This article presents results for 983 small areas in London showing the number of employees working for enterprises with fewer than 250 employees in the UK (Small and Medium-sized Enterprises, or SMEs) and for enterprises with 250 or more employees (large enterprises). The analysis uses data from the Inter-Departmental Business Register for the period 2001-12. Results include proportions of employees working for SMEs and highlight some of the changes which have taken place since 2001. The article is accompanied by data tables showing numbers of workplaces and employees in each of the 983 small areas in London in 2001-12, broken down to show SMEs and large enterprises separately.
This is the second release in a series of two articles on the size of firms in London. The first article, published on 19 July 2013, presented analysis of numbers of workplaces and employees in London, broken down by enterprise size and industry sector, for the period 2001 to 2012. It presented this analysis at the level of London and its 33 local authorities.
The first article reported that:
The proportion of workplaces associated with Small and Medium-sized Enterprises (SMEs) in London remained steady at around nine-tenths of all workplaces in 2001-12. Workplaces belonging to large enterprises comprised around one-tenth of London’s workplaces.
Some three-fifths of employees in London worked for large enterprises in 2001-12, while two-fifths worked for an SME.
SMEs are defined as enterprises with fewer than 250 employees and large enterprises as those with 250 or more employees.
This article presents a second set of results: for the small areas known as ‘Middle-layer Super Output Areas’ (MSOAs) which nest within the local authorities1. There are 983 MSOAs in London. The results at MSOA level are broken down to show SMEs and large enterprises separately. However, for confidentiality reasons, it is not possible to produce breakdowns by industry sector2.
For both articles, the figures are calculated using data from the Inter-Departmental Business Register (IDBR), see Background notes. Although workplaces and employees are counted at local level, we use enterprise size bands that are based on numbers of employees working for the enterprise in the UK as a whole. It should be noted that ‘enterprises’ include private sector businesses, public sector bodies and not-for-profit organisations.
Figures 1 and 2 show the number of employees working for large enterprises in 2001, the earliest year for which IDBR datasets are available, and 2012, the latest year available. The number of employees working for large enterprises in London rose by 12% over this period. This increase took place before the 2008-09 recession; thereafter, the number of employees working for large enterprises fell slightly.
Jobs in large firms are mainly concentrated in the centre of London and around Heathrow, and there are also some concentrations in town centres in outer London boroughs, for example in Croydon, Uxbridge and Romford. The pattern of where jobs are concentrated has changed little over time, but some areas have seen job creation by large enterprises while others have lost such jobs:
Uxbridge has seen an increase in numbers of employees working for large enterprises from 16,600 to 42,100 (MSOAs E02000508 and E02000509).
Croydon has seen a decline in numbers of employees working for large enterprises from 43,900 to 33,900 (MSOAs E02000213, E02000215, E02000217 and E02000220).
Figures 3 and 4 show the number of employees working for SMEs in 2001 and in 2012. The number of employees working for SMEs in London rose by 25% between 2001 and 2012. However, readers should treat this figure with caution because some of the growth appears to be due to improvements in the HM Revenue and Customs data on small businesses that feeds into the IDBR, producing an artificial increase in the figures between 2011 and 2012 (see Background notes). Between 2001 and 2011, the number of employees working for SMEs in London rose by 15%.
SME jobs are more evenly spread across London than those in large enterprises and it is hard to distinguish from Figures 3 and 4 where growth in SME jobs has been greatest. Therefore, Part 2 of this article ‘zooms in’ to look at some small areas within London in greater detail. These are intended as examples. For those readers who are interested in other parts of London, similar analysis can be done using the data tables in this release.
In London as a whole the proportion of employees working for SMEs is around two-fifths of the total and has changed little since 20011. However, there are considerable variations between MSOAs and in some parts of London there have been big changes in the proportion of employees working for SMEs since 2001. For instance, in 2012 there were 213 MSOAs in London (out of 983) where 70% or more of all employees worked for SMEs, compared with 124 MSOAs in 2001. Figures 5 and 6 show that:
Along the A1 / M1 corridor in the London Borough of Barnet, a higher proportion of employees worked for SMEs in 2012 than in 2001. This reflected increases in the number of employees working for SMEs in most years between 2001 and 2012, combined with a decline in the number of employees working for large enterprises in the latter half of the period (2006-12).
In the southern part of the London Borough of Croydon, to the east of the A23 (Brighton Road), a higher proportion of employees worked for SMEs in 2012 than in 2001. This was partly because of job creation by SMEs and partly because of a fall in the number of jobs in large enterprises.
