Task Force on Small and Medium Sized Enterprise Data (SMED) UK presentation on: Producing estimates on SMEs: National level 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

Producing estimates on SMEs: National level

Definition of SMEs There are three broad parameters which define SMEs: Micro enterprises have up to 10 employees Small enterprises have up to 50 employees Medium-sized enterprises have up to 250 employees The European definition of SME follows: "The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro."

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 unit’ – if part of a larger business not taken account of (not feasible to produce using current survey methods; might impact on businesses moving between categories)

SMEs – diagram to show breakdown

Reporting the number of SMEs 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)

Use of register data - IDBR Use register information - data point in time Not consistent with Business Demography (but same principle applies) Different definitions (i.e. not those businesses active during the year) Only those businesses in scope for the survey (used for SBS regulation) Does not include information for Northern Ireland – for purpose of analysis only (can be included) Produce count, turnover & employment for each SME classification Produce different aggregation, can be subdivided by Industry & Legal Status

High level figures from Register Definition Number Employment (thousands) Turnover (£’billion) Micro (0-9 emp & <£2m t/o) 1,726,300 4,145 308 Small (10-49 emp & <£10m t/o) 206,300 3,628 353 Medium (50-249 emp & <£50m t/o) 38,600 3,175 411 Large (>250 emp & >£50m t/o) 10,100 10,419 2,509 All 1,981,400 21,366 3,581

Industry level figures – Register Number of businesses

Industry level figures – Register Turnover & Employment

Use of survey data - SBS regulation Use of returned contributor data (and imputed data for large businesses) Survey samples 65,000 businesses (approx.) SME definition based on ‘registered’ not ‘returned’ Aggregated using design & calibration weights to approximate for the whole non-financial business economy Weighting based on different stratification so not optimal Produce aggregated counts, turnover & aGVA for each SME classification Employment collected as part of a different survey but same principle could be applied; similarly for purchases Produce summary statistics by Industry & Legal Status

High level figures from Survey (SBS) Definition Number aGVA (£’billion) Turnover (£’billion) Micro (0-9 emp & <£2m t/o) 1,768,900 165 331 Small (10-49 emp & <£10m t/o) 211,500 161 375 Medium (50-249 emp & <£50m t/o) 38,400 158 410 Large (>250 emp & >£50m t/o) 10,100 562 2,541 All 2,029,000 1,046 3,657 aGVA & turnover is analysed but other variables collected as part of the SBS regulation could also be produced

Industry level figures – Survey (SBS)

Caveats when using the different sources - reminder Relevant to both: Balance sheet information is not available so cannot be stratified by this Turnover (T/O) definitions for the UK need to be based on £ as opposed to € Data is not totally consistent between SBS & BD (consistency as previously mentioned at SBS WG) Relevant to Register data Only count, employment & T/O data can be calculated T/O & employment data updated based on different rules and periodicity Relevant to Survey data Survey not optimally designed for estimation at levels provided T/O & employment breakdown based on registered figures not actual figures – what approach should be used?

Summary It is (broadly) feasible to produce estimates for SMEs This can be done for industry & legal status splits There are differences between register counts & survey counts due to timing The optimal source for information on SMEs is: Data from the register for counts of businesses; Data supplied as part of the SBS regulation for all ‘other’ variables required (T/O, Employment, Purchases) - but need to be aware of the caveats The approach used is suitable at higher levels of aggregation The more detail required the higher the associated CVs would be (impact on the quality) e.g. if split further by balance sheet, legal status & industry etc This would be relevant at higher levels if balance sheet information was also included as a stratification

Next steps for work/analysis Assess the quality & confidentiality of the estimates produced Calculate associated CVs for the SMEs (relevant if using survey sources) Help to determine an appropriate level of detail that can be produced (relevant if using survey data as opposed to admin/register data) Produce estimates for further time periods Produce estimates for additional variables (based on requirements) Employment, purchases etc

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

Issues when considering regional estimates How to deal with multi site businesses Should the reporting address be used to produce estimates? Should estimates be produced based on site level information? Difference would be those small businesses with more than one site in different geographical areas – is this very common? Adding an extra level of disaggregation Adding regional dimension to SME definition will add a further level of detail At NUTS1 level should be reasonably robust (need further analysis on quality though); lower levels of geography more scope for variability Is the business part of a larger business? More difficult to identify & handle especially in survey results Not possible to produce without significant work/analysis

Additional issues/caveats Analysis looks at just the overall business level (will not be consistent with the regional data currently provided – which is based on site level) Not be significant impact for the ‘smaller’ businesses For the survey data used the definition for turnover and employment based on the registered values not the returned values To do based on ‘returned data’ would be very difficult to produce appropriate estimates for a survey (this might impact on those businesses that move between different categories)

How many SMEs are single site? Definition Average number of sites Micro 1.01 Small 1.17 Medium 2.39 Large 24.46 (As expected) Micro businesses mainly single site Average for small & medium businesses also low If interested in just SMEs not significant issue to use ‘whole’ business as opposed to site level

Average number sites by emp & T/O Reporting address effect is evident in companies with more than 250 emp & affected more by emp than T/O As a proxy, the business as a whole can be used for calculating SMEs with limited reporting address effect

High level figures from Register

High level figures from Survey (SBS)

Summary It is (broadly) feasible to produce regional estimates for SMEs Can be produced at NUTS1 and at lower geographical levels (though quality would need to be assessed) Reporting address of the business does not appear to have a significant impact for SMEs as ‘mainly’ single site Certainly not at NUTS1 level; lower level of geography required would (might) have an increasing impact Register data would again be the preferred source for counts of businesses at regional level and data provided as part of the SBS regulation (survey data for UK) the source for ‘other’ variables (turnover etc) There are differences between register and survey business counts due to timing

Next steps Need to assess the quality & confidentiality of the estimates Survey for UK optimised to produce regional (NUTS1) estimates so quality should not be (significant) issue IF estimates required at lower geographical breakdown then would have increasing impact Produce estimates for site level This would fully assess the impact of site against reporting address Would produce a consistent figure with what is delivered as part of the SBS regulation Produce estimates for time series & additional variables Expand the analysis to include variables such as purchses, employment etc