A new economic index, published by Regeneris Consulting and covering the performance of all areas of England, reveals that the gap between North and South narrows substantially once the true costs of wealth production are taken into account.
The Regeneris Sustainable Prosperity Index (SPI) shows that higher economic output in the South comes at a greater social and environmental cost in terms of more commuting, congestion, greenhouse gas emissions, reduced domestic labour, and higher costs of living.
The Index is the first of its kind to cover all regions and local authority areas in England, and aims to prompt a wider debate on the way regional economic policy is designed and measured.
The SPI gives a rather different picture of economic welfare from that provided by conventional measures of prosperity, such as Household Income, Gross Domestic Product (GDP) or Gross Value Added (GVA). While London is still the highest performing region in the SPI, it is only nine per cent above national average prosperity per head compared to 17 per cent when measured in terms of household disposable income. The difference between the actual prosperity of Londoners and the national average is effectively half that suggested by income levels.
The Index places Yorkshire and the Humber in fourth place in England, compared to eighth place - next to the bottom of the league - in terms of household disposable income. The region rises from lying 10 per cent below the England average household income to exactly average using the SPI approach.
At district level, Kensington & Chelsea, the City of London, Westminster and Elmbrige top the SPI table, due to exceptional income levels. Outside London, the South East and East of England, Macclesfield – with high income and relatively low prices – is the highest ranking district, at number sixteen.
The lowest performing areas include parts of East London – Barking & Dagenham and Newham – where modest to average incomes are combined with high living costs, and districts such as Bolsover in the East Midlands, Sandwell in the West Midlands, and Knowsley and Blackburn with Darwen in the North West which all have underlying weaknesses in the economic base.
The Regeneris SPI reflects the current debate about the extent to which economic growth delivers improvements in the quality of people’s lives, and also the findings of the Stern Report on Climate Change about the negative effect of greenhouse gas emissions.
Regeneris managing director Stephen Nicol said: “Economic output is currently seen as the key indicator of regional performance and government policy encourages improving output as the ultimate target for each region. However, higher economic output does not automatically give people a better quality of life, as there are significant social and environmental costs involved in wealth production. As the Regeneris SPI shows, once these costs are taken into account, the real quality of life gap between north and south is reduced.”
The SPI uses disposable household income as a starting point but makes adjustments for regional price differences. It also takes into account the time and costs involved in commuting and congestion, the emission of greenhouse gases and unpaid domestic labour, or the extra costs of childcare and domestic help associated with working longer hours. It estimates these ‘hidden costs’ amount to around £3,000 for the average person in England.
Stephen Nicol adds: “The Regeneris SPI raises some important questions for policy makers, in particular whether economic growth is the best way to measure the success of the regions, and whether there should be greater recognition of trade-offs between growth and the costs of that growth, in particular the additional travel and CO2 emissions.
“While the Index does not yet fully capture all the factors affecting quality of life and wellbeing, it provides a valuable alternative perspective and is potentially an important economic development tool. We hope it will start a wider debate about the future of economic policy in the regions.”
To download a copy of the Regeneris SPI 2007 Summary Report, click on the link below:
Regeneris Sustainable Prosperity Index (SPI) 2007
For more information on the Regeneris Sustainable Prosperity Index and its implications, contact Stephen Nicol on 0161 926 9214 or s.nicol@regeneris.co.uk.
|
