Economic Growth: - Gross Value Added per Head

Gross Value Added (GVA) indicates the level of economic activity within an area by measuring its production of goods and services. It is a measure that allows comparison of areas, and highlights variations in performance with a region, and trends over time. The GVA figure (workplace based) divided by the total residential population (resident based) gives an estimate for GVA per Head, whilst not a measure of productivity it is, nevertheless a widely used measure to indicate the economic well-being of an area and again, provides comparison/benchmarking with other areas.

ONS release annual sub-regional estimates of GVA and GVA per head. The most recent update was released in December 2017 and covers the period up to 2016. As in the previous year the data is released by the 2015 NUTS3 areas – which split West Sussex into two areas: West Sussex South West (WSSW) including Adur, Arun, Chichester and Worthing, and West Sussex North East (WSNE) including Crawley, Horsham and Mid Sussex. NOMIS had previously reworked the NUTS3 data to provide estimates for county level geographies, whilst the new data has been released NOMIS have not yet undertaken this exercise, though we can make some estimate of the West Sussex figure in the meantime.

NUTS3 : http://Nomenclature of Territorial Units for Statistics - Geographies used across EU for statistical purposes

The levels of GVA per head in WSSW continue to be significantly lower than the North East of the county where GVA per head is higher than the regional and national rate –due to the presence of Gatwick Airport being the key economic driver for that sub region. The estimate for West Sussex suggest that it is just under 9% lower the figure for the South East region – as light reduction in the gap between the regional and county figure compared with the previous year.

Over the last year (2015-2016) GVA per head grew in WSNE by 1.64% nearly 7 times more than that seen in WSSW which grew by 0.24%. Regional growth was 1.66% and that for England at 2.7%. Looking at the areas within the South East region Milton Keynes saw the highest growth over the year at 6.89% and in some area GVA per head fell – the greatest fall being seen in North Hants at -1.11%. Of all these 21 areas WSNE was ranked 9th highest, and WSSW at 16th

Estimates for West Sussex suggest that in 1997 (the starting point of the current time series), GVA per head was £14,006 for West Sussex; slightly higher than for England at £13,676, and 5 lower than the South East at £14,696. Over time however, GVA figures have risen in England and the South East at a higher rate than in West Sussex, the gap in GVA per head between West Sussex and the South East has now risen to 9.1% in 2014.

Looking at the county estimates from Nomis it is evident that West Sussex does not compare favourably with other county areas in the South East region, it lies in the bottom 50% of authorities where the range in GDP per head is from £17,339 in Medway to the highest in West Berkshire of £45,738 – which is more than double the level of that seen in West Sussex South West area.

West Sussex does compare better with those GVA per Head levels of our Statistical Neighbours –as shown below and lies in the highest quartile. The ambition is to bring the GVA per head figure for West Sussex to the regional (South East) average.

Quarter 2 - September 2017

The latest data for Gross Value Added (GVA) was released in December 2016 and covers the period up to 2015. The next release of this data from ONS is expected in is a recognised measure of economic activity broadly defined as the difference between the value of the goods and services produced and the cost of raw materials and other inputs used in production. The data is released annually from ONS, and includes the sub-regional estimates for GVA for the two West Sussex Sub Areas:

  1. West Sussex–South West (WSSW) – comprises Chichester, Arun, Adur and Worthing
  2. West Sussex–North East (WSNE) – comprises Crawley, Horsham and Mid Sussex

The latest data,already reported, was released in December 2016, and covers the period up to2015, the figures and trends for the two West Sussex areas were reported at theend of the previous quarter and there is no update in terms of the localpicture. The next release of data is expected in December 2017. However, in March 2017 tables showing GVA allocated tolocal authorities in the UK were released, the data was produced in response touser need but while not National Statistics, nevertheless give some indicationas to the scale of GVA at local authority level, and the contribution that eachof the broad level sectors make to the local economy.

https://www.ons.gov.uk/economy/grossvalueaddedgva/datasets/regionalgvaibylocalauthorityintheuk

The main points from the (ONS) summary of the (GB) Short-term economic indicators published in early September 2017 are:

  • Total production output saw a slight increase in the 3 months to July 2017 and increased by 0.3%;
  • Manufacturing remains relatively subdued since the beginning of the year, though some growth seen from July attributed to stronger growth in car production;
  • Construction output fell for the fourth month in a row, with private housing building contracting in July 2017 after seeing growth at the beginning of the year.

https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/shorttermindicatorseconomiccommentary/sept2017

Quarter 4 - March 2017

Gross Value Added (GVA) is a recognised measure of economic activity broadly defined as the difference between the value of the goods and services produced and the cost of raw materials and other inputs used in production. The data is released annually from ONS, and includes the sub-regional estimates for GVA for the two West Sussex Sub Areas:

  1. West Sussex –South West (WSSW) – comprises Chichester, Arun, Adur and Worthing
  2. West Sussex –North East (WSNE) – comprises Crawley, Horsham and Mid Sussex

The latest data was released in December 2016, and covers the period up to 2015, the figures and trends for the two West Sussex areas were reported at the end of the previous quarter and there is no update in terms of the local picture. The next release of data is expected in December 2017.

