Good or Bad news, it's nonsense to say "Cornwall is not poor anymore" New EU figures reaction

The narrative that has been created today is that “Cornwall is not as poor as it thought it was”

or “It’s not quite as bad as we thought it was but still not as good as it can be”

That’s because the way that EU Officials and statisticians calculate GDP (gross domestic product) has changed and they have revised all figures back to the year 2000.

But is this a true reflection of the situation, or preparing the ground for the way things will become?

EU statisticians  are now using an indicator called Purchasing Power Standards (PPS) that takes in the difference between countries of the bang behind your buck, or as they put it “a fictive currency unit that eliminates differences in purchasing power, i.e. different price levels, between countries”

Calculated in this way Cornwall’s new GDP figure has shot up from the previous measure and at no point since 2000 has Cornwall fallen below the 75% (of EU GDP average) line that makes a region eligible for top level Euro funding. Therefore, the argument has gone today,  if this method of calculating GDP had been used back then, Cornwall would not have qualified for the £1bn + Tier 1 EU funding (Objective One, Convergence etc) that we have received.

There is no suggestion that any of the money has to be paid back, and it will not impact on the current Structural Funds (Growth Programme) that is funded until 2020.

However, it may be used as a factor in post Brexit funding rounds. Now, the government has data to back up it’s argument that Cornwall is not a economic special case and won’t deserve to have any means tested replacement EU funds to add to other Growth Deals.

Cornwall’s new GDP percentages :

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

89

88

90

83

81

80

78

76

79

77

75

76

In basic terms, these figures mean that for every £1 made on average across Europe, Cornwall produced 76p in 2015, or 75p in 2014. If you go below 75 you qualify for the special help.

The previous figures had us at lows of 68% in some years.

These new figures notably show that despite many people saying we are not as poor as we thought we were, there is still a downward direction in the figures. and output has fallen 3 points since 2012 and 14 points since 2006’s high of 90%.

It must also be noted that whereas these new figures might be encouraging, they still mean we are falling significantly behind the rest of the country.  And now the country has decided to leave the EU, shouldn’t UK data now be the yardstick rather than EU wide figures?

To compare the latest annual figure (2015) of Cornwall’s 76 with random areas within the UK, East Anglia is on 102, Merseyside 81, West Midlands 88, North East Scotland 155, Inner London (West) 580, Gloucestershire/Wilts 113, Devon 83. A link to all the figures can be found at the end of this article.

CornishStuff.com Homepage

Using these new figures some regions in Europe fall well below the 50% mark.

In the UK, only Tees Vally &Durham (74%) and West Wales and the Valleys (68%) would qualify for Tier 1 EU funding if it were allocated today. South Yorkshire at 75% is the only other region to come below Cornwall in the UK wide table. Northern Ireland, which has just benefited from £1bn extra due to the Tory/DUP power deal currently has a GDP of 78%.

It has not been made clear if the EU will continue to use the 75% Tier 1 threshold or recalculate that now it has re-calibrated the figures that that judgement of social deprivation is based on.

Whichever way the figures are worked out, the facts on the ground remain that wages in Cornwall still fall more than £4 per hour lower than the national average.

Sandra Rothwell, Chief Executive of the Cornwall and Isles of Scilly Local Enterprise Partnership, told CornishStuff today :

“GDP is one of a raft of indices used to measure economic  performance and although the revised headline figures do show an uplift in Cornwall’s performance, we still rank 37th out of 40 UK regions and there remain some deep-rooted issues such as low wages, at 77% the England average, and low productivity, at 74% of the English average. That’s why the LEP continues to build the case for continued investment after Brexit because we believe Cornwall and the Isles of Scilly can deliver a significant return to UK Plc while boosting wages and the performance of our businesses and people.”

Candy Atherton for Cornwall Labour told CS “It’s absolute rubbish to say that we never deserved the money.  Cornwall, at the bottom of the pile, will be abandoned as a result of this daft EU report.  Look around Cornwall and see just how important that extra funding has been.