The total number of employees in the Canary Wharf area (MSOA E02006854) almost quadrupled between 2001 and 2012, from 27,400 to 100,500 (Figure 7). This was mainly due to an increase in employees working for large firms (up by 67,400), but the number of employees working for SMEs in the area doubled, from 5,100 to 10,800. The biggest driver of growth was the financial and insurance activities sector, but information and communications, the professional, scientific and technical sector, and administrative and support service activities also contributed strongly (Table 1). There were also increases in the numbers of employees working in several other sectors, notably in retail, accommodation and food services, and arts, entertainment and recreation.
|Primary and utilities||..||..|
|Wholesale and motor trades||800||700|
|Transportation and storage||2,000||600|
|Accommodation and food service activities||1,200||3,600|
|Information and communication||3,500||9,200|
|Financial and insurance activities||14,300||58,500|
|Professional, scientific and technical||900||7,800|
|Administrative and support service activities||1,700||12,600|
|Public administration and defence||..||..|
|Human health and social work activities||100||500|
|Arts, entertainment and recreation||100||2,200|
|Other service activities||300||300|
|Activities of households as employers||0||0|
|Activities of extraterritorial organisations||0||0|
|Total in all sectors||27,400||100,500|
Parts of the London Borough of Southwark have also seen rapid growth in employee jobs over the past decade. In particular, the area to the south-east of London Bridge Station in the north of Southwark (MSOA E02000809) saw the number of employees working for large firms nearly triple between 2001 and 2012 and the number of employees working SMEs more than double. This was largely driven by increases in jobs in the professional, scientific and technical sector, information and communications, administrative and support service activities and the human health and social work sector. In the Canada Water area, also in the north of Southwark (MSOA E02000813), most of the growth in employee jobs between 2001 and 2012 was associated with SMEs, where the number of employees rose from 800 in 2001 to 1,200 in 2010 and to 3,400 in 2012. In 2012, almost three-fifths of the SME jobs in this area were in the administrative and support services sector.
Figure 8 shows changes in the number of employees working for SMEs between 2001 and 2012 in the southern part of the London Borough of Newham, between London Underground’s District Line to the north and the Thames to the south, including London City Airport and the Royal Docks Enterprise Zone1. Overall, the number of employees working for SMEs in this part of Newham increased by one-third over this period, although part of this increase (between 2011 and 2012) may be due to the improvements in HM Revenue and Customs data on small businesses that feeds into the IDBR (see Part 1). Some MSOAs saw particularly large increases from low bases; for instance, the number of employees working for SMEs rose from 100 to 400 in E02000742 and from 200 to 1,100 in E02000749. This growth occurred over a range of activities, including accommodation and food services and real estate as well as education and human health and social work activities.
The impact of the Westfield centre at White City/Shepherd’s Bush in West London, which opened in October 2008, can be seen in MSOA E02000375. The number of employees in this area rose from 8,000 in 2008 to 15,100 in 2012, almost entirely due to increases in jobs in the retail and accommodation and food sectors. The centre provided a boost for employment in SMEs (with the number of employees rising by 110% between 2008 and 2012) as well as for large enterprises (up 86% between 2008 and 2012).
The source of data for this article is the Inter-Departmental Business Register (IDBR), a register which covers nearly all of UK economic activity including that of public sector bodies. An organisation will be on the IDBR if it is registered for Value Added Tax (VAT), and/or pays employees through a Pay As You Earn (PAYE) scheme and/or is an incorporated business registered at Companies House. Some very small businesses, self-employed people and non-profit-making organisations are not on the IDBR as they are not registered in any of these ways.
The information about employees on the IDBR is drawn mainly from the Business Register and Employment Survey (BRES). Estimates from other ONS surveys are also included. For the smallest businesses, either PAYE jobs or figures imputed from VAT turnover are used. The IDBR extracts used for this analysis are taken in March each year, but the employee data that they contain relates mainly to the previous September, when the BRES data is collected.
The IDBR is useful for producing estimates of numbers of employees broken down by enterprise size (SMEs and large enterprises), as presented in this article. However, the IDBR does not provide official estimates of numbers of employees in London or other parts of the UK. These are published in ONS’s monthly Labour Market Statistics series (available at www.ons.gov.uk/ons/taxonomy/index.html?nscl=Labour+Market). ONS also recommends using the BRES for detailed industry sector and geographical breakdowns of official employee statistics.
Increases in numbers of workplaces and employees between 2011 and 2012 are overstated in the IDBR because improvements to HM Revenue and Customs computer systems lead to the inclusion in 2012 of businesses that had not previously been recorded on the register. This particularly affected results for SMEs. For further details, see the first article in this series at www.ons.gov.uk/ons/rel/regional-trends/london-analysis/size-of-firms-in-london--2001-to-2012/index.html and UK Business: Activity, Size and Location, 2012 at www.ons.gov.uk/ons/rel/bus-register/uk-business/2012/index.html
The MSOAs mentioned in this article can be seen against the background of a searchable map of London at www.neighbourhood.statistics.gov.uk/HTMLDocs/urbanrural.html
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