However, in terms of the national picture, there is some commentary from various sources including ONS itself and the Bank of England.

ONS Monthly Economic commentary (March 2017) suggests that the UK economy grew by 0.7% in Quarter 4 (Oct to Dec) 2016, and by 1.8% for the whole of 2016. Whole economy indicators of economic well-being are reported as being generally positive,with growth in GDP per head, spending per head and net national disposable income, though household income saw a decline. The growth in production and construction output seen towards the end of 2016 had flattened out in January 2017 and whilst service sectors dropped slightly in January the long term picture is still one of expected growth. Overall, most of the broader measures of the UK economy are continuing the trends seen during 2016. For example,consumer spending remains relatively strong, services output is increasing,manufacturing output is rising, particularly in the production of motor vehicles and unemployment is low. Households are however seeing rising prices for goods and services in some key areas such as food and fuel, which is putting downward pressure on real wages and incomes.

  https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/monthlyeconomiccommentary/mar2017

More national level data will become available over the coming months, though it will be much longer before data for West Sussex will be released and we can see what the emerging picture is for the local economy particularly in light of the post EU vote, triggering of Article 50 and subsequent negotiations.

Quarter 3 - December 2016

Gross Value Added (GVA) is a recognised measure of economic activity broadly defined as the difference between the value of the goods and services produced and the cost of raw materials and other inputs used in production. The data is released annually from ONS, the latest sub-regional estimates for GVA was released in December 2016, and the next release is expected in December 2017.

The data is available at: https://www.ons.gov.uk/economy/grossvalueaddedgva/datasets/regionalgrossvalueaddedincomeapproach

Previous to 2015 the GVA data was released at county level and therefore available for West Sussex. Since then, the figures have been released at revised geographical levels which split the county into two areas to include:

  1. West Sussex – South West (WSSW) – comprises Chichester, Arun, Adur and Worthing
  2. West Sussex – North East (WSNE) – comprises Crawley, Horsham and Mid Sussex

This split is helpful as West Sussex–South West (WSSW) matches with Coastal West Sussex and West Sussex-North East (WSNE) with that area of West Sussex that lies within Gatwick Diamond so there is more detail for these two very different economic areas of the county. Whilst the figure sare not released by ONS for West Sussex County area they can be estimated by combining the two new areas. The latest figures suggest that at 2015:

  • Within the South East region Berkshire had the highest GVA at £35,845m and Isle of Wight the lowest at £2,473m.
  • With the exception of Portsmouth all areas within the South East experienced growth in GVA over the year 2014-2015. The highest percentage growth was seen in Kent Thames Gateway at 6.1%, Portsmouth saw a fall in GVA of 0.4% over the year. Out of the 21 sub areas in the South East region ‘West Sussex - South West' saw the second lowest growth of 0.1% compared with growth in West Sussex North East of 3%. This compares with the growth over the year for England at 3.0% and for the South East region a growth of 3.2%.
  • West Sussex North East is ranked 7th (out of 21 areas in the region) at £11,799m, and West Sussex South West has fallen from 11th to 13th position over the last year at £9,292m. The West Sussex economy as a whole is therefore estimated to be £21,091m.

Gross Value Added per head

Gross Value Added per head uses a workplace-based numerator i.e. that GVA produced in that area divided by the residence based denominator (total residential population). It allows comparison of the wealth generation capability at various geographical areas but can provide slightly misleading results as the measures are mixed between workplace based GVA generated in that area and the resident based population. The wealth creation of those who commute is counted at the workplace so that areas of significant out-commuting may have the effect of understating GVA levels as would those areas with a high retirement population.

Estimates of GVA per head indicate that West Sussex South West levels are lower than the regional and national levels, whereas West Sussex North East levels are higher. GVA per head for West Sussex at 2015 is estimated to be £25,220, again lower than that for England (£26,159) and for the South East region (£27,847). Since 1997 the gap in GVA per head between West Sussex and the South East has now risen from 4% to over 10% in 2015. The latest figures show that:

  • In 2014 Gross Value Added (GVA) per head of population increased in all regions in the UK. The highest annual growth was in the North West at 3.0% and the lowest in the East Midlands at 1.0%. The South East experienced a growth of 2.3% higher than that for England at 2.1%. With the exception of Yorkshire and The Humber all regions in England experienced a lower level of growth in GVA per head over the year 2014-2015 than that over the previous year.

