Development of regional household expenditure measures

• The highest national expenditure per person of the four countries of the UK in 2022 was in England at £22,467, followed by Scotland at £22,025; the lowest was in Northern Ireland at £18,129, with Wales at £20,693.

• The highest households’ saving ratio of the four countries of the UK in 2022 was in Northern Ireland at 9.5%; the lowest was in Wales at negative 5.4%.

• The highest national expenditure per person of the nine English regions in 2022 was in London at £26,309, followed by the South East at £25,518; the lowest was in the North East at £17,544.

• The highest households’ saving ratio of the nine English regions in 2022 was in London at 24.1%, followed by the East of England at 10.8%; the lowest was in the South West at negative 2.5%.

• The highest national expenditure per person in 2022 of the International Territorial Level (ITL) 2 subregions of the UK was in Inner London – West at £39,593, followed by Outer London – South at £30,289; the lowest was in Tees Valley and Durham at £17,165, followed by the West Midlands (metropolitan county) at £17,676.

• The highest households’ saving ratio in 2022 of the ITL2 subregions was in Inner London – West at 37.1%, followed by Inner London – East at 33.1%; the lowest was in Cornwall and Isles of Scilly at negative 11.5%, followed by Merseyside at negative 7.6%.

This article gives an update on our progress in producing regional household final consumption expenditure (HFCE). This was developed in response to users’ needs and Sir Charles Bean’s Independent review of UK economic statistics.

This is the third in a series of articles describing our progress in producing regional household expenditure measures. We explained the concepts, data, and methods to produce the measures, in our previous articles published in September 2018 and July 2020. These data will be published in the future as a regular annual output.

We currently only measure the income and outgoings of households at a regional level to the point of the gross disposable household income (GDHI) account, as described in our Regional GDHI, UK: 1997 to 2022 bulletin. This measures the primary income components, such as wages, salaries and property income, and the secondary distribution of income, such as the effect of taxes on income and social benefits. GDHI is a measure of the amount of money people in households have available for spending or saving.

Regional HFCE takes this further by measuring how much money people in households spend on a range of commodities. Once all spending is accounted for, we are left with a measure of saving.

We measure regional HFCE in two ways: the domestic concept and the national concept. Each is measured independently, using data collected according to that concept. The domestic concept measures all spending that takes place in a region, regardless of who is doing the spending. It includes spending by foreign tourists visiting the UK, as well as spending by the residents of other parts of the UK. It excludes spending by residents of the region outside the region where they live. The national concept measures all spending by the residents of a region, regardless of where that spending takes place.

These estimates are the only regional measures produced on a consistent basis across the whole UK. The devolved administrations of Scotland and Northern Ireland have been independently compiling and publishing estimates of HFCE for their respective countries for several years. While our estimates are still in development, users are advised that the official Scottish and Northern Irish estimates are likely to be more reliable.

We have produced estimates for the International Territorial Level (ITL) 1 countries and regions of the UK for the years 2009 to 2022. They are consistent with our UK National Accounts, The Blue Book 2023 and our Regional gross disposable household income (GDHI), UK: 1997 to 2022 bulletin, published in September 2024.

The full set of results, including a detailed commodity breakdown, can be found in our accompanying dataset. This article summarises the data, showing the main items at a high level. All the figures are in current market prices, which do not remove the effect of price inflation.

Estimates of domestic expenditure relate to all spending that takes place in the region. They do not necessarily relate to the people who live there, since people can and do travel around the country, spending as they go. We therefore do not calculate domestic expenditure on a per person basis.

National expenditure for a region does relate directly to the spending by the people who live there, so calculating national expenditure per person is useful. This is because it allows us to compare spending across regions of different sizes and populations. Total national expenditure is also the value that is used in the calculation of the households’ saving ratio.

Domestic expenditure helps us to derive estimates of net spending flows between countries and regions of the UK. We also need to consider spending by foreign visitors to the UK and spending by UK residents abroad in this.

National expenditure

Table 1 shows total national expenditure on all goods and services and national expenditure per person for the ITL1 countries and regions of the UK in 2022. It also shows the percentage growth in spending per person between 2021 and 2022.

For comparison, the overall rate of inflation for this period was 7.9%, as shown in our Consumer Prices Index including owner occupiers’ housing costs (CPIH all items) dataset.

London had the highest national expenditure per person in 2022 at £26,309. This was mainly caused by the higher housing costs in and around the capital. The lowest spending per person in 2022 was seen in the North East at £17,544.

