Title | Business start-ups: VAT/PAYE registrations per 10,000 adult population. |
Associated Targets | Increase the business start-up rate. |
Brief Description | This measure gives an indication of new firm formation and entrepreneurship, and provides a sign of how conducive the business environment is for encouraging new ventures and increased demand for businesses. A VAT/PAYE registration rate (expressed in terms of population) is the chosen measure in order to allow comparisons with other UK nations and regions, as well as other European countries, and to take account of population changes when measuring progress. |
Strategic Objective(s) to Which Indicator Relates | This indicator will inform progress in relation to the Wealthier and Fairer Strategic Objective. As outlined above, this indicator provides a sign of how conducive the business environment is for encouraging new ventures and increased demand for businesses. |
Definitions of Keywords | New VAT/PAYEregistrations are defined as Scottish based businesses that have registered for VAT and/or PAYE (Pay As You Earn) with HMRC during the relevant calendar year. The number of VAT/PAYE registrations for Scottish based businesses is recorded within the Office for National Statistics ( ONS) Inter-Departmental Business Register. Per 10,000 adult population is defined as per 10,000 people aged 16 or over in Scotland. Rates are based on the mid-year population of resident adults in Scotland as published by the General Register Office for Scotland. |
Evidence Source | The source of this indicator changed in 2009. Originally the business start-ups were monitored via the VAT registrations published annually by the Department for Business, Enterprise and Regulatory Reform ( BERR). However, the BERR series is no longer published and has been replaced by the business births series published by the Office for National Statistics (ONS) through its Business Demography: Enterprise Births and Deaths publication. As well as VAT registration figures, the ONS series additionally includes the births and deaths of employing businesses (which are not VAT-registered but are PAYE-registered) providing a more comprehensive view of business start-up activity. The change is in line with the new Structural Business Statistics Regulation introduced by Eurostat, which requires the ONS to produce business birth data using definitions and methodology determined by Eurostat, which will ensure greater comparability across the EU. The VAT/ PAYE registrations series is the best official source for business start-ups. The figures do, however, exclude the smallest firms that operate below the VAT threshold and are not registered for PAYE. It is estimated that this group of firms account for 47% of private businesses operating within Scotland but that they account for only around 2% of economic activity. |
Baseline and Past Trends | The baseline figure used for this target is the number of VAT/PAYE registrations per 10,000 adult population in 2006. The latest figures for this indicator can be found on the Scotland Performs website: http://www.scotland.gov.uk/About/scotPerforms/indicators/startUp Registration figures increased substantially between 2006 and 2007. It is likely that these figures partly reflect the impact of changes in tax rules in April 2007 surrounding Managed Service Companies (MSC). Businesses registered as Managed Service Companies at one address were previously excluded from this series; however following the change to the tax rules a number of these businesses de-registered and re-registered as single entities elsewhere and this activity has been included in the series. For more information please see paragraph 10 at the following link: http://stats.berr.gov.uk/ed/vat/VATStatsPressReleaseNov2008.pdf |
Methodology for Data Source | This indicator is based on a straightforward rate of VAT/PAYE registrations per 10,000 adult population. The exact calculation is: (X / Y ) *10,000 where
X = the number of VAT and/or PAYE registrations
Y = the resident adult population |
Data Ownership and Quality Assurance | VAT/PAYE registration figures for Scotland are released by the Office for National Statistics. The data are released as part of the National Statistics publication Business Demography: Enterprise Births and Deaths. |
Publication of Data | The Business Demography: Enterprise Births and Deaths publication is released annually by the ONS: http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=15186 Data for the previous 2 years may be subject to revision in each release. |
Methodology for Recent Change Arrow on Scotland | Position is improving if the rate per 10,000 population increases by 3 or more compