1. Methodology background


 National Statistic   
 Survey name 
 Frequency  Annual
 How compiled  Based on third party data
 Geographic coverage  UK
 Sample size 
 Last revised  26 June 2014

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2. Executive summary

Business demography is an annual publication produced from an extract taken from the Inter-Departmental Business Register (IDBR). The publication focuses on changes to the registered business population, that is, those businesses registered at Her Majesty's Revenue and Customs (HMRC) for Value Added Tax (VAT) and/or Pay-As-You-Earn (PAYE) and at Companies House.

Tables in the publication provide data on births (start-ups), deaths (closures) and survival rates of businesses by broad industry group according to UK Standard Industrial Classification 2007 (SIC 2007) and geography. Data are also provided on business survival rates by broad industry group and geography.

Data relate to the recorded position of enterprises in the IDBR in November for the reference year, that is, data for the reference period 2013 would relate to the position of enterprises in the IDBR at November 2013. Data are released 12 months after the reference period; therefore, data for November 2013 would be released around 2014. Publication dates are available via the release calendar.

Business demography data are released as a series of tables in an Excel Workbook accompanied by a statistical bulletin. The statistical bulletin alerts data users to significant data changes and provides relevant commentary on changes and discontinuities along with methodological information. Data are compiled according to the Eurostat-Organisation for Economic Co-operation and Development (OECD) Manual on Business Demography Statistics.

It should be noted there are important differences between ONS Business demography data and related statistics released by Eurostat. Firstly, in Business demography an adjustment has been made to death data to allow for reactivations, to enable more timely data to be provided (for more information on the definition of a reactivation, refer to the section “About the output”). Secondly, managed service companies are excluded from Business demography but included in the UK data submitted to Eurostat. More detail about these differences can be seen in the sections entitled “Coherence and comparability” and “Concepts and definitions”.

There is also a difference between Business demography and its ONS related publication UK business: activity, size and location. Although both of these products are extracts from the IDBR, the total stock of active businesses is greater in Business demography. This is because the definition of active businesses for Business demography is based upon activity at any point during the year, whereas for UK business: activity, size and location, data are based on an annual snapshot at a specified point in time.

The information used to create and maintain the IDBR is obtained from five main administrative sources. These are:

  • HMRC VAT – traders registered for VAT purposes with HMRC
  • HMRC PAYE – employers operating a Pay-As-You-Earn (PAYE) scheme, registered with HMRC
  • Companies House – incorporated businesses registered at Companies House
  • Department for Environment, Food and Rural Affairs (DEFRA) farms
  • Department of Finance and Personnel, Northern Ireland (DFPNI)

As well as the five main sources listed in this section, a commercial data provider, Dun and Bradstreet, is used to supplement the IDBR with Enterprise Group information.

In addition, the Business Register Employment Survey (BRES) and other ONS surveys supplement these administrative sources, identifying and maintaining the business structures necessary to produce detailed industry and small area statistics. It should be noted that BRES is the only source of local unit (site) information.

Should supplementary analyses or additional information be required about non-disclosive data from the IDBR, please contact the IDBR Data Analysis Service on +44 (0)1633 456902 or email IDBRDAS@ons.gsi.gov.uk.

This document contains the following sections:

  • Output quality
  • About the output
  • How the output is created
  • Validation and quality assurance
  • Concepts and definitions
  • Other information, relating to quality trade-offs and user needs
  • Sources for further information or advice
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3. Output quality

This document provides a range of information that describes the quality of the data and details any points that should be noted when using the output.

We have developed Guidelines for measuring statistical quality; these are based upon the European Statistical System (ESS) quality dimensions. This document addresses these quality dimensions and other important quality characteristics, which are:

  • relevance
  • timeliness and punctuality
  • coherence and comparability
  • accuracy
  • output quality trade-offs
  • assessment of user needs and perceptions
  • accessibility and clarity

More information is provided about these quality dimensions in the following sections.

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4. About the output

Relevance

(The degree to which statistical outputs meet users’ needs.)

Business demography presents, via a series of tables, counts of registered business births, deaths and survival rates by broad industry group according to UK Standard Industrial Classification 2007 (SIC 2007) and geography.

The data in the publication are used extensively by central and local government, MPs and private sector users for a range of investigative, monitoring and planning purposes. The data are also used by academia and regularly by the media who consider this information to be an indicator on economic activities. The product is generally used by those who wish to examine the numbers of business births, deaths and survival in certain industries and/or geographical areas.

There are three National Statistics publications that provide information on the UK business population. The Department for Business, Innovation and Skills (BIS) Business population estimates publication provides the only estimate of the total UK business population; the Business demography publication includes levels of business start‐ups and closures, as well as providing an alternative measure of the registered business population; and the UK business: activity, size and location publication provides more detail on the registered section of the business population.

In addition to the publications mentioned in this section, similar related National Statistics are released by the three devolved administrations for their countries, the Insolvency Service publishes National Statistics for corporate and individual insolvency and Companies House publishes statistics based on activity on their register.