Wales had the greatest increase in spending per person between 2021 and 2022, at 19.5%. This growth was seen across a wide range of goods and services, with a substantial increase in transport services. The lowest growth was seen in the West Midlands at 7.4%.

Expenditure in the high-level categories of goods and services shows what the people in each country and region of the UK are spending their money on. Tables 2, 3, and 4 show these figures categorised by Classification of Individual Consumption According to Purpose (COICOP) standards on a per person basis for 2022. They give a comparison across different areas on a consistent basis.

Table 2 shows much higher housing costs in London and the South East of England. London has a much higher expenditure on education at more than double that of the average across all regions. However, it has the lowest spending per person on both recreation and culture, and alcohol and tobacco. Northern Ireland shows the lowest spending on restaurants and hotels. However, it has one of the highest expenditures for food and soft drinks, only just behind Scotland and the South East of England.

Inter-regional spending

Having both domestic and national expenditure allows us to estimate the net household spending flows between countries and regions of the UK. We explain how we calculate these estimates in Section 8: Glossary. Positive net spending figures imply that a region is a net exporter of goods and services to the rest of the UK, whereas negative figures imply a region is a net importer.

Only London and the North West were net exporters of goods and services to the rest of the UK in 2022, though the North East was relatively close to having a positive balance. In London, the largest exports were in miscellaneous goods and services (including financial services), recreation and culture, and transport. In the North West, the largest exports were in housing (including electricity and gas) and household goods.

Households’ saving ratio

We have compiled estimates of total household final consumption expenditure (HFCE) by the national concept. We use these estimates to extend the regional household account from GDHI, its current end point, and to derive the households’ saving ratio for the countries and regions of the UK. The saving ratio is the percentage of total available resources that remains after all spending has occurred. This is calculated by dividing gross saving by total resources. For the full calculation, see Section 8: Glossary. Table 6 shows the stages in this derivation with data for 2022. The transaction codes shown (B.6g to B.8g) correspond to those used in the UK National Accounts.

A negative saving ratio indicates that the residents of an area have spent more money than they have available in that year, reducing the overall balance of savings that they have.

The households’ saving ratio varies considerably across the UK. London’s savings are more than twice that of the East of England, the second highest savers. London had the highest value in 2022 at 24.1%, while the East of England saved 10.8%. The lowest levels of saving in 2022 were seen in Wales at negative 5.4%, followed by the South West at negative 2.5%.

This section shows the national expenditure at subregional International Territorial Level (ITL) 2 from the full set of results. Results for ITL2 for all spending commodities using the Classification of Individual Consumption According to Purpose (COICOP) structure can be found in our accompanying dataset.

Figure 1 shows spending per person in 2022 for all subregions for a selection of COICOP categories, taken from the full results. Users can examine spending of specific subregions relative to other UK regions by selecting the subregion of interest. Direct comparison between regions can be made because spending in the chart is shown per person.

Figure 1: National expenditure per person by selected division

Classification of Individual Consumption According to Purpose (COICOP) divisions, International Territorial Level (ITL) 2 subregions, 2022

Subregional expenditure on housing is likely to be of interest to many. However, there is a large difference between housing expenditure for Inner London - West and the other UK subregions. This means that the detail for other commodities becomes lost when all this information is presented together. Therefore, we have displayed subregional expenditure per person for COICOP category “housing” separately. Please note that the scale for this chart is substantially larger than the scale used for the chart of the other six commodities.

Figure 2: National expenditure per person by division for housing

Classification of Individual Consumption According to Purpose (COICOP) divisions, International Territorial Level (ITL) 2 subregions, 2022

The highest national expenditure per person of the ITL2 subregions of the UK in 2022 was in Inner London - West at £39,593. This is 1.8 times higher than the national expenditure per person for the whole of the UK in 2022 at £22,227. It was also 1.5 times higher than the ITL1 region London, (of which Inner London - West is a subregion). Inner London - West has been the region with the highest national expenditure per person consistently from 2009 to 2022. The largest contribution to this spending in 2022 is on housing at £18,212. This accounts for nearly 46% of expenditure per person in Inner London - West. In comparison, housing forms 26% of 2022 national expenditure per person in the UK.

The subregions with the lowest national expenditure per person figures in 2022 were:

• Tees Valley and Durham at £17,165
• the West Midlands at £17,676
• Northumberland and Tyne and Wear at £17,858

The highest households’ saving ratio of the ITL2 subregions was in Inner London – West at 37.1%, followed by Inner London – East at 33.1% and Outer London - East and North East at 19.9%. Those with the lowest saving ratios were in Cornwall and Isles of Scilly at negative 11.5% and Merseyside with negative 7.6%. These were 2 of the 13 regions with a negative household saving ratio. This indicates that the residents of these areas typically spent more money than they had available from their income in 2022.