  • Within the South East region Milton Keynes has the highest GVA per head of all areas at £41,581 and East Kent the lowest at £17,232.

  • West Sussex North East GVA per head at £30,069 is higher than the average for England (£26,150) and the South East region (£27,847) and is ranked 7th highest out of the 21 geographies in the region. It compares with the GVA per head seen in West Sussex South East of £20,933 (ranked 16/21).

  • Over the last ten years 2005-2015 GVA per head increased in the South East region by 25.3%. Within the South East Milton Keynes saw the highest growth of over 40% compared with the lowest growth of 5.8% in Southampton. In West Sussex the growth in the North East of the county at 35.8% was the second highest rate of growth in the region, and over twice that seen in West Sussex South West at 16% growth. However, over the last year in 14-15 growth in GVA per head has generally fallen since the previous year. Indeed West Sussex South West is one of two areas in the regional to have seen a drop on GVA per head levels(-0.7% ) West Sussex North East saw an increase of 109% in 2014-15 compared with 6.7% growth in the previous year.

Quarter 2 - September 2016

No further estimates of GVA at local level will be released from ONS until mid-December 2016 which will give GVA and GVA per head estimates up to 2015.

Quarter 1 - June 2016

What will happen to these measures, in respect of the national/regional/local economy, given the EU referendum result, is still to be determined.

The authority is taking forward a range of actions to improve matters here. These include:-

  • Promoting growth of the Health and Life Sciences sector
  • Creating new economic assets to the south of the airport and to encourage more high value GVA businesses to base themselves in the area
  • Development of District / Borough Place Plans and the establishment of Growth Boards to support these plans.

Together these form the West Sussex Growth Plan. The amalgamated Growth Plan was in place by December 2015.

2015 GVA Data Release

The Regional Gross Value Added (Income Approach) data which includes data for West Sussex is published annually, the latest release was in December 2015 and relates to the years upto 2014; the next release is expected in December 2016.

Gross Value Added (GVA) is a recognised measure of economic activity broadly defined as the difference between the value of the goods and services produced and the cost ofraw materials and other inputs used in production. In December 2015 ONS released the latest sub regional estimates for GVA. The data is available at:

http://www.ons.gov.uk/ons/rel/regional-accounts/regional-gross-value-added--income-approach-/december-2015/stb-regional-gva-dec-2015.html

Up until this release GVA data has been available for former NUTS3 geographies which covered the West Sussex County area. However,this latest data is published, for the first time, using revised NUTS3 geographies, which splits the county into two to include:

  1. West Sussex – South West (WSSW) – made up of Chichester, Arun, Adur and Worthing
  2. West Sussex – North East (WSNE) – made up of Crawley, Horsham and Mid Sussex

This split is helpful as West Sussex –South West (WSSW) matches with Coastal West Sussex and West Sussex North East (WSNE) with that area of West Sussex that lies within Gatwick Diamond. So for the first time we have ‘official’ figures for these two very different economic areas in West Sussex. Taking into account the split that has occurred in Surrey so that Surrey East (Epsom and Ewell, Tandridge, Mole Valley, Reigate and Bansted), together with West Sussex North East matches the whole Gatwick Diamond area. The latest set of data includes trends from 1997-2014. NB – the 2014 estimates are provisional and subject to review by ONS.

Whilst the figures are not released by ONS for West Sussex County area they can be estimated by combining the two new areas.

  • Within the South East region Berkshire has the highest GVA of all areas at £34,506m and the Isle of Wight the lowest - £3071m.

  • West Sussex North East is ranked 7th (out of 21 areas in the region) at £11,146m, and West Sussex South West 11th at £9,360m, meaning that the West Sussex economy as a whole is estimated to be £20,506m

  • All areas within the South East experienced growth in GVA over the year 2013-2014. West Kent experienced the highest growth at 4.9% and North Hampshire the lowest at 0.8%In the previous year, 2012-2013 West Sussex North East, and Surrey East saw significant rates of growth – WSNE had experienced the 3rd highest rate of growth in the South East region, however in both areas this growth as fallen considerably during 2013-14 affecting growth in Gatwick Diamond which is less than half what it was in 2012-‘13.

