REVIEW OF NOMENCLATURE OF UNITS FOR TERRITORIAL STATISTICS (NUTS) BOUNDARIES 2012

Introduction

The Nomenclature of Units for Territorial Statistics (NUTS) is a set of geographical boundaries set and regulated by the European Union. The core purpose of NUTS boundaries is the reporting of regional statistics to Eurostat, however those statistics are often used to inform regional policy development and determine regional funding allocations.

Eurostat are carrying out a review of NUTS boundaries. The purpose of this consultation is to help inform the Scottish Government's response to this review and to ensure that stakeholders views are taken into account before submitting proposals.

The NUTS geography is a hierarchical geography with 3 levels. NUTS 1 is the highest level of the NUTS geography and Scotland is a NUTS 1 region. NUTS levels 2 and 3 are sub-divisions of Scotland and should align to local administrative boundaries. Maps 1 and 2 on the following pages show the current boundaries of NUTS 2 and 3 regions respectively.

The Scottish Government will only be submitting proposals for changes to NUTS 2 and 3 boundaries.

There are four NUTS 2 areas and 23 NUTS 3 areas in Scotland. Article 3 (2)^[1] of the NUTS regulation, 2003 outlines the population thresholds for each NUTS level (NUTS 2: 800,000-3,000,000, NUTS 3: 150,000-800,000). The population ranges are guidelines only and Article 3 (5)^[1] states that individual non administrative units may deviate from these thresholds because of particular geographical, socio-economic, historical, cultural or environmental circumstances.

The current UK NUTS structure was established in 1998 following an extensive consultation exercise two years earlier. All NUTS areas across Europe are reviewed regularly (normally every three years), with the last review taking place in 2010.

Changes made as part of this review will come into force on the 1^st January 2015, but will not impact on the allocation of structural funds until 2021.

Responses to this consultation are invited by Thursday, 10 January 2013.

Map 1: Current NUTS Level 2 Boundaries

Map 2: Current NUTS Level 3 Boundaries

Statistical Issues

A number of statistical issues need to be balanced when reviewing NUTS boundaries: data availability, data protection, comparability across areas and stability over time.

All Member States have to report on a range of regional statistics to the EU on NUTS boundaries. In many cases, this is a legislative requirement, in other cases this is an ESS (European Statistical System) Agreement. ESS agreements are voluntary and there is no obligation on the UK to sign up to them, however, once signed there is an obligation to co-operate with them as part of wider EU obligations. Table 1 provides an overview of the statistical reporting requirements of Eurostat.

If any changes are made to NUTS boundaries, the Member State must also provide a back series on the new boundaries within two years of them coming into force. The length of the back series will be agreed between Eurostat and the administration responsible for the statistics.

Table 1: Overview of Reporting Requirements

Domain	Content	NUTS level
Demography	Population and area Population change Population projections Regional level 2001 Census	NUTS 2 or NUTS 3
Migration	Internal migration: arrivals, departures by sex, origin and destination	NUTS 2
Economic accounts	GVA and GDP Growth of real GDP Compensation of employees Employment Gross Fixed Capital Formation Household accounts	NUTS 2 or NUTS 3
Rural development	Coordination of indicators specific to the subject of rural development	NUTS 2 or NUTS 3
Labour Market	Economically active population Employment and unemployment Socio-demographic labour force statistics Labour market disparities Labour market data based on pre-2003 methodology (data up to 2001)	NUTS 2 or NUTS 3
Science and Technology	R&D expenditure and staff Human resources in science and technology Employment in high technology sectors European patent applications to European Patent Office	NUTS 1 or NUTS 2
Structural Business	Structural Business Statistics yearly and multi yearly data Credit institutions	NUTS 1 or NUTS 2
Agriculture	Land use/cover Farm Structure Surveys Animal and crop production Economic accounts for agriculture Agri-environmental indicators	NUTS 2 or NUTS 3
Maritime Policy	Spatial data and indicators relevant to the coast and the sea	NUTS 2 or NUTS 3
Health	Causes of death Health care infrastructure, Health status Hospital patients	NUTS 2
Tourism	Tourist accommodation, arrivals, nights spent	NUTS 2 or NUTS 3
Transport	Road, rail, maritime, inland waterways and air transport Transport infrastructure, stock of vehicles and road accidents	NUTS 2 or NUTS 3
Education	Number of students by sex, age, education level, orientation, educational attainment and lifelong learning	NUTS 2
Information Society	Internet access Computer usage	NUTS 1 or NUTS 2
Environment	Water resources Wastewater treatment Solid waste	NUTS 1 or NUTS 2

Due to the regulatory requirements to provide data at NUTS 2 and 3 level, it is essential that any proposed boundary changes allow data suppliers to meet their reporting requirements.

Aligning to local administrative boundaries is one of the criteria for NUTS boundaries. Local Authority is not listed as an administrative boundary in Annex II of the NUTS Regulations, however it is the most widely accepted administrative boundary in Scotland and meets the definition of administrative unit set out in Article 3 (1) of the NUTS Regulations. Aligning to Local Authority makes statistical reporting much easier for the majority of domains, as the data is often collected and reported on at Local Authority level. This reduces the administrative burden associated with EU reporting.