In addition to the ITL1 regions, net inter-regional trade flows were calculated at ITL2 level. This allows for further observation of net importing and exporting of goods on a subregional level. The results for these subregions are also included in our accompanying dataset.

We provide the full details of the data and methods used to produce regional household final consumption expenditure (HFCE) for the International Territorial Level (ITL) 1 countries and regions of the UK in our Development of regional household expenditure measures article published in September 2018. We first published our ITL2 subregions data in July 2020, using updated methods described in our Development of regional household expenditure measures article.

We introduced some changes to specific Classification of Individual Consumption According to Purpose (COICOP) commodities in this release.

Water supply and Sewerage

We have made improvements to Water supply (COICOP 04.4.1) and Sewerage (COICOP 04.4.3) to reflect that most households in Scotland pay a fixed charge for water and sewerage services, which is determined by their residence’s Council Tax band. We continue to use data provided by Scottish Water on household revenue for national expenditure at the ITL1 level. We have replaced the Living Costs and Food Survey (LCF) data on water and sewerage used in previous publications for the ITL2 allocation. They have been replaced by actual current and historical rates for water and sewerage services, which vary by Council Tax band but are the same across Scotland. These rates are multiplied by the number of chargeable dwellings in each Council Tax band, based on data published by the Scottish Government. This improvement has been applied to the entire national time series running from 2009 to 2022.

Vehicle maintenance and repair

We have introduced an improvement to our domestic concept measure of Vehicle maintenance and repair (COICOP 07.2.3). This is based on a change in the national data that are published in our Consumer trends bulletins. We continue to use Value Added Tax (VAT) turnover (Standard Industrial Code 45.2) to regionalise data on vehicle maintenance and repair. We have now applied the proportion of privately licenced vehicles to total licenced vehicles (private and company) to this for each ITL2 subregion. This is to get a better representation of the household share of vehicle maintenance and repair spending. These data are published by the Department for Transport (DfT). This improvement has been applied to the entire time series running from 2009 to 2022. Data on private and company-licenced vehicles are not available for Northern Ireland before 2014, so these values have been estimated.

The data used to allocate the international tourism flows (spending in the UK by foreign visitors and spending abroad by UK residents) to regions of the UK come from our International Passenger Survey (IPS). The IPS was suspended because of the coronavirus (COVID-19) pandemic between 16 March 2020 and 18 January 2021. We used the high-level estimates of travel and tourism spending that were produced for April to December 2020 using alternative sources. There is also limited availability of data at lower geographical levels from 2018 onwards, particularly for UK residents’ spending abroad. We have therefore estimated some of our figures based on available data. It is also important to note that there have been methodological changes to the IPS since 2020; for example, movements across the Irish land border are excluded from 2021 onwards. For more information on the IPS changes and plans, see our Travel and tourism review: final report.

As part of our ongoing development work, we are considering a range of card spending data to understand consumer spending habits. Credit and debit cards are used daily by consumers across the UK to pay for goods and services. These data are a rich source of information that we are looking to use to supplement our traditional data sources to understand household final consumption expenditure (HFCE).

One data source is card payment data from Visa. We have entered into an agreement with Visa to receive aggregated and anonymised data on UK card payments from 2019. The data provided by Visa constitute one part of the consumer spending landscape and we use their data along with other data sources to consider trends.

We have been exploring the level of coverage needed to produce reliable HFCE estimates for levels of geography below the International Territorial Level (ITL) 2. Card spending data available to us includes aggregated spend by a variety of variables, such as cardholder location and merchant location at different geographical levels. This level of granularity gives us insight into consumer spend for local authority districts both for the national and domestic concepts.

There are two main considerations that still need to be explored before using card spending data to supplement HFCE estimates.

Card spending data are usually categorized by merchant category code (MCC), which describes a merchant’s primary business. This classification does not fully align with the Classification of Individual Consumption According to Purpose (COICOP) because this is based on products. Further work is needed to align the merchant category codes with the COICOP classification, as well as provide further detail on spend per category. We will explore this alignment with the use of other administrative data to supplement the card payments data. For example, COICOP 1 (food and non-alcoholic beverages) is largely covered by the merchant category group “Food & Grocery”. However, there are products that are included in this category that are excluded from the COICOP 1 classification because the transaction is allocated to the merchant’s primary business.