Table 1 describes the important features of the three UK business population publications. For details on how this information might best be used, which is the most appropriate product for users and more information on methodologies employed to produce each publication, please refer to the Guide to business population and demographics statistics publications.

Timeliness and punctuality

(Timeliness refers to the lapse of time between publication and the period to which the data refer. Punctuality refers to the gap between planned and actual publication dates.)

Business demography is an annual publication that is released around 12 months after the reference point, which is November each year. That is, data relating to the period November 2013 would be published between September and November 2014. This translates into a time lag of 10 or 12 months.

For more details on related releases, the GOV.UK release calendar is available online and provides 12 months’ advance notice of release dates. In the unlikely event of a change to the pre-announced release schedule, public attention will be drawn to the change and the reasons for the change will be explained fully at the same time, as set out in the Code of Practice for Official Statistics.

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5. How the output is created

The data contained in Business demography are produced from an extract taken in November each year from the Inter-Departmental Business Register (IDBR). The extract, which is not subjected to imputation or estimation, lists all active records excluding those relating to central government and local authorities. The definition of active units can be seen in chapter 3 of the Eurostat-Organisation for Economic Co-operation and Development (OECD) Manual on Business Demography Statistics.

The comparison of active records files for the data periods shown in the publication make it possible to determine births, deaths and survival rates (the length of time a business has been active).

It is important, however, to note that underlying the extract are IDBR processing rules, which impact upon the timeliness and classifications of businesses for example. An overview of these processing rules are shown in the Introduction to the Inter-Departmental Business Register (IDBR) and Further information about IDBR sources, structure and updating for publications.

IDBR data are extracted and placed into a series of pre-defined tables using SAS Enterprise Guide software. Data in each of the tables are then subjected to rigorous quality control testing to ensure that information has been extracted correctly and reflects the information contained on the IDBR. Continuity checks and investigations into data value changes when compared with previous years’ data values are also carried out to ensure that data movement(s) (for example, large increases in births or closures, or large changes in counts for geographies or industries) are correct and can be explained satisfactorily, and if appropriate and significant, the reason for changes explained in the statistical bulletin.

In order to publish estimates within a year of the reference period, we make an adjustment to the deaths figures in the release to allow for reactivations. Reactivations occur because of lags in the administrative sources (VAT and Pay-As-You-Earn), which mean it is possible that a business that is continuing to trade can appear to cease on the IDBR. If an old VAT scheme is de-registered and there is a delay in the creation and/or matching of the new VAT scheme, it can leave the enterprise without a live administrative source resulting in it being automatically flagged as a death. Additionally, VAT-based units where turnover drops to zero are automatically made dead on IDBR, but will rebirth if turnover is then reported in a later period. These units will appear to move from the active stock into the death counts then become live again as births. To prevent distortion in these figures, those businesses that “reactivate” on the register within 2 years of death are treated as if they have continued to trade throughout the period.

We have departed from the Eurostat-OECD Manual on Business Demography Statistics at this point. The manual recommends waiting for 2 years after the reference period to allow for reactivations before deaths are calculated. Instead, we have estimated the number of reactivations. This adjustment has been applied to all industries, by removing units from the death data. This can lead to different percentage adjustments at the lowest level of aggregation. Since the level of reactivations is subject to some uncertainty, the latest 2 years in the publication are considered to be provisional and subject to revision.

Managed service companies are also excluded from the publication but are included in the statistics published by Eurostat for business demography. We exclude these companies from all outputs because they are registered at the address a service company provides, and can therefore distort the geographical location and industry of the businesses as well as business demography changes.

Statistical disclosure control methodology is applied to the data to ensure that information attributable to an individual organisation is not disclosed. The Code of Practice for Official Statistics, specifically Principle 5: Confidentiality, sets out the practices to be followed to protect data from being disclosed. This principle includes a guarantee to survey respondents to “ensure that official statistics do not reveal the identity of an individual or organisation, or any private information relating to them.” More information can be found on the Statistical Disclosure Control Methodology pages.

Business demography is an extract from the IDBR at a specified point in time, so the quality of the datasets in the publication are highly dependent upon IDBR source information and the checks and quality controls applied to this when received. Subsequent checks applied to the integrated source data before incorporation into the IDBR are also stringent.

Information on the administrative source data used to construct and compile the IDBR, the quality control checks, processes and maintenance procedures are described in the Introduction to the Inter-Departmental Business Register (IDBR).

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6. Validation and quality assurance

Accuracy

(The degree of closeness between an estimate and the true value.)

In each Business demography publication, the latest 2 years’ estimates on births, deaths and survivals are subject to revision. Revisions would normally be made in the following year’s publication.

For more information, please see the “How the output is created” and “Coherence and comparability” sections.

