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News of Cornwall
A thread dedicated to the Duchy of Cornwall and its people, the Cornish.
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Cornwall poor? It all depends how you look at the figures
Peter Gripaios examines the statistics which have brought Cornwall so much financial aid.
http://www.westernmorningnews.co.uk/...ail/story.html
Spoiler!
Hordes of tourists on Cornwall’s beaches tell only part of the Duchy’s economic story
As usual Cornwall has had thousands of tourists during the summer months from other parts of the UK and from overseas. They might well have been impressed not just by the natural environment but also by the quality of retail outlets, the small number of empty shops, the number and variety of highly rated restaurants and the cost of housing in locations such as Fowey, Falmouth, Padstow and Rock.
If so, they may have been surprised to learn, that, according to a recent report for the EU Commission, the Duchy is one of the poorest regions in Northern Europe, so poor in fact to have qualified for the most generous form of regional aid. Indeed, it has been in receipt of hundreds of millions of euros since it first qualified in 2000. There has also been a considerable match funding component from the general UK tax payer.
Though Cornwall has its deprived areas, the question arises then as to whether the county, in total, is anything like as poor as it looks. It certainly seems to be if we look at Gross Value Added (GVA) per capita, a measure of the value of goods produced and services provided in a locality and the main one adopted by the authorities in Brussels in deciding which regions get the most aid.
The figure for Cornwall is well below 75% of that of the EU in total, the threshold for the package of support that it gets. This is the lowest figure for any sub region in the UK. Indeed, Cornish GVA per capita was just 61.2% of the UK figure in 2012, the latest year for which we have data. Moreover, that data seems to suggest that the recession affected the Duchy disproportionately for the corresponding figure for Cornwall in 2007, when the prolonged dip began, was 64.7% of the UK figure.
However, there are a number of reasons why Cornwall is always going to score badly in terms of this measure.
One important factor is that Cornwall is a political rather than an economic entity. There are two aspects to this. The first is that many Cornish residents commute to work in Plymouth and other parts of Devon so that the value of their output is counted in the latter locations. The second is that the main, high value added business service locations for Cornwall are in Plymouth and Exeter rather than in locations within the county. Instead Cornwall has a high percentage of output in relatively low value added agriculture and services associated with leisure, other aspects of tourism and healthcare. This implies that if Cornwall was subsumed within a larger Devon and Cornwall area for such measures, it would look rather less deprived.
Another key factor is that the Duchy is an attractive environment for retirement, early retirement and other aspects of lifestyle choice so that the value of goods and services in the Duchy is divided by a relatively large number of unproductive heads, thereby reducing the calculation. It is further deflated by the fact that, since the GVA figure is based on the value of production, it excludes income from annuities and pensions – clearly very important in the Cornish case.
Such income is included in Gross Disposable Household Income (GDHI) per head – an alternative measure of an area’s wealth. If we look at this indicator, a rather different picture emerges of relative Cornish prosperity. The figure for Cornwall in 2012 is now as high as 93.2% of the UK figure and higher than that of the North East, North West, Yorkshire and Humberside, East Midlands, West Midlands, Wales and Northern Ireland regions of the UK, most of which do not qualify for the same high level of EU aid. Moreover, GDHI per capita in Cornwall relative to the UK actually improved over the recession rising from 90.9% in 2007 to 93.2% in 2014. That might reflect the fact that pensions and annuities were indexed to inflation while earnings from employment fell significantly.
Arguably, the latter measure is a more realistic indicator of economic wealth in areas such as Cornwall. If so, the county seems to be very lucky that relative regional prosperity in Europe is measured in the way that it is. It might have much to lose if the UK pulls out and other criteria are used to decide who gets what in a nationally decided distribution of development funding.
A traditional indicator for this in the years of UK regional policy was unemployment rates and here again Cornwall compares favourably. The latest Labour Force Survey figure for the spring of this year is 5.3% for the Duchy, lower than the corresponding ones for the South West region in total (5.4) and the whole of the UK (7.2). The alternative figure for the percentage of persons of working age claiming Job Seekers Allowance is also lower in Cornwall than the two larger areas.
This is not to suggest that things couldn’t be better in the county for it compares unfavourably with the UK in total on the percentage of the labour force employed in managerial and professional occupations, percentage with qualifications of NVQ4 and above, percentage on out of work benefits and percentage of part-time jobs. Not surprisingly, this is reflected in gross weekly pay which in Cornwall is only 80% of the national average.
And, of course, there is a big difference between the fashionable resorts of the coast and the old industrial areas. They are certainly lagging behind in the emergence from recession just as they are elsewhere in the UK.
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Peter Gripaios is emeritus professor of economics at the University of Plymouth.
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