Who gets what: GVA and GDHI

There's a connection between the value of what gets produced in an area, and the amount that is returned to an area in terms of local income and expenditure.  At its most crude, this is the difference between workplace-based production, as measured by Gross Value Added (GVA); and residence-based expenditure as shown by Gross Domestic Household Income (GDHI).  The data is only available at the level of large local authorities and above.

The most recently available comparative data for Glasgow is for 2009, and shows that

• GVA was £17,343 million, equal to 16.9% of the Scottish total;
• GDHI was £7,769 million, or 10.1% of the Scottish total.

On the face of it, this suggests quite an imbalance.  A large part of the explanation lies with commuting patterns, as GVA represents the output of people working in Glasgow regardless of where they live, combining residents working in Glasgow with the contribution of in-commuters.  GDHI, on the other hand, shows the amount of money available for residents to spend regardless of where they work, and groups together residents working in Glasgow with people that out-commute.  As on a daily basis around 191,000 in-commute, offset by around 40,000 out-commute, you can see why GVA is higher than GDHI.

But this only explains part of the story.  As shown above, Glasgow receives 10.1% of the Scottish total of available income.  But Glasgow makes up

• 11.4% of Scotland's population; 
• 12.4% of Scotland's working-age population.

Glasgow's GDHI is therefore 11.4% lower than its share of Scotland's population, and 18.5% lower than its share of Scotland's working age population.  Put another way, if Glasgow's GDHI was equal to its share of Scotland's overall population, it would be over £1bn higher each year; if equal to its share of Scotland's working age population, it would be £1.8bn higher.  So it still appears as though Glasgow gets less in terms of its income than its contribution to the Scottish economy would suggest.

It could be that the large number of people on benefits explains why aggregate income in Glasgow appears low.  GDHI is made up of two components: primary income which is received from employment net of taxation, pension contributions and housing costs; and secondary income that are received through redistribution via pensions and benefits.  So if we think that the large number of benefit claimants explains Glasgow's relatively low share of Scotland's GDHI, we would expect secondary income to be relatively high.  In fact the data shows the opposite

• Since 2000 the balance of secondary income in Glasgow has been negative ie in aggregate terms more is contributed in terms of taxation than is received by way of income;
• Even when Glasgow received a positive net secondary income, as in 1997,    the amount received was only 5.2% the total positive primary income level.

Part of this can be explained by the relatively low proportion of people in Glasgow that are of pensionable age, relative to the rest of Scotland and the UK.  Even so, the small size of the overall share of secondary income to total GDHI suggests this explanation of Glasgow's smaller than expected share of Scotland's GDHI does not hold.

Income levels are another plausible explanation: if residence-based income levels are lower than workplace-based income, this would help explain the discrepancy.  The latest data from the Annual Survey of Hours and Earnings (2011) shows that

• the median gross annual full-time income for residents was £24,465;
• for workplaces, the equivalent income was £25,428.

Resident-based income was therefore 3.8% lower than workplace-based income.  Workplace-based income in Glasgow was only slightly lower than the Scottish median of £25,538.  Median income levels only explain part of the shortfall between Glasgow's GDHI and the level to which it might be expected in terms of population levels.

If Glasgow is getting a lower than expected GDHI, which areas are getting higher than expected returns?  Existing redistribution via the Scottish Government's Grant Aided Expenditure procedures already favour rural areas.

• East & West Dunbartonshire, Helensburgh and Lomond has an overall GDHI of £3.4bn and a GVA of £2.8bn, and this higher than expected income can be attributed to commuting patterns and a relatively weak local economy;
• Caithness & Sutherland and Ross & Cromarty has a GDHI of £1.4bn and a GVA of £1.3bn;
• Lochaber, Skye & Lochalsh, Arran & Cumbrae and Argyll & Bute have a £120m net gain on the balance of secondary income which adds 9.4% to their local economy.

