Why are we all here GVA made "simple" What is GVA and how does it shape what we do as an Agency How

1
Why are we all here? GVA made "simple"- What
is GVA and how does it shape what we do as an
Agency- How is it measured- What do we do which
affects GVA

• Hosted by - Rebecca Riley Andy Mowlah

2
Objectives of the session..

• What you should take away today
• I know why GVA is important to my job
• I know what GVA is
• I know what can influence GVA
• I know who to ask about GVA
• I enjoyed that.

3
Why is GVA important to the RDA?

• It is the focus of the main PSA target DTI and
  Treasury have in place to measure regional
  economic performance..
• Make sustainable improvements in the economic
  performance of all English regions by 2008 and
  over the long term reduce the persistent gap in
  growth rates between the regions, demonstrating
  progress by 2006
• The PSA is measured using GVA per head, and
  comparing the fastest growing with the slowest
  growing regions.

4
Why is it important to me?

• It is important to understand GVA so you can make
  appropriate decisions and you can understand the
  decisions made by others
• We need to be able to demonstrate what our
  contribution is to achieving GVA growth

5
So, what is GVA?
National Statistics Definition GVA measures the
contribution to the economy of each individual
producer, industry or sector in the economy.
At UK level there are 3 ways of measuring GVA
expenditure, production and incomes
The incomes approach is the only one used at
regional level because of availability of data
but it is constrained to the National GVA Figure
6
What is the Incomes Approach?

• It is only about income generated through the
  output of goods and services

Compensation of employees WAGES Mixed incomes
INCOME FROM SELF EMPLOYMENT
Gross operating surplus COMPANY PROFITS
Taxes less subsidies on production BUSINESS
RATES
Put simply Earnings Profits Taxes
Subsidies (on production)
7
And what it isnt

• A measure of prosperity or standard of living,
  because it does not include taxes or benefit such
  as unemployment benefit, Working Families Tax
  Credit or pensions.
• A measure of how much is produced, because it is
  measured in current prices - the cost of items
  can change!
• Nor may it be used to compare standards of living
  between different regions, not only because of
  different regional patterns in taxes and benefits
  received, but also price levels may be different.

8
So how do they measure it?

• Compensation of employees - Inland Revenue tax
  return / Government accounts ONS surveys
• Gross operating surplus - Inland Revenue
  ONS/BERR inquiries and ONS estimates
• Mixed income - Inland Revenue and DEFRA
• Taxes less subsidies on production - HM Customs
  and Excise

9
What influences GVA?

• More people in work greater earnings
• Higher productivity greater profits

10
Earnings Population/working population
Working age population in the NW 1990-2007
Internal international net migration to the NW

11
Earnings Employment
Number of jobs in the Northwest UK
Male female inactivity rates ( of working age
population)
12
Earnings Types of Occupations
Occupations by occupational category ( of total
jobs)
13
Earnings Skills Levels
Highest qualification of economically active (
of economically active WAP)
14
Profits Enterprise
VAT registrations per 10,000 of working age
population (Source NOMIS ONS)

15
Profits Innovation and Competition
Total RD expenditure as proportion of GVA
(Source ONS)
16
Profits - Investment
Manufacturing services investment (by UK-owned
companies) as a percentage of regional GVA
(Source ABI and ONS)
17
Profits - Sectors
Labour productivity in services, 2005 (,000 per
person employed)
18
What are the numbers.

• GVA headline
• total amount of GVA - How big is the pie! 111bn
• GVA per head
• total amount of GVA divided by the total
  population How big a slice each person has!
  16,234

19
What does latest data tell us.

• GVA headline - We have maintained ranks (3 and 8)
  and index fig (87). Our economy has grown but its
  growth rate is slower than any other region, and
  this is for the second year running. Manchester
  and Liverpool's growth rate has slowed despite
  employment rates going up in the same period.
  Manchester has the same relevance to the regional
  economy as London and SE does to England (40)
• GVA per head - We have seen reasonable growth -
  better than 3 other regions. The per head Gap has
  got bigger 18.4bn (it was 17.8) to 19.5bn but the
  gap in growth rates (the important measure for
  the target) is narrowing from 0.9 (1996) to 0.2
  (2006) NW has had less migration than other
  regions which in the short terms helps the per
  head, but in the longer term may constrain
  growth. Reliance again on Manchester Merseyside
  for growth

20
Things to bear in mind when using GVA as a
measure...
ONS GVA does not separate out inflation, which
means growth is usually around 4, rather than
the "real" growth terms used to express the GVA
targets or done in economic modelling which is
about around 2. So at the moment there is no way
to measure our GVA p/head target Latest ONS
data has no sectoral breakdown as ONS. Time lags
in data Allocated where profit is reported
headquarters effect Commuter patterns The lower
the geography the less reliable it is Having a
large dependant population is bad for GVA The
data is revised every year and can be revised for
pervious years
21
Put the sub-regions GVA per head in order,
largest first
A. Cheshire - 19,367
D. Greater Manchester - 16,546
B. Lancashire - 14,568
C. Cumbria 13,491
Merseyside 12,7848
A. Cheshire
B. Lancashire
C. Cumbria
D. Greater Manchester
22
What is used to measure GVA?
A. A ruler
B. Salaries x Working Age Population

C. Profits Earnings - taxes
D. GDP is used as an estimation
23
What is the Northwests GVA per head?
A. 17,790
B. 13,360

C. 15,506
D. 16,234
24
How big is the Northwest Economy?

A. 100bn
B. 111bn
C. 116bn
D. 106bn
25
What were our objectives?

• We really hope you know
• Why GVA is important to our job
• What GVA is?
• How we can influence GVA?

Any further questions.. Write it on a
post-it!!!!!!
26
Oh and lastly.

• Did you enjoy it?

(If not Andy wrote this presentation..)
(if you did I wrote it..)