  • WSSW has continually seen lower rates for growth in GVA than WSNE and indeed lower rates than the regional and national average; growth in West Sussex County is very much buoyed up by the growth taking place in the North East of the county. In the last ten years growth in the north east of the county has been higher than the national and regional average.

GVA per head

Gross Value Added per head

Gross Value Added per head uses a workplace-based numerator i.e. that GVA produced in that area divided by the residence based denominator (total residential population). It is a key measure of the wealth generation capability of an area’s economy. However it can provide slightly misleading results as the measures are mixed between workplace based GVA generated in that area and the resident based population, the wealth creation of those who commute is counted at the workplace so that areas of significant out-commuting may have the effect of understating GVA levels. In West Sussex many resident workers may commute to e.g. London/Surrey/ Brighton and Hove etc., so the wealth reaction of those workers will be counted there. Conversely, for example, London’s GVA per head figures will be overstated as London is such a major importer of labour. Those areas with a high retirement also produce understated estimates of GVA per head. Coast to Capital LEP have provided some estimates of GVA per job which is a better measure of productivity of an area, though GVA per capita is a useful indicator of economic performance in an area, and ONS do make the figures available.

Estimates of GVA per head for West Sussex suggests that in 1997 (the starting point of the current time series) GVA per head was £14,006 for West Sussex; slightly lower than for England (£13,676), and 5% higher than that for the South East at £14,698. Over time however GVA figures have risen in England and the South East at a higher rate than seen in West Sussex. The gap in GVA per head between West Sussex and the South East has now risen to 9.1% in 2014.

[1] Gatwick Diamond = West Sussex NE plus Surrey East

  • In 2014 Gross Value Added (GVA) per head of population increased in allregions in the UK. The highest annual growth was in London at 5.3% and the lowest annual growth was in Northern Ireland at 1.9%. The South East experienced a growth of 2.8% lower than that for England at 3.7%.

  • At the regional level, in 2014 London had the highest GVA per head at £42,666, while Wales had the lowest at £17,573. The South East region had the second highest GVA per head at £27,012 and compares with that for England at £25,367.

  • Within the South East region Milton Keynes had the highest GVA per headat £39,709 compared with Medway which had the lowest level at £17,038. Both North East West Sussex, and South West West Sussex had levels of GVA per head lower than the regional average at £26,695 (6th out of 21) and £21,274 (ranked 17th) respectively.

  • No areas of the South East had experienced a fall in GVA per head in the last year. West Kent saw the highest increase over the year 2013 – 2014 at 4.9%, West Sussex – South West and West Sussex – North East have seen similar levels of growth in GVA per head at 1.8% and 1.7%. For West Sussex North East this was considerably lower than that seen since 2011 when annual growth had been over 6%.

2014 GVA Data Release

Gross Value Added (GVA) is a recognised measure of economic activity broadly defined as the difference between the value of the goods and services produced and the cost of raw materials and other inputs used in production. In December 2014 ONS released the latest sub regional estimates for GVA.The next update of this data is expected in December 2015. The data is available at:

http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-339598

The latest (provisional) figure for Gross Value Added (GVA) suggests that at 2013 GVA for West Sussex was £19,848mn, making up around 8.5% of the South East GVA. This contribution has fallen from over 9% in 1997.

The South East economy expanded by 2.8% according to these preliminary estimates from ONS, this was lower than growth across the UK, London, East of England and the South West. The provisional estimates of GVA for county and unitary authorities show that West Sussex, at 4.4% growth, had the fourth highest growth in the South East between 2012 and 2013, lagging behind Southampton (9%), Milton Keynes (4.9%) and Brighton and Hove (4.7%), so was the fastest growing county in the South East.

In 1997 West Sussex had a higher GVA per head than England and was at a similar level at £14,114 to the South East average (£14,740). Since around 2004 however county GVA per head has been generally lower than that seen nationally and growth in West Sussex has been lower than that seen regionally so the gap between the regional and county GVA per head figure has widened. In 2013 the GVA per head for West Sussex was estimated to be £24,165 (provisional figures) compared for the South East average at £25,843. The GVA for West Sussex in 2013 was about 3.3% above the UK average and it had increased by 3.6% significantly slower than in 2012 (6.4%) but faster than the UK average and faster than in any other county in the South East in 2013. At 3.8% Brighton and Hove had the fastest growth in GVA per head in the South East region. Cumulative growth in GVA per head in West Sussex between 2009 and 2013 was 13.1% marginally slower than in Surrey, but faster than in the Hampshire County Council Area, Kent and East Sussex and the regional and national average.