Latest demographics

Unlike England and Wales, Scotland will have to wait another couple of months until we get sight of even the most basic Census 2011 results.  Thanks Holyrood.  Until then, we will have to make do with the latest (2011) mid-year estimates from Scottish National Statistics.  But at least this gives us some details of age composition and without making any great splashes it confirms some trends we've already noticed

• Scotland's population is increasing in number, it increased by 3.8% between 2001 and 2011;
• however the number of people in Scotland aged between 25 and 44 decreased during this period, falling by 6.2%.

The 25-44 age group increased in only three of Scotland's 32 local authorities

• Edinburgh: up by 16.4%;
• Glasgow: increase of 8.0%;
• Aberdeen: up by 2.8%, but lower than the overall population increase of 4.0%.

Any guesses on what they have in common?  The age group declined noticeably in areas like Dumfries & Galloway (-21.2%), Argyll & Bute (-21.7%) and East Dunbartonshire (-23.1%).

Looking at Glasgow, by far the greatest proportionate increase was in Anderston/City, where the increase was by 71.2% 2001-11.  Then came

• Calton: +27.2%;
• Hillhead: +23.1%; 
• Southside Central: +18.6%.

On the other hand, the age group declined in number in

• North East: -11.7%;
• Shettleston: -12.6%;
• Baillieston: -15.8%.

The 25-44 age group is worth monitoring as it includes people likely to be in employment, and probably also contemplating settling down and starting a family.  So it gives a clue as to the likely characteristics of a place over the next 5/10/15 years.

What are the features and wider implications of this?  The most obvious is that it marks the end of the flight to suburbanisation and New Towns and wider deurbanisation that was a feature of much of the last 50-60 years.  Other points are

• in Glasgow at least, the increase has mainly been not so much in but on the fringe of the city centre, linking it with the West End and areas like Dennistoun to the east, and to a lesser extent south across the Clyde;
• the decline in Glasgow has been in other parts to the east of the city, in spite of high levels of public investment in these areas over the last 20-30 years;
• the areas where the increase is most apparent are also those with an ethnic diversity and a private rented sector.

These trends also raise more worrying questions.  In crude terms, the younger part of the working-age population is increasing in cities, while the elderly population is going to increase in suburban, semi-rural and rural areas.

• are the urban economies going to be asked to support precarious and fragile suburban and rural economies as well as areas of need within their own boundary? - after all, they weren't too concerned about contributing when the cities were in decline;
• rural areas are likely to be faced with two pressures: a declining local economy (because of fewer people in employment) as well as increasing health and social costs due to increasing life expectancy - can services cope, and how will it shape these areas?
• will cities be able to reach their full potential?  Aberdeen probably will, given its importance to the energy sector, provided that it decides to.  Edinburgh's inbuilt advantages as a political and financial centre will stand in its favour.  That leaves Glasgow - contributing more to the Scottish economy (in terms of GVA) than it gets back (in terms of GDHI). It would be ironic if, at the time when its demographics fall in its favour, Glasgow becomes additionally burdened to support areas outside its boundary.

Demographics visualisation

UK Economic Performance

Data out today shows that the UK economy shrank by -0.2% between the fourth quarter 2011 and the first quarter 2012.  Quarterly change since 2008 is here.  The ONS also revised their estimate of the change between Q3 2011 and Q4 2011, from -0.2% to -0.3%.  It is also worth noting that the UK economy is still smaller than at the start of the recession.

Energy use linked to deprivation

Data from DECC

Areas with per capita energy consumption below 5000 kilowatt hours

Methodology: 

• calculate a deprivation score from the 2009 SIMD for each Intermediate Datazone using a weighted average;
• rank in order in order so that 1 equals the most deprived; 
• similarly, rank the per capita energy use so that 1 equals the lowest use;
• work out the difference so that, for example, a negative score shows that the use ranking is higher than the deprivation ranking, and vice versa;
• dark green areas in the map show where the negative difference is greatest.

The two datazones covering Milton are relatively highly deprived and also have relatively high levels of per capita energy consumption.


Possible explanations:
People consume energy up to the point to which they can afford it

April 2012 Stats

Latest Labour Market Data for Glasgow (April 2012)

Hover over this for further explanation, comments , and Scottish data

Ward Details April 2012

Basic details of Glasgow Multi-Member Wards as at April 2012.