Lancashire County Council Logo | Listen | Home | A to Z | Feedback | Complaints | Your Council | Business | Residents | Visitors |
The estimated sum of incomes earned from the production of goods and services in the Lancashire NUTS-2 area in 2006 amounted to almost £22bn. This represented nearly a fifth (19.4%) of the North West Region total and 1.9% of the UK figure. For the smaller Lancashire County Council Area the value was some £18.2bn.
In 1997, Gross Value Added per head in the Lancashire NUTS-2 area was 85% of the national average. By 2006, the rate had fallen to 80%.
Over a number of years, the dramatic growth of the financial services industry in the capital has had a major impact on the overall value of the UK economy. This is a significant reason why the pace of increase of the local economy has not been able to keep up with the national trend.
Photograph of some money
Gross Value Added (GVA) is an indicator of wealth creation, measuring the contribution to the economy of each producer, industry or sector and is generally regarded as the best measure of the sum of economic activity within an area. It is an important measure in the estimation of Gross Domestic Product (GDP) when using the "production" or "income" approaches and is now used to determine regional and sub-regional estimates of wealth creation that were originally termed Gross Domestic Product by the Office for National Statistics. In essence, the link between GVA and GDP can be defined as GVA plus taxes on products, less subsidies on products equals GDP.
Viewed over time, GVA can be used as a conventional measure of economic growth. However, whilst often used as a broad measure of economic and social wellbeing, the GVA/GDP measures are far from perfect. As well as the "black economy" which escapes the output and income measures of GVA, it also does not include, for example, transfer payments such as social security and pensions, or allowances for household or voluntary work nor aspects like leisure time availability, income inequality or the quality of the environment, all of which are thought to be important factors in determining a nation's wellbeing.
A further consideration is that local sub-regional estimates measure GVA on a workplace basis. This means that income from the employment of commuters is allocated to the area in which they work rather than where they live. (In 2001 the Census of population recorded a net outflow of commuters from Lancashire to other work centres of 21,400). Often a better guide to prosperity at the sub-regional level is provided by estimates of gross disposable household incomes .
The most recent official local estimates of GVA are for 2006 and are geographically based on European-defined statistical units – the so-called "Nomenclature of Units for Territorial Statistics" (NUTS). In the case of Lancashire, for example, the County of Lancashire together with the two unitary authorities of Blackburn with Darwen and Blackpool comprise a sub-regional NUTS-2 area. Each of the three areas are also separately NUTS-3 or "local areas".
The GVA figures provided for each area are (unless otherwise stated) "headline" figures – that is to say, they have been calculated using a five-year moving average based trend of the unadjusted estimates for each region. The estimates are also (unless stated) at current basic prices and do not allow for changes in prices over time (inflation) or differences in regional price levels (purchasing power.
Results for all parts of the UK may be obtained directly from the (External) National Statistics website .
The estimated sum of incomes earned from the production of goods and services in the Lancashire NUTS-2 area in 2006 amounted to almost £22bn (Table 1). This sum represented nearly a fifth (19.4%) of the North West Region total or 1.9% of the United Kingdom figure. Within the North West, Lancashire’s GVA contribution was higher that that of Cheshire (£20.8bn), Cumbria (£7.0bn) or Merseyside (£18.4bn) but only approaching half that of Greater Manchester (£44.8bn). Within the three Northern regions of England, the Lancashire sub-region's GVA was exceeded by Greater Manchester, West Yorkshire and was not far behind the figure for Northumberland and Tyne and Wear.
In absolute terms, the Lancashire sub-region's contribution to national wealth creation in 2006 was the 21st largest out of the 37 UK NUTS-2 regions in a range that extended from Inner London (£157.1bn) to the Highlands and Islands (£6.2bn). Some £18.2bn or nearly 83% of the Lancashire NUTS-2 GVA was generated in Lancashire County with the remainder divided between the two unitary authorities of Blackburn with Darwen with a share of 9.2% and Blackpool with 7.9%.
