Task Force on Small and Medium Sized Enterprise Data (SMED) UK presentation on: Producing estimates on SMES: Regional data & issues to consider

Information Note Figures used in the analysis do not match exactly to previously delivered estimates. They are used as development work to assess the feasibility of producing SME data from register/survey sources. They should NOT: Be compared directly to previously delivered estimates Be circulated outside of the task force meeting This analysis does not take account of differences between SBS & BD estimates

Definition used for SMEs Size class Persons employed Annual T/O SMEs Micro-enterprises Up to 9 Up to £2m Small enterprises Up to 49 Up to £10m and no micro enterprise Medium enterprises Up to 249 Up to £50m and no small enterprise Large enterprises > 249 > £50m Can only base SMEs on employment and T/O T/O is based on £ as opposed to € using a pre-defined conversion rate can be implemented – would need to consider impact of currency changes Based on ‘reporting units’ and ‘local units’ (site level information). Accounting for larger business units is still not feasible using current survey estimates

SMEs – diagram to show breakdown Note - This breakdown not used in all analyses, due to increased risk of disclosure under regional breakdown

Reporting the number of SMEs (recap) Two potential options: Register source – Business Register (IDBR) Easier to produce & provides good estimate of number of businesses but not best approach to ‘other variables’ Survey Source – SBS regulation Can ‘better’ estimates for the variables (such as turnover, aGVA etc) due to methodology accounting for non-sampled units (however, still not totally optimal unless sample on the required basis) (if countries have an administrative approach to provide data under SBS then may be easier)

High level figures from Register Presented at the last task force – can be replicated at lower levels of geography relatively easily

High level figures from Survey (SBS) Presented at the last task force – focus on the variable level data Based on Enterprise level – is there a better way?

Regional data – options Within the survey data there are two proposed options for regional information: Enterprise level data, region based on the location of the ‘head office’ Data that was presented at the last task force Uses national SBS data for turnover Does not account for regional splits of multi-site businesses Site level data, produced using Regional SBS apportionment SME ‘category/definition’ based on the business as a whole Lot of SMEs (particularly micro businesses) will be single site but captures multiple sites better Apportionment is a form of estimation, so not as accurate as returned data Preferred method for regional data below NUTS1 Full congruent with published SBS regional results

Regional methodology Data collected at Enterprise level Data apportioned amongst sites based on industry, size & location – regression model Once the data have been apportioned to sites, totals are estimated for NUTS1 At the "all industry, all region" level regional data are constrained to equal the national total for each variable using a scaling factor Estimating totals for detailed levels of geography Minimum Domains – threshold below which the number of returns in any given year makes the data too volatile to use for regional apportionment Below this level synthetic estimation replaces actual data. Reduces the impact differing samples can have on small area estimates. Estimating totals for industry at regional level Regional & national industry figures below totals differ as site classification is used for regional & enterprise classification for national

Comparison between Enterprise & Site estimates - Total SME level   Turnover (£'bn) NUTS1 code NUTS 1 description Enterprise Site Difference UKC North East 28 UKD North West 110 106 -4 UKE Yorkshire & the Humber 85 82 -3 UKF East Midlands 77 70 -7 UKG West Midlands 93 86 -6 UKH East of England 108 99 -10 UKI London 204 217 14 UKJ South East 174 163 -11 UKK South West 94 79 -15 UKL Wales 34 UKM Scotland 76 74 -2 UKN Northern Ireland 35 1 UK 1116 1073 -43 Note: Figures do not totally match at the UK level due to the exclusion of the Financial Sector

NUTS1 split using site level data   Turnover (£'bn) NUTS1 code NUTS 1 description Micro Small Medium Total SME UKC North East 7 8 13 28 UKD North West 27 34 45 106 UKE Yorkshire and the Humber 21 32 82 UKF East Midlands 20 25 70 UKG West Midlands 24 86 UKH East of England 30 35 99 UKI London 65 76 77 217 UKJ South East 50 52 61 163 UKK South West 29 26 79 UKL Wales 12 UKM Scotland 74 UKN Northern Ireland 9 UK 306 365 402 1,073