Misaligned geographical boundaries can result in a disclosure risk, in particular disclosure by deduction. This occurs when statistics are reported on two very similar, but slightly different areas and it is possible to subtract one set of figures from another to calculate statistics on the small area where the geographies do not align. This increases the risk of an individual or household being identified and in order to mitigate this risk, data are withheld or distorted, so aligning to Local Authority boundaries will increase the availability and quality of data supplied on NUTS regions.

Roughly standard populations across NUTS regions aid regional comparisons across the EU.

Comparability over time is essential for any time series analysis of statistics at the regional level. Boundary changes cause a discontinuity in the series and make it difficult to determine if a change in the statistics is due to a change in the geography or a change in the character of the area.

Policy Impact

The statistics supplied to the EU at NUTS regions are used to formulate regional policy initiatives and to determine regional funding allocations and eligibility. Any changes to the boundaries of NUTS regions will impact on the statistics used in these policies and which areas are affected by these policies.

€780 Million of Structural Funds were allocated over 7 years (from 2007 to 2013) to NUTS 2 regions in Scotland. Changing the boundaries of these regions may, in the long term, affect the levels of support different areas are eligible for, as Structural Funds are distributed based on GDP per capita in each NUTS 2 region and changing the boundaries could change the figures. All areas of Scotland except the NUTS 2 Highlands & Islands (H&I) region are currently in the least intensively supported category.

A review of Structural Funds will be carried out in 2013 to determine funding over the period 2014-2020; however any boundaries agreed during this review of NUTS boundaries will not come into force until 1st January 2015 and will not impact on the allocation of Structural Funds until 2021.

Whether an area gains or loses Structural Funding eligibility will not be taken into account by Eurostat when considering changes to NUTS boundaries and they will not accept proposals simply intended to make an area eligible for Structural Funding.

The NUTS 2 and NUTS 3 areas are also used to set eligibility for Regional Selective Assistance under the European Union's Regional Aid Guidelines, a policy which spends on average £50 million through SE and HIE per annum, and which creates roughly 6,500 jobs per year in Scotland. Changes to NUTS boundaries should not materially affect Scotland's Assisted Areas Map as we already select areas within NUTS 2 and 3 areas.

Proposals

Eurostat accept amendments to NUTS areas for two reasons:

(i) Administrative change (for example, local government reorganisation) that affects the existing NUTS structure. Member States are asked to amend NUTS areas so that they reflect current administrative areas.

(ii) Non-administrative change. Eurostat advise Member States to balance out the principles of increasing comparability between regions with retaining stability to preserve time series. Any changes proposed must respect the population thresholds (below) and reduce the standard deviation^[2] of the size (in terms of population) of all EU territorial units for the NUTS level.

Population thresholds for NUTS areas
NUTS 1 3 million - 7 million
NUTS 2 800,000 - 3 million
NUTS 3 150,000 - 800,000

Eurostat have asked us to consider merging the Highlands & Islands with the North Eastern Scotland NUTS 2 area so that all areas within Scotland have populations within their recommended thresholds. The Scottish Government is not in favour of this change and will request that these areas should be allowed to deviate from those thresholds due to their unique geographical, socio-economic and cultural circumstances (Article 3 (5) of the NUTS Regulations).

The Scottish Government plan to submit proposals based on administrative change. We propose to align NUTS boundaries to current Local Authority boundaries, while making minimal changes beyond that. At NUTS 2 level, this would involve the following changes:

• The Highlands and Islands NUTS 2 area would be expanded to include all of Argyll & Bute Local Authority, so that the Local Authority is entirely contained within a single NUTS 2 area;
• The Isle of Arran and The Cumbraes would move into South Western NUTS 2 area so that they are in the same NUTS 2 region as the mainland part of North Ayrshire.

Other minor changes will occur where Local Authority boundaries have changed since the 2006 review, however these will only affect a small number of postcodes.

Map 3 highlights the areas that would be affected by these changes.

Map 3: Proposed Changes to NUTS 2 Boundaries

The Scottish Government's proposals for NUTS 3 regions are to align to Local Authority boundaries. This requires slightly more changes to the boundaries than at NUTS 2 level, but would leave much of the South and East of Scotland unaffected:

• East Dunbartonshire, West Dunbartonshire and Helensburgh & Lomond will become East and West Dunbartonshire and reflect the Local Authority boundaries of the same names;
• The East Ayrshire and North Ayrshire Mainland NUTS 3 area would become East and North Ayrshire. This NUTS 3 area would contain both the mainland and island parts of the East Ayrshire and North Ayrshire Local Authorities;
• Three new NUTS 3 areas: Highlands, Moray and Argyll & Bute. These three NUTS 3 areas will align to the Local Authorities of the same name and replace the three NUTS 3 areas of Caithness & Sutherland and Ross & Cromarty, Inverness & Nairn, Moray and Badenoch & Strathspey, and Lochaber, Skye & Lochalsh, Arran & Cumbrae and Argyll & Bute.

Other minor changes will occur where Local Authority boundaries have changed since the 2006 review, however these will only affect a small number of postcodes.

Map 4 below shows the areas affected by these proposals.

Eurostat have suggested that Moray could be combined with Argyll & Bute to create a non-contiguous NUTS3 area that complies with their population thresholds. Although non-contiguity is acceptable to Eurostat, the Scottish Government is not in favour of such an approach and plan to request an exception under Article 3 (5) of the NUTS Regulations.

The full NUTS Regulations can be found here: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2003R1059:20110207:EN:PDF

Map 4: Proposed Changes to NUTS 3 Boundaries