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Introduction

For the first time ONS have published estimates of how much individuals and businesses in the regions contribute to government's finances and, in turn, how much they directly receive. These "experimental statistics", for 1998, have been produced for each of the 37 NUTS-2 sub-regions across the UK. Lancashire County together with Blackburn with Darwen and Blackpool unitary authorities comprise the Lancashire NUTS-2 sub-region.

For each area the data give information on where General Government (both central and local) gets funding through taxation ("resources"), where it directly spends money for non-capital purposes on individuals and businesses ("transfers") and the balance between the two ("gross adjusted disposable income"). The analysis also includes the amount of government capital expenditure received in the sub-regions.

General Government Output

Output of Government is defined as the value of goods and services that government is responsible for producing. In 1998 the average General Government output, in terms of £ per head, for the UK, was £2,695 (Table 1). General government output in Lancashire, at £3.4bn or 2.1% of the UK total, amounted to £2,378 per head, ranking the sub-region as 22nd out of the 37 areas. Within Lancashire, central government output accounted for 53% of total General Government output compared with a UK average of 59%.

Overall, General Government output tended to be highest in sub-regions containing the administrative centres of countries (e.g. Inner London, Eastern Scotland, etc.) and/or where there were large military bases. There tended to be less regional variance in local government output than in that of central government, which reflects the responsibility that each local authority has to provide services for their areas.

General Government Gross Adjusted Disposable Income

Gross Adjusted Disposable Income (GADI) is defined as the financial position of government when all the current transfers (Uses) have been deducted from government current income (Resources). Resources include taxes on products, on production and on income. Current transfers, deducted from resources are for the benefit of individual households and organisations and include social benefits, social transfers in kind (e.g. health, education, social protection and culture and recreation) together with debt interest. GADI is used to finance both capital expenditure and government output provided for the benefit of the community as a whole, e.g. services in such areas as general administration, defence, public order and safety.

In 1998 Lancashire contributed £6.9bn or £4,840 per head towards General Government resources, a level 15% less than the UK average but also received lower current transfers (Uses) which at £5.7bn or £4,000 per head were 5% less than the UK average (Table 2). In total, Lancashire's net contribution to GADI amounted to £1.2bn or £840 per head, a level 43% below the national average. This ranked the sub-region as 25th out of the 37 areas. Of the total General Government GADI contribution by Lancashire, 55% went to central government and 45% to local government

Estimates of GADI for Central and Local Government shown separately together with their components are shown in Table 3.

Gross Fixed Capital Expenditure

Gross Fixed Capital Expenditure (GFCF) represents the net expenditure by Government on fixed assets (i.e. acquisitions less disposables) - in other words - capital expenditure. In 1998 General Government GFCF amounted to nearly £10.8bn across the UK, equivalent to £181 per head (Table 4). The equivalent figure in Lancashire was £186 million, 1.72% of the national total or £130 per head, which was 72% of the UK average. This ranked Lancashire as 29th out of the 37 sub-regions. Further details of GFCF by function of government for both central and local government are shown in Table 5.

Variations in GFCF across the UK and by central and local government have to have regard to a number of factors. Perhaps the foremost consideration is the particular tier of government that is responsible for providing certain services. For instance, Northern Ireland tends to rank high in absolute terms because central government is responsible for education and housing, whereas elsewhere in the UK, local government is responsible for these services. Sub-regions that are centres of government administration have high expenditure on general public services whilst NUTS-2 areas with large military bases have high expenditure on defence. There are large differences in "economic affairs" expenditure between central and local government dependent upon where, in each area, responsibility for road building and maintenance lies. The selling of housing stock too, can result in large variations in local government GFCF.

In the case of Lancashire, only social security and welfare enjoyed net capital expenditure significantly above the UK average. This was attributable to central government expenditure and may possibly reflect one-off investment in the up grading of the large DSS offices based in the area. Conversely, expenditure in such areas as defence, education, recreational & cultural affairs and even economic affairs (largely roads) was well below the UK norms.

Investment Grants

Finally, separate information is also provided about both central and local government grants provided for capital expenditure. Such grants are made for a variety of reasons and include, for example, grants to regional transport bodies and public housing corporations as well as grants to non-government organisations (e.g. lottery grants, regeneration grants, regional industrial grants, etc).

In total General Government investment grants to the value of £8.1bn were made across the UK in 1998, equivalent to £134 per head. Lancashire's share of this, at £155 million or 1.9% was equivalent to £109 per head (Table 6). About 84% of all investment grants were made by central government with the main beneficiaries being economic affairs (including transport) and housing. Nearly all investment grants made by local government were for housing.

For further details, please contact:
Peter Kivell
Tel 01772 534157
Email Peter.Kivell@lancashire.gov.uk