Coherence and comparability

(Coherence is the degree to which data that are derived from different sources or methods, but refer to the same topic, are similar. Comparability is the degree to which data can be compared over time and domain, for example, geographic level.)

Business demography is an extract from the Inter-Departmental Business Register (IDBR) and is not subjected to imputation or estimation. The constituent data used to populate the IDBR are received from the administrative sources listed in the “Executive summary”. This information is received on a daily basis and is subjected to rigorous testing and quality control checks before it is uploaded onto the IDBR.

Checks include matching HM Revenue and Customs (HMRC) VAT and Pay-As-You-Earn (PAYE) information; checking business locations and structures match PAYE and VAT information; checking employment data are correct and businesses are active; and allocating businesses to correct standard industrial classifications, among other things. These tasks are carried out via automatic system checks, with changes and errors reported out for manual investigation and checking before correction and subsequent uploading to the IDBR.

Information about coherence and comparability of Business demography, when compared with a similar IDBR product entitled UK business: activity, size and location and the Department for Business, Innovation and Skills (BIS) Business Population Estimates, is explained in another section of this QMI report entitled “About the output – Relevance”. Information about comparability and links with regional outputs produced by the devolved administrations can also be accessed via the Guide to business population and demographics statistics publications.

Comparable time series for Business demography are available going back to the reference year period 2009.

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7. Concepts and definitions

(Concepts and definitions describe the legislation governing the output and a description of the classifications used in the output.)

Subject to the estimates of reactivations and the treatment of managed service companies (see the “How the output is created” section), Business demography data are produced according the definitions, guidelines and methodology specified in the Eurostat-Organisation for Economic Co-operation and Development (OECD) Manual on Business Demography Statistics.

The source data for Business demography is an extract of active units held on the Inter-Departmental Business Register (IDBR). The IDBR, which was introduced in 1994, covers over 2 million businesses in all sectors of the UK economy. It fully complies with EU legislation relating to the structure and use of business registers, including:

  • Regulation (EC) No 177/2008 of 20 February 2008 establishing a common framework for business registers for statistical purposes
  • Council Regulation (EEC) No 696/93 on statistical units for the observation and analysis of the production system in the Community
  • Commission Regulation (EC) No 250/2009 as of 11 March 2009 implementing Regulation (EC) No 295/2008 of the European Parliament and of the Council as regards the definitions of characteristics, the technical format for the transmission of data, the double reporting requirements for NACE Rev.1.1 and NACE Rev.2 and derogations to be granted for structural business statistics arrangements

Business activity is classified using the descriptions shown in the UK Standard Industrial Classification 2007 (UK SIC 2007). The UK SIC 2007 classification system is based upon the European NACE Rev 2. Statistical classification of economic activities in the European Community classifications system, which in turn has been based upon the United Nations International Standard Industrial Classification of All Economic Activities (ISIC) Rev. 4.

Subject to minor variations that were brought in to meet specific UK needs, that is, further breakdowns of some specific industries to a five-digit level, UK SIC 2007 reflects NACE (Rev 2).

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8. Other information

Output quality trade-offs

(Trade-offs are the extent to which different dimensions of quality are balanced against each other.)

To publish estimates within a year of the reference period, we make an adjustment to the deaths figures in the release to allow for reactivations. More details about this adjustment can be seen in the “How the output is created” section.

Assessment of user needs and perceptions

(The processes for finding out about uses and users, and their views on the statistical products.)

Business demography datasets present analyses of births, deaths and survival rates of UK enterprises by broad business activity and geography.

The views and requirements of government and non-government users of this product, as well as the UK business: activity, size and location release and the Department for Business, Innovation and Skills (BIS) Business population estimates are sought regularly. The following methods are used for engaging with users of these three products:

  • an ONS and BIS jointly-convened Business Population and Demographic Statistics (BPDS) User Group; this group, which meets once a year, has been created to specifically engage with government and non-government users at the same time, with the intention of seeking their views and opinions about BPDS outputs and future developments
  • Government Statistical Service Business Registers Group; this is a cross governmental group that identifies and address developments and issues affecting the IDBR, which meets 6-monthly
  • we welcome comments and feedback on each of our register publications and each release contains an invitation for users to contact the Business Registers Strategy and Outputs (BRSO) team to submit their views and comments about the product
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9. Sources for further information or advice

Accessibility and clarity

(Accessibility is the ease with which users are able to access the data, also reflecting the format in which the data are available and the availability of supporting information. Clarity refers to the quality and sufficiency of the release details, illustrations and accompanying advice.)

Our recommended format for accessible content is a combination of HTML web pages for narrative, charts and graphs, with data being provided in usable formats such as CSV and Excel. We also offer users the option to download the narrative in PDF format. In some instances, other software may be used, or may be available on request. Available formats for content published on our website but not produced by us, or referenced on our website but stored elsewhere, may vary. For further information please email karen.watkins@ons.gsi.gov.uk or telephone +44 (0)1633 456902.

For information regarding conditions of access to data, please refer to:

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