NUTS2 split using site level data   Turnover (£'bn) NUTS2 code NUTS2 description Micro Small Medium Total SME UKC1 Tees Valley and Durham 2 4 7 13 UKC2 Northumberland and Tyne and Wear 5 14 UKD1 Cumbria 3 UKD3 Greater Manchester 11 19 42 UKD4 Lancashire 6 10 22 UKD6 Cheshire 17 UKD7 Merseyside UKE1 East Yorkshire and Northern Lincolnshire 8 UKE2 North Yorkshire UKE3 South Yorkshire UKE4 West Yorkshire 35 UKF1 Derbyshire and Nottinghamshire 30 UKF2 Leicestershire, Rutland and Northamptonshire 9 28 UKF3 Lincolnshire Note: Extract, please see spreadsheet/handout for all NUTS2 estimates

NUTS1 by Industry (Sector) for total SMEs   Turnover (£'bn) Section Section description UKC - North East UKF - East Midlands UKI - London UKJ - South East All regions A Agriculture, forestry & fishing (part) X - 3 B Mining & quarrying 2 C Manufacturing 5 15 10 19 157 D Electricity, gas, steam & air con E Water supply & waste management 1 4 13 F Construction 8 20 125 G Wholesale, retail & motor trades 9 22 51 48 318 H Transportation & storage 7 6 45 I Accomodation & catering 39 J Information & communication 23 12 59 K Financial & insurance activities L Real estate activities 26 M Professional, scientific & technical 44 N Administrative & support services 80 P Education 11 Q Health & social work R Arts, enertainment & recreation 18 S Other service activities 21 Industry Total 28 70 217 163 1,073 Note: Extract, please see spreadsheet/handout for all NUTS1 by sector estimates; only industries covered as part of SBS regulation

NUTS1 & NUTS2 data – micro, small and medium enterprises Data can be produced at varying levels of geography Feasible to also be split by industry Can be produced for ‘other’ SBS variables Industry by region would not match industry from national (based on our estimation model) Further ‘slices’ of the data would impact Congruent with published regional SBS data Quality measures – Need to assess the quality as apportionment has element of estimation Produced only using current systems, with very little resource required for additional analysis

NUTS1 & NUTS2 data – points to consider Analysis suggests limited disclosure issues at NUTS1 or NUTS2 levels for SMEs Further breakdowns of the data would have quality implications In terms of quality & disclosure need to balance user requirements May need to compromise on detail i.e. if want specific geographical level by industry AND MAY have to accept total SMEs (no split by micro etc) Quality would need to be tested in more detail (produce standard errors)

Producing estimates on SMEs: Foreign and domestic ownership

Data sources – foreign & domestic owned As for all other analysis on SMEs data can be produced from: Business Register Survey Source (in case of UK) – SBS regulation Dependent on what information is required as to the source used: Business counts – Register Variables (turnover etc) – Survey Source (SBS) Marker to indicate if foreign or domestic owned Different way to ‘cut’ the data Dependent on whether interest is national or regional

Foreign/Domestic Ownership – National level   Number Enterprises Turnover (£'bn) Domestic Owned Foreign Owned Micro 1,760,200 8,800 324 7 Small 204,500 6,900 348 26 Medium 33,700 4,600 323 87 SME total 1,998,400 20,400 996 120

Domestic/Foreign ownership – further breakdowns & issues Producing SME data by foreign/domestic by region AND/OR industry can lead to disclosure & quality issues Industry Can be produced; certainly disclosure issues by SME breakdown (micro, small, medium), some industries also disclosive at overall level Geography Can be produced (using regional approach); again disclosure issues for certain SME breakdowns (micro, small, medium), total level generally fine Need to determine what is required/most important SME detail, industry, region, ownership (some but not all)

Foreign/domestic ownership – further information UK publishes annual article/report on foreign/domestic owned businesses http://www.ons.gov.uk/ons/rel/abs/annual-business-survey/business-ownership-in-the-uk--2012/sty-abs-business-ownership.html Not looked at SMEs (yet!) as part of this publication but... Produced analysis based on size (employment) of business by sector Continent & country of ownership Turnover & aGVA Looking to expand to regional for July 2015

Examples of what has been produced