Comparison databases

One problem with using the EEDA database is that there is no easy way of estimating the goodness of fit of companies on the database to those in the actual business population in the region. A further issue is that the Enterprise Directorate of the Department for Business, Enterprise and Regulatory Reform (BERR, 2007) says that no single source is able to estimate the total number of enterprises in the UK. There are, however, two official estimates of such data for the UK as a whole and by region. The official register of enterprises, the Inter Departmental Business Register (IDBR), holds records of over two million enterprises but its coverage is known to be incomplete among the very smallest enterprises. So the directorate also estimates small and medium-sized enterprise statistics,

29Ten non-respondents were interviewed by telephone and the responses for this straw poll were all of the nature ‘I meant to get round to it’ or ‘Not another survey!’

including an estimate of the number of unregistered enterprises, their employment and turnover. This database covers some 4.2 million enterprises and these databases are the best available external gauges of the proportions of businesses in the sample to those in the imputed population.

3.12.1 The Inter-Departmental Business Register (IDBR)

The Inter-Departmental Business Register (IDBR) is the comprehensive list of UK businesses used by the UK Government for statistical purposes. It provides a sampling frame for surveys of businesses carried out by the Office for National Statistics (ONS) and by other government departments. It is also a key data source for analyses of business activity. The main administrative sources for the IDBR are VAT trader and PAYE employer information passed to the ONS by HM Revenue & Customs, together with details of incorporated businesses passed to ONS by Companies House. This is supplemented by ONS survey data and survey information from other government departments. The IDBR contains over two million enterprises and BERR (2007) claim that the ‘comprehensive administrative sources combined with the survey data contribute to the coverage on the IDBR, which is one of its main strengths, represent nearly 99 per cent of UK economic activity’. The IDBR does not, however, include businesses that are not registered for either VAT or PAYE, thus excluding many small businesses and the self-employed, so the Small Business Service and the UK Statistics Authority collect additional data on these enterprises to add to the IDBR.

3.12.2 Small and medium-sized enterprise (SME) statistics according to arrangements approved by the UK Statistics Authority

Officially collected SME statistics add to the IDBR an estimate of the number of unregistered enterprises such as sole proprietorships, partnerships and companies (including public corporations and nationalised bodies) in which the working directors are counted as employees. Confusingly, single employee companies are excluded from the one to four employees category of the IDBR but included in the zero employees category in SME statistics. An estimate of self-employment is taken from the Labour Force Survey (LFS) and

HMRC’s Survey of Personal Incomes (SPI) and a number of assumptions are made to avoid over-counting. The estimates exclude inactive companies.

The SME statistics for 2007 showed an estimated 4.71 million private sector enterprises in the UK at the start of 2007, employing an estimated 22.7 million people with an estimated combined annual turnover of £2,800 billion. Of these, small and medium-sized enterprises (SMEs) together accounted for 99.9 per cent of all enterprises, 59.2 per cent of private sector employment and 51.5 per cent of private sector turnover. Notably, almost a quarter (24 per cent) of all UK private sector enterprise is deemed to operate in the Business Services sector (SIC2003 Section K).

Table 5 compares the two databases by employment bands for the Eastern Region. Note that the SME statistics provide a finer-grained analysis of companies with 100 employees or more.

Table 5. Comparison of employment bands in two UK National Statistics measures for the East of England Region

2007 SME statistics IDBR

All enterprises 512,455 168,900

With no employees 389,715

0–4 129,420

1–4 83,205

5–9 20,475 20,765

10–19 10,670 10,130

20–49 5,360 5,335

50–99 1,615 1,630

100–199 735 {925

200–249 140 {...

250–499 255 {695

500 or more 285 {…..

Source: UK Office for National Statistics (2008)

So the question is just how representative of the actual population is the proportion of businesses in the survey sample? Table 6 below shows the percentage by employee band for the EEDA region SME statistics and the percentage by employment band generated in the survey sample.

Table 6. Employment bands by per cent

Number of employees (per cent) SME

Statistics EEDA region

Survey sample

4–9 52.5* 42.2

10–24 ) )

25–49 ) 41 ) 45.5

50–99 2 6.8

100–249 0.5 5.4

Source: UK Office for National Statistics (2008) and analysis of the 2008 Research Survey

*based on 5–9

Given that the SME statistics count those with five to nine employees, and the survey counts four to nine, the bottom end percentage match is a little low for the sample. The SME statistics also count 10–19 and 20–49 so consolidating these within the two columns gives a reasonable match in these employment bands. For firms above 50 employees, the survey sample appears significantly over-weighted, though the small numbers are subject to large statistical variation. One explanation is that the nature of the survey appeals to larger firms that can more readily identify with the issues tackled within the survey questions. Given all the caveats about the reliability of the data in the official statistics and in the EEDA database, the over-representation of relatively larger SMEs needs to be borne in mind when looking at the analysis.