A more useful and comparative measure of economic wellbeing, and implicitly of general living standards (before allowing for transfer payments), can be made in terms of "GVA per head of population". For the UK as a whole, excluding Extra-Regio, average (compensation of employees and gross operating surplus which cannot be assigned to regions) GVA per head of population in 2006 was £18,945 whilst across the UK it exhibits wide disparities. Amongst the 37 NUTS-2 sub-regions Inner London not unexpectedly had the highest level of GVA per head in 2006, at more than two and a half times the UK average. Overall, productivity in Inner London was nearly 4.4 times higher than that in the least productive area, Cornwall and the Isles of Scilly.
Aside from Inner London, other NUTS-2 areas of high value added per head in 2006 together with those at the lower end of the rankings are shown in Table 2.
In the case of the Lancashire NUTS-2 area, GVA per head in 2006 was estimated at £15,145 (Table 3). This level was seven percentage points lower than that of the wider North West Region and only 80% of the United Kingdom average. In these terms, Lancashire ranked as a relatively modest lower middle ranking 25th out of the 37 NUTS-2 regions used by the Office for National Statistics, positioned between Kent in 24th place and East Riding and North Lincolnshire in 26th place.
GVA per head at the NUTS-3 level (principally individual counties and unitary authorities) revealed even greater variation. Inner London West had by far the largest sum with £93,144 followed some way behind by City of Edinburgh with £30,620 and Inner London East with £29,351. At the other extreme the Isle of Anglesey had the smallest GVA per head of population with just £10,560, followed by Gwent Valleys (£10,987) and Wirral (£11,199).
Rankings of the NUTS-3 areas in 2006 (out of 131 across the UK) place Lancashire County as 67th; Blackburn as 89th and Blackpool as 118th.
Over the period from 1997 to 2006, the North West as a whole has undergone a modest decline in GVA relative to the UK over the past decade however in Lancashire the decline has been more dramatic. For the broader Lancashire NUTS 2 area, the relative position has declined from 85% of the UK average to just 80% in 2007. For the County Council area, the decline was from a figure of 86% to 82%, whilst for both Blackburn with Darwen and Blackpool the reductions have been more significant.
The strength of the economy of London has a dramatic influence on the overall UK average and is a major reason behind the relative decline in the Lancashire area. On the basis of these GVA estimates Lancashire continued to become a more prosperous place in which to both live and work over the period 1997 to 2006 even though its pace of economic progress relative to many other UK areas was far from sparkling. Over the ten-year period to 2006, total GVA in the Lancashire NUTS-2 area increased by around 44% in nominal (cash) terms. This was below the UK average of 53% as well as trailing the regional average of 49%.
In interpreting these figures, it should be stressed that where an area relies heavily on output and employment on a particular sector or industry, its GVA is particularly sensitive to changes in the profitability of and employment in that industry. In Lancashire's case the importance of manufacturing generally and of the defence/aerospace industry in particular, has impacted disproportionately on local GVA figures for many years. Lancashire continues to have a high dependence on manufacturing (still accounting for 23% of Lancashire's GVA in 2006 compared with 13% in the UK - see Table 4).
In addition to the manufacturing sector, there are other sectors where Lancashire has a percentage share that is greater than the UK average, but none are of the same level of significance. The three service sectors of Public Administration, Education and Health and Social Work are together probably the next most significant and form 21.5% of the GVA Share in Lancashire against 18.5% for the UK as a whole.
The Financial intermediation and Real estate, renting and business activities sectors have spearheaded much growth across the UK, but together only contributed 19% of Lancashire's GVA in 2006 against around 32% nationally. It is therefore, an area of the economy where the county is not strong.
This page was compiled by Bryan Moulding .
All enquiries from the media should be sent to Corporate.Communications@lancashire.gov.uk .
Any other questions about the content of this page may be sent to EconInfo@lancashire.gov.uk .
For all enquiries about the county council's services , contact the Customer Service Centre on 0845 0530000 (01772 530000) or at Enquiries@css.lancscc.gov.uk .
Printer Friendly Version | About our website | Top of page | Office of the Chief Executive Copyright © 2009, Lancashire County Council | Site Terms (External) Tell us what you think about our site...