic activity - not incomes or prosperity Denominator is not consistent whole population, not just measure of “inputs” residence based - huge impact on London due to commuting

What should be used for particular purposes (4) When examining regional productivity: Should use GVA per full time equivalent or hours worked Relates GVA to measure of input (labour) For welfare of residents of a region: Use Household Disposable Income (HDI) per head

What should be used for particular purposes (5) No single (or even 2) measures are sufficient: Complement GVA and HDI with additional information, eg: Business Statistics Vacancy Rates, Employment, Unemployment Individual Consumption Expenditure Investment (GFCF) Activity rates, commuting rates, productivity rates Infrastructure Links, Property prices, etc

What explains differences in GVA per head? OECD view ... What explains regional differences in GDP per capita? What explains differences in GVA per head? OECD view ... Sectoral specialisation = industry mix in region Labour Productivity = Employment rate = Activity rate = Commuting rate = GDP . Employment at the workplace Employment at the workplace Labour force at the workplace Resident labour force Resident population Labour force at the workplace. Resident labour force

What explains differences in GVA per head? OECD view ...

Drivers of productivity that need measurement: Skills - lifelong learning, employment choices > labour market statistics Investment - integrated & efficient capital markets, supported by public investment > GFCF, Govt Accounts Innovation - development & adoption of new technologies revised/updated classifications, hedonics Enterprise - friendly tax & regulatory environment, culture open to ideas & risk taking - new business formations Competition - boost innovation, reduce costs, enhance quality - how to measure competitiveness?

ONS RESPONSE TO THE INCREASING SUB-NATIONAL NEEDS (1) Recognise importance of sub-national statistics: Established Divisions with key roles for enhancing regional & local data: Regional and Local Division Neighbourhood Statistics & Census Outputs Division Statistical Frameworks Division (inc Geography) Social Data Collection & Administrative Data Division Consolidating Regional Accounts within National Accounts

ONS RESPONSE TO THE INCREASING SUB-NATIONAL NEEDS (2) Major developments: ONS Modernisation Programme Re-engineering of systems eg common tools for data collection, storage, analysis Statistical Infrastructure Development Programme eg common methods for disclosure protection, estimation, imputation, etc Improved dissemination, eg interactive website, as well as tailored solutions such as Neighbourhood Statistics.

THE ALLSOPP REVIEW - AN OPPORTUNITY Terms of Reference: 1. To advise on changes in the statistics and information necessary if the UK were to join the European single currency 2. To deliver an assessment to the Chancellor, Governor of Bank of England, and the National Statistician, on: the regional information and statistical framework needed to support the Government’s key objective of promoting economic growth in all regions and reducing the persistent gap in growth rates between the regions; whether the changing economic structure of the UK is being properly reflected in the nature, frequency and timeliness of official economic statistics

THE ALLSOPP REVIEW - AN OPPORTUNITY Need to develop statistical framework that will support management of area-based policies Must include consideration of wide range of needs - EU/international, UK, nations of the UK, regional, sub-regional. Need to support identification of barriers to growth and competitiveness - eg productivity, structural change, demography, rural/urban, etc. Should lead to step-change in commitment to sub-national dimension of UK statistics

THE ALLSOPP REVIEW - timetable Review announced February 2003 Initial focus on regional aspect June/July - scoping and consulting key stakeholders and experts August/September - formulating views September/October - testing conclusions November - draft interim report Interim report to be published in December Final Report with Budget (March 2004)

NATIONAL STATISTICS QUALITY REVIEW OF REGIONAL ACCOUNTS Looking at quality of current outputs Looking at all aspects of quality, including relevance Proposing a strategy for Regional Accounts for the future Strategy to include timely & reliable estimates of key data, which include: GVA, GFCF, on workplace basis Household Incomes and Expenditures, residence basis but also considering other indicators Must have confidence of users in the statistics

BOTH REVIEWS: Wide ranging implications for statistical methods and sources: Annual Business Inquiry (ABI) is critical to GVA current processes mainly designed for good national results need changes in order to raise quality of regional results National Accounts and Regional Accounts to be more integrated Need expertise from (or on) the regions to be part of the process Should conclude and publish early 2004

Much to do, but plans should lead to: Improved synergy between sources and analyses at sub-national level, including for Regional Accounts Better timeliness, improved accuracy and relevance Additional advice and metadata to support the statistics Greater user consultation at all key stages of programme development, including through peer review of outputs. Much greater acceptance and appropriate use of outputs.

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