Purpose: This paper outlines how the use of statistics often masks the Island's deprivation. A lack of accuracy around sub-regional prosperity has implications when seeking to identify and reduce disparities in regional prosperity.

1.  NUTS ISSUES MASK DEPRIVATION

  1.1  The European NUTS level II as a standard statistical unit is in increasingly common usage for shaping government policy. The use of this nomenclature masks well evidenced deprivation suffered by the Isle of Wight due to the Island being combined under NUTS II with the significantly more prosperous County of Hampshire (despite the Island being a separate Unitary Authority).

  1.2  Placing the Island with Hampshire at NUTS II means that the Isle of Wight is the only island of 21 island regional authorities in the EU that does not belong to Objective 1, Objective 2 or phasing out funding. Objective 1 eligibility is based on GDP per capita being less than 75% of the EU average. The Isle of Wight, on its own, does fall into this category (72.8%) but has not received Objective 1 status due to it being combined with Hampshire at the NUTS II level, making combined GDP 118.1% of the EU average. We are working with our colleagues in the European Parliament and the European Commission to secure recognition of the Isle of Wight at the NUTS II level.

  1.3  NUTS Level II statistical boundaries are being used to the detriment of the Island not just in the context of European funding decisions and policies, but increasing NUTS level II is also being used for UK government decisions which have no relation to European Affairs.

  1.4  Recent sub-regional Government accounts for example including Government Output (Government Spending) tables were released by ONS last year. Tables produced show combined figures for Hampshire and the Isle of Wight but figures for the Isle of Wight alone are not available. Combined figures shows that Hampshire and the Isle of Wight receive the second highest level of Central Government spending in the country. Discussions with the ONS suggested that the reason for this is because of the significant funding received by the naval base at Portsmouth. It can be seen then, that even though the naval base at Portsmouth grants little economic benefit to the Island, in government statistics the benefits have become attributable to the Isle of Wight as well as Hampshire, masking local deprivation.

  1.5  Gross Disposable Household Income (GDHI) is a useful measure of wealth increasingly used in policy making. The following table shows that Hampshire and Isle of Wight has an overall figure of 101 compared with only 89 when we consider the Island alone. The household income index figure for Hampshire and IW is 107 compared with 89 for the Isle of Wight. Again with this dataset, use of the NUTS II level for policy making presents an inaccurate picture of the Island's prosperity. Appendix A outlines other economic indicators for the Isle of Wight in comparison with all regions in England.

2.  PHYSICAL ISOLATION LIMITS PROSPERITY

  2.1  The fact of being an Island with no physical links to the mainland is a second factor which impacts negatively upon our prosperity. Having no physical link to another county means the Island can not fully benefit from the labour market, skills and increased prosperity of its neighbours.

  2.2  In addition, essential services such as fire, highways maintenance, and health services cost more to run, a fact little reflected in Government funding formulae. The Island has its own self-sufficient fire service for example, in order to meet national standards. The Isle of Wight cannot rely on neighbouring local authorities due to its isolation although under section 2 of the Fire Services Act 1947 it was stated that fire authorities should mutually assist each other, which the Island cannot benefit from. Therefore, the council must meet all additional costs of equipment, supplies and personnel etc.

  2.3  Highways maintenance can also incur additional costs as materials and teams must in some cases be sourced from the mainland and transported to the Island. This adds to costs significantly.

  2.4  The Isle of Wight has an ageing population and has the highest age index of any health authority in England, which puts additional strains on health services. Although the Island receives some additional funding due to the elderly population, it is not in proportion to the number of elderly people the Island has. The Island also faces addition costs when transporting patients to mainland services such as cancer treatment and renal dialysis, which are not available locally. The "diseconomies of scale" faced by the Health Authority are detailed below.

  2.5  A recent report by PricewaterhouseCoopers estimates that the costs of being an Island, all in all, amounts to at least an additional £4.2 million for the Local Authority, a significant burden which has to be passed on to the public in the form of Council Tax rises. There was an 13% rise in 2002, and an 18% rise is estimated for 2003 to cover these costs. Central government has yet to demonstrate how the "Island Factor" as outlined above is implemented into their funding formulae for streams such as Revenue Support Grants etc.

  2.6  The Regional Development Plan (RDP) by GOSE (page 13), also recognises the importance of supporting Islands, when seeking to improve prosperity. The plan states that, "The geography of the divide between prosperity and deprivation is a major consideration. The Isle of Wight, which is both a County and a Unitary Authority, has been identified as one of the priority areas in need of support. In addition, as the only island in the South East and one of the largest offshore islands in the UK, it has particular issues resulting from the permanent structural disadvantages of insularity. Under Articles 158 and 159 of the Treaty of Amsterdam both the European institutions and the UK Government are required to take these into consideration when formulating their economic policies and priorities."

CONCLUSION

  It is useful to consider pockets of sub-regional deprivation when assessing the prosperity of a region. It is, after all, the collection of sub-regions which make up a region. The Isle of Wight's case is one of a deprived area, by any indicator, lacking improvement opportunities afforded by major UK and EU funding streams due to its misplaced statistical association with Hampshire and the more prosperous SE region as a whole.

  The fact that the extra costs of being an Island are not reflected in government funding formulae presents further challenges for the Island. The select committee may therefore wish to consider how they can address significant variations in sub-regional prosperity as an integral component of reducing disparities in regional prosperity.