A key indicator of the health of the economy is the level of disposable income households have. By disposable income we mean the amount of money that households have available for spending or saving after income distribution measures (for example taxes and benefits) have taken effect. This is very different to earnings, which are measured in a different way. We provide more detail on how disposable income is calculated at the foot of this post
The Office for National Statistics (ONS) has just released figures on disposable income for 2010, down to county level. If we want to compare levels of disposable income in Warwickshire with elsewhere, the best way to do this is on a ‘per person’ basis. In 2010, the GDHI per head in Warwickshire was £16,628. This is above the UK average (£15,727) and is closer to the average for the South East region than the West Midlands. Figures range from more than £33,000 in parts of London down to £10,700 in Nottingham. As the graphic illustrates, Warwickshire features comfortably within the top quartile, ranking 24th out of 139 areas.
The Warwickshire figure increased by 3.6% between 2009 and 2010, exceeding the national trend (3.0%).
Since 1997, GDHI in Warwickshire has increased by 62% (not accounting for inflation). This is broadly in line with the national trend (60%) but exceeds both the West Midlands (57%) and South East (55%) regions. During the past thirteen years, Warwickshire’s GDHI per head has remained between 5%-8% above the national average and is currently 6% higher.
So how does this information get used? As the ONS describes, “These statistics provide an overview of economic diversity and social welfare at regional, sub-regional and local area levels. They supply information about the availability of disposable income throughout the UK. Disposable income is a concept which can be used to approximate the ‘material welfare’ within the household sector, although the term ‘welfare’ is commonly used in ways that go beyond financial wealth and, as such, cannot be measured by a single statistic…Local authorities [should] use these statistics to facilitate evidence-based policy-making.”
Footnotes:
Gross Disposable Household Income = Balance of Primary Income + Balance of Secondary Income
Primary income is generated through market transactions. There will be income (e.g. wages) but also expenditure (e.g. mortgages). Secondary income includes the government redistribution of resources. Again, there will be income (e.g. benefits, pensions) but also outgoings (e.g. tax, pension contributions). Therefore, the disposable income figures represent what households have ‘in their pocket’ after income redistribution measures have taken effect. It should not be confused with earnings.
Filed under: Economy, Government Release, Warwickshire | 4 Comments »