When I was first campaigning for the European funding civil servants told the Prime Minister that there was no way we would be able to be separated from Devon (which lifted us over the 75% GDP level) to qualify.  It took a big push but we won and it has made a difference.  Where would we be without that funding – down and out!  These Tory MPs, hanging on by a thread to their seats, need to start working for Cornwall and make sure we get the money we were promised”

The Chair’s Blog – Our Relationship with Government is Transactional, we need to talk about opportunity, not entitlement.

Already Scott Mann, MP for North Cornwall has made the case for a better way to allocate funding. He told Radio Cornwall

scott-mann-4

“Measuring social deprivation and GDP can be very difficult in rural areas. The Conservative manifesto had a promise to set up the ‘Shared Prosperity Fund’ which will basically be a fund to recycle some of that EU money back into the economy. Our argument is that we need to see that wealth spread out much more widely now, and we’ll be making the case that Cornwall get it’s fair share of that when the Shared Prosperity Fund opens”

“But it’s a myth to suggest that it only the EU that is investing in Cornwall. Only this week the Dept of Transport announced a multi-million pound investment into A roads and new by-passes. Our six Conservative MPS will continue to ensure we get what is fair for Cornwall”

Low productivity: Cornish SMEs to benefit from £12m Euro R&D fund + Green Energy initiative

“I think if you went out on the streets of Cornwall and did a vox-pop and asked if you thought that EU money had affected their day-to-day lives, with a few notable exceptions like the Superfast Broadband which has been great for the Cornish economy, there’s very little of the EU money the man in the street would say has been used to help their day to day lives”

“I think this money can be much better spent if it’s UK based and it has specific priorities to help small and medium sized businesses”

The North Cornwall MP was challenged to promise similar levels of funding to Cornwall post Brexit.

Growth Deal: Major Disappointment as Cornwall will receive only £18m in investment over the next three years, despite being one of the poorest parts of the UK

He responded “We make this case everyday to the ministers and secretaries of state in government, to ensure that Cornwall gets the right level of funding and we’ll continue to do that. We work as a team in Cornwall with our 6 MPs to ensure we get our fair share.

What I would say is that as we move forward the European money won’t be there, but there will be a replacement and that will be UK based . The EU funding didn’t directly impact on people’s day to day lives. I’m not suggesting that it hasn’t been used to build buildings and the like but it hasn’t trickled down into people’s pockets in Cornwall. I think a much more tailored approach from central government to ensure that money gets to where it’s needed will be better for the UK and it will be our priorities rather than the EU’s”

On the same programme ex Lib Dem MEP now Lord Robin Teverson told the BBC ” I been one of those saying that Cornwall needs to move off this ‘welfare state’ of regional funding, being a ‘Euro fund Junkie’ but it needs to do that gradually. I still expect the government to continue funding but taper that off so that we become a ‘normal’ region again'”

Purchasing Power Standards (PPS) are a fictive currency unit that eliminates differences in purchasing power, i.e. different price levels, between countries. Thus, the same nominal aggregate in two countries with different price levels may result in different amounts of purchasing power. Figures expressed in Purchasing Power Standards are derived from figures expressed in national currency by using Purchasing Power Parities (PPP) as conversion factors. These parities are obtained as a weighted average of relative price ratios in respect to a homogeneous basket of goods and services, both comparable and representative for each country. They are fixed in a way that makes the average purchasing power of one Euro in the European Union equal to one PPS. The calculation of GDP in PPS is intended to allow the comparison of levels of economic activity of different sized economies irrespective of their price levels. It is less suited for comparisons over time. Eurostat compiles PPP and publishes them on this website (Database by themes / Economy and Finance / Prices).

All regional accounts data published by Eurostat are based on PPP for the EU28.

PPP and related economic indicators are constructed primarily for spatial comparison and not for comparison over time. Therefore any comparison of results of different years must be made keeping this in mind. In particular, GDP in PPS should not be used to estimate growth rates.

Details of the new figures here 

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Peter BatesPeter Bates shows how eu waste money if that is all they have to do why bother it has gone 2000

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