Mismeasurement in the UK's Regional Accounts during the 1980s may have led certain parts of the country to miss out on European Union funds for lagging regions in the 1990s. That is the conclusion of Gavin Cameron and John Muellbauer of Nuffield College, Oxford in a report published in the latest issue of the Economic Journal. For example, according to their calculations, had the data been accurate, the newly created Welsh region of 'West Wales and the Valleys', which has qualified to receive 'Structural Funds' for the period 2000-06, might have got 130 million a year for the past decade.
None appear to be significant.
Instead, Cameron and Muellbauer conclude that it was probably due to rather prosaic problems at the Inland Revenue in allocating tax records across regions. Increased under-counting of earners in the South East appears to explain why the South East measure of earnings fails to rise in line with data from other sources. As the problem of unallocated cases was solved, the share of income attributed to the South East rose. This led to a surprising rise in South East relative earnings in the early to mid-1990s, at a time when the South East was actually doing relatively badly. The problem has now largely unwound, and the Office for National Statistics is making a range of improvements to its regional and local economic accounts.