Data provided to us by external organisations typically have disclosure controls applied before we receive them. These ensure individuals or businesses are not identifiable. This may mean that not all UK spend is allocated to a location or a merchant category. The amount of spend that we have full information on may also vary between categories, and in some cases estimation techniques may need to be used. Further adjustments will be needed to allocate spend from unknown merchant locations into known local authorities before being incorporated into HFCE estimates.

This type of data is valuable for ensuring that we continue to produce high quality estimates. We need to consider these differences in how the data are collected and processed. We are collaborating with the Economic Statistics Centre of Excellence to develop a method that uses card payments data to model household consumption expenditure for small geographic areas.

We have already published a range of datasets and insights based on consumer card spending data, including in our Consumer card spending, flow of spending across the UK: 2019 to 2023 article.

We will update users with our progress in this area in our next release of regional HFCE.

Inter-regional spending flows

These are estimates of the net household spending flows between countries and regions of the UK. They are calculated as total domestic expenditure, less spending in the UK by foreign visitors, less total national expenditure, plus spending by UK residents abroad.

Households’ saving ratio

The saving ratio is the percentage of total available resources that remains after all spending has occurred. It is calculated by adding the adjustment for pensions to gross disposable income to get total household resources, then subtracting final consumption expenditure to get gross savings. Gross savings divided by total resources gives us the saving ratio.

Official statistics in development

These statistics are labelled as “official statistics in development”. Until September 2023, these were called “experimental statistics”. Read more about the change in the guide to official statistics in development.

These statistics are based on information from our Living Costs and Food survey (LCF), our Annual Business Survey (ABS), and turnover from Value Added Tax (VAT) administrative data. We are developing how we collect and produce the data to improve the quality of these statistics.

Once the developments are complete, we will review the statistics with the Statistics Head of Profession. We will decide whether the statistics are of sufficient quality and value to be published as official statistics, or whether further development is needed. Production may be stopped if they are not of sufficient quality or value. Users will be informed of the outcome and any changes.

We value your feedback on these statistics. Contact us at regionalaccounts@ons.gov.uk.

Data sources

Our main data source for estimates of national expenditure is the LCF. It has its sample designed and drawn at International Territorial Level (ITL) 2. Although the sample size for some ITL2 subregions is small, we believe the survey data are sufficient to produce reasonable quality results for a high-level commodity breakdown. The ITL2 subregions that are geographically contiguous with combined authorities have relatively large sample sizes, so results for these areas should be more reliable. ITL2 is the lowest level we can go without more comprehensive data sources on household spending at a local level.

The ABS is a survey that collects information from businesses. This includes retail sales of various commodities at the point of sale, meaning the data are allocated to the regions where the spending takes place. It therefore provides data appropriate for the domestic concept measure of household expenditure. The strength of the ABS is its coverage of businesses across the UK. It collects detailed information from a large sample size of around 80,000 businesses per year. Its main weakness for our use is that it cannot distinguish between sales to households and sales to business. We therefore need to assume that the proportion of total sales that represents business use is equal across all regions of the UK, which may or may not be a valid assumption.

The VAT dataset is a near-census of businesses across the UK. It includes information provided on administrative VAT returns to HM Revenue and Customs (HMRC). Turnover from this source provides a useful alternative to ABS retail commodity data for the domestic concept measure of household expenditure, particularly for services that are not covered by the ABS data. Like the ABS data, there is no way to distinguish between sales to households and sales to business, so the same assumption must be applied to VAT data.

We have detailed energy consumption data from the Department for Energy Security and Net Zero (DESNZ) for categories covering energy consumption. These are administrative data with local authority coverage. For the national concept, we use these data for electricity, gas, liquid and solid fuels. For the domestic concept, we use these data for liquid and solid fuels because we believe it is reasonable to assume that most spending takes place close to the home, from local suppliers.

For other spending categories, we use a range of survey and administrative data, including our gross disposable household income (GDHI) and gross domestic product (GDP).

To produce estimates for lower-level geographic areas, including local authorities across the UK, we will continue to pursue our work with anonymised credit and debit card data, as discussed in Section 6: Exploring card payment data. This will provide the level of coverage needed to produce reliable results for small areas. These data will also improve the quality and reliability of data for larger areas.

We are continuing our work to build a reliable statistical process to produce these data, following the principles of reproducible analytical pipelines. This should reduce the lag in producing these data and reduce the risk of human error.

From our next release, these estimates will be published as a regular annual bulletin.