Regional Economic Growth
62. In June 2008, the Treasury reported slippage
against its PSA 6: to "make sustainable improvements in the
economic performance of all English regions by 2008, and over
the long term reduce the persistent gap in growth rates between
the regions, demonstrating progress by 2006".
In its response to our 2006-07 report regarding this PSA, the
Government stated that:
it will not be possible to measure regional trend
growth until regional price deflators can be robustly estimated.
The Office for National Statistics has been developing a methodology
to estimate deflators and expects to have deflators available
63. In October 2008, Mr Macpherson told us that
the issue of measurement remained unresolved:
Part of the problem about really understanding what
is going on remains the fact that we do not have regional deflators.
So we know in gross terms what is happening to the incomes per
head, or the gross value-added per head, but we do not really
know whether the rate price change, say, in the north-east is
significantly different from London or the south-east, it just
makes analysis of real trends more difficult. I think we have
got to use all the data we can get hold of to understand what
is happening to employment, unemployment, skill levels and so
64. We are disappointed that
after three years the measurement of performance against the Government's
target to reduce regional inequality remains problematic. We welcome
the work of the Office for National Statistics and recommend that
the Government publishes the results of the work on regional deflators
as soon as it becomes available.
65. The economic downturn may act to reduce regional
inequality if the financial services industry, largely based in
the South East, is very adversely affected. Mr Macpherson suggested
to us that it was too early to tell if the present recession would
lead to a narrowing of the gap between the regions..
This is an issue we may return to in the future.
66. In June 2008, the Treasury reported slippage
against PSA 7: to "halve the number of children in relative
low-income households between 1998-1999 and 2010-11, on the way
to eradicating child poverty by 2020".
The Treasury reports that "between 1998-99 and 2006-07 the
number of children in households with relative low-income fell
in the UK by 600,000 from 3.4 million to 2.9 million".
This continues the pattern of failure acknowledged in the Treasury's
2007 Autumn Performance Report.
67. In its 2007-08 Annual Report, the Treasury
described the three metrics used to measure performance against
the child poverty target, the third of which was introduced for
the CSR 2007 period (see table 4). Table
4 - Metrics for the measurement of child poverty reduction