  • GVA per head is a ratio of total (workplace based GVA) and total (residence based population). Relatively large economically inactive population tends to depress GVA per head and GVA per head growth rates. GVA per head is a useful measure for comparing areas of difference sizes

  • Regional Gross Value Added Tables (released December 2014 – ONS)

  • Source: Table 3.2 Regional Gross Value Added Tables, ONS

There is a twelve month data lag between the headline preliminary estimate of sub regional GVA and the estimates of GVA by broad sector so the latest GVA split by sector is for 2012. The figures for West Sussex suggest strong growth in financial and insurance, real estate, distribution, transport, accommodation and food, manufacturing and business service sectors. Faster growth overall was held back by construction and information and communication.

Distribution, transport, accommodation and food is the largest broad sector in West Sussex as it accounts for around 24% of total GVA. This sector expanded by around 9.7% from 2011-12 compared to 2.3% in the UK. The real estate sector in West Sussex is the second largest broad sector of the economy and accounted for 13.3% of GVA. Financial and insurance services account for around 6% of the West Sussex economy. This sector though was the best performing sector in West Sussex in 2013, after contracting in 2011 total output in this sector increased by around 20% in 2012.

ONS do not release estimates of GVA at district authority level.

  • Source: - Coast to Capital LEP -figures in italics are estimates, figures from Coast to Capital and West Sussex from ONS

However, estimates for West Sussex districts and boroughs have been estimated by Coast to Capital LEP using the latest workplace based mean gross weekly earnings , total employees and the benchmark of the County level regional GVA estimates from ONS. Estimates suggest that Arun has the lowest GVA per head, and unsurprisingly Crawley the highest at £57,290. GVA figures are workplace-based i.e. based on output produced at the workplace; GVA per head is where GVA is expressed as a value per resident population,and therefore is mixing workplace and resident based measures. We need to be mindful that GVA per head can produce slightly misleading results so that where there is a high level of commuting out of an area the GVA per head figure could be understated as the wealth creation of those who commute is counted at their workplace. Areas where there is a high level of in-commuting can produce over stated levels of GVA per head. That said GVA per head measures are widely used to indicate the economic well-being of an area and to provide comparison/benchmarking with other areas.

WSCC is committed to improving GVA per capita in West Sussex which is currently below that of our neighbours and the South East average and as a response, is developing approaches that, over the longer term ,is intended to encourage economic growth. The initiatives include the development of a series of Bold Ideas, which, if successful should create a encourage economic activity that will positively affect the West Sussex Economy, these ideas build on the county’s existing economic assets to draw more high value jobs into the area, secondly they intend to leverage the County’s location to London, to attract Capital/s current and future young wealth creators into the county.

The Health and Life Sciences sector has been identified as being a priority sector for growth in West Sussex, and the Council is considering how best to invest into the sector. A Health and Life Sciences cluster engagement event for businesses and key partners was held in July bringing together local companies along with partners, such as hospitals, CCGs and universities and creating an opportunity for networking as well informing the debate on how investments should be best made to help growth and what role partners can play in developing the sector.

It is the council’s ambition to create new economic assets to the south of Gatwick Airport and to encourage more high value GVA businesses to base themselves in the area and is exploring the idea of establishing a multi-tenanted cold chain storage facility for use by pharmaceutical and bio engineering companies, in close proximity to Gatwick Airport. The facility would be integrally linked to Coast to Capital’s Strategic Economic Plan’s ambitions to grow trade with the Association of Southeast Asia (ASEAN) Nations. Gatwick itself has route strategies around ASEAN Nations, and the demand for healthcare products, services and innovation is growing hugely in those sectors.

The West Sussex Weekends campaign was launched in the early summer aiming to appeal to young urban professionals living in London, by positioning West Sussex as a 'go to' place for healthy, active, outdoor short breaks. The campaign and corresponding website www.west-sussex-weekends.com was launched on 14th June and so far have seen impressive preliminary analytics results. Campaign visuals and full-page editorials have been featured in both the Metro and Evening Standard. There is currently some follow-up work underway that will assess the effectiveness ofthe campaign to date.

In addition District / Borough Place Plans are being developed and Growth Boards have been established to support their development. Together these will form the West Sussex Growth Plan, a clear Investment and Delivery Plan which will ensure that cross county issues are addressed – e.g. strategic road, rail, transport, skills, utilities, NHS, SDNP; that cross authority / stakeholder funding opportunities, priorities and proposals are addressed and will provide a clear lobbying tool that will secure funding. The amalgamated Growth Plan will be drafted by end December 2015.

Comparison of median earnings within West Sussex District and Boroughs

Comparison of GVA against regional and national performance over time