§ Lord Lea of Crondallasked Her Majesty's Government:
Why they published on 26 April sub-regional and local area estimates of Gross Domestic Product (GDP) calculated solely on a workplace basis 203WA (as opposed to a residence basis), thereby giving the impression that GDP per head is two-and-a-half times the national average in Inner London; whether in future they will simultaneously issue residence-based figures; and what representations they have made to the European Commission to ensure that these figures are not misunderstood. [HL2050]
§ Lord McIntosh of HaringeyThe information requested falls within the responsibility of the National Statistician, who has been asked to reply.
Letter to Lord Lea of Crondall from the National Statistician and Registrar General for England and Wales, Office for National Statistics, Mr Len Cook, dated 9 May 2001.
As National Statistician, I have been asked to reply to your recent question on sub-regional and local area estimates of Gross Domestic Product (GDP) (HL2050).
GDP is a workplace-based concept, measuring the economic activity occurring within an area, regardless of whether the persons engaged in the activity actually live within the area. This is as required by the European System of Accounts 1995 (ESA95) regulation and conforms to the methods set out by Eurostat (the Statistical Office of the European Commission).
GDP per head figures are then calculated by dividing the total GDP for an area by the resident population of that area. This is the indicator that has been used historically as a measure of the well-being of an area, in the absence of an alternative that is available for all member states.
Ideally, the economic activity of an area should be described by relating GDP to a measure of the volume of work (hours worked or full-time equivalent employment) in that area, which would provide a productivity measure. Alongside this, the well-being of those living in an area should be measured by household disposable income per head. However, such measures of sub-regional productivity or incomes per head are not yet available for all the member states of the EU. In the absence of such harmonised estimates, the Commission uses the available consistent data.
The Office for National Statistics (ONS) currently has no plans to publish sub-regional and local area estimates of GDP on a residence basis. ONS is, however, planning to publish sub-regional and local area residence based estimates of total and disposable household income towards the end of 2001 ONS is also developing sub-national productivity estimates.
The European Commission and Eurostat are aware of the implications of using GDP estimates divided by resident population as a measure of regional incomes. These issues are being addressed through Eurostat's Regional Accounts Working Party, with ONS playing an active part.