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Productivity and Gross Value Added

‘Gross value added (GVA) is a measure of the increase in the value of the economy due to the production of goods and services. It is measured at current basic prices, which include the effect of inflation, excluding taxes (less subsidies) on products (for example, Value Added Tax). GVA plus taxes (less subsidies) on products is equivalent to gross domestic product (GDP)’ – Office of National Statistics (ONS)

Key points: 

  • Herefordshire’s GVA was £3,940 million in 2016* an increase of 2 per cent on 2015, but a little lower than regionally and nationally (4 per cent increase).
  • Total GVA(I)1 estimates in millions of pounds (£m) are divided by the total resident population of an area (including the economically inactive) to give GVA per head in pounds (£). GVA per head of population in Herefordshire was £20,830 in 2016* and was low compared to £22,140 in the West Midlands and £27,100 across England.
  • In 2016, Herefordshire’s annual growth was equivalent to 1 per cent compared to England (2.7 per cent) and the West Midlands (3.3 per cent.). The highest annual growth among all the West Midlands authorities was in Solihul and Warwickshire (5 per cent). Other measures of labour productivity2 show a similar picture. 
  • Herefordshire’s GVA per head of population has increased steadily over the last ten years (by 19 per cent in total), but by lower percentage than that of the West Midlands (23 per cent) and England as a whole (25 per cent) - Chart 1.

    Chart 1: GVA per head at current basic prices
    GVA per head at current basic prices 2016

    Source: Office for National Statistics
  • Herefordshire's contribution to regional GVA, in terms of GVA per head, lays in the middle (seventh) among fourteen West Midlands authorities in 2016. When comparing just the “shire” authorities to the West Midlands, Warwickshire was the only one where GVA per head exceeded that for the region overall. When comparing the Chartered Institute of Public Finance and Accountancy (CIPFA) nearest neighbours, Herefordshire's contribution was again placed in the middle among its thirteen nearest neighbours.
  • In 2016, the industries that contributed most to the local economy were ‘distribution, transport, accommodation and food3 (19 per cent), ‘Manufacturing’4 (18 per cent), ‘Real estate activities’ (15 per cent) and ‘public  administration, education, and health5 (14 per cent); together they made up over two thirds (66 per cent) of all economic output (Chart 2).

Chart 2: Proportion of Gross Value Added by industrial sector in 2016*
GVA by Industry 2016
Source: Office for National Statistics

  • ‘Agriculture, mining, electricity, gas, water and waste’6 accounted for a greater proportion of GVA in Herefordshire (10 per cent) than England and the West Midlands (4 per cent and 5 per cent respectively).  ‘Financial and insurance’ and ‘information and communication’ on the other hand accounted for markedly less in Herefordshire (4 per cent together) than they did in England (11 per cent) and the West Midlands (7 per cent).
  • ‘Manufacturing’ was the fastest growing industry in Herefordshire over the last decade, growing by a total of 75 per cent since 2006 with the annual growth rate averaging 18 per cent.

*2016 data is provisional

GVA(I) (Income) per head can be a useful way of comparing regions of different size, comparisons can be affected by commuting flows into or out of the region

2 Labour Productivity is a measure of the size of the input (labour) compared to the size of the output (£GVA). The most common measure is GVA per head of population, but the labour input can be measured in different ways.

3 Made up of: Wholesale and retail trade; repair of motor vehicles, transportation and storage and accommodation and food services activities

4 Made up of: Food products, beverages and tobacco, textiles, wearing apparel and leather products, wood and paper products and printing, coke and refined petroleum products, chemicals and chemical products, basic pharmaceutical products and preparations, rubber and plastic products, basic metals and metal products, computer, electronic and optical products, electrical equipment, Machinery and equipment not elsewhere classified, transport equipment, other manufacturing and repair

5 Made up of: public administration and defence; compulsory social security; education; health and social work; other community, social and personal service activities; and private households with employed persons

6 Made up of: agriculture, forestry and fishing, mining and quarrying, electricity, gas steam and air-conditioning supply and water supply, sewerage and waste management



Last updated: Tuesday, December 11, 2018