How does disposable income in Warwickshire compare with elsewhere?

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.

4 Responses

  1. Interesting, but raises many more questions. Eg. What are principal/drivers for this? What are the differences between Districts?

  2. Thanks Tim – you’re right it certainly does need some further interpretation (that’s why we like putting this kind of material out on the blog, to try and raise some discussion!). Unfortunately the Office for National Statistics does not publish any figures below county level for this dataset so we can’t answer that one, although I think the county-level figures do suggest it may not be as straightforward as thinking in terms of ‘deprivation’. Once the impact of income-redistribution measures has taken effect (such as taxation and benefits) we might expect disparities to be reduced, although as the graphic illustrates there are still some notable gaps, even with our geographical neighbours.

    • I forgot to mention that the names on the histogram graphic were illegible, at least on my browser.

      • Are you clicking on the graph or trying to view it as it originally appears on-screen? If you click on it, it will open up a pdf version which should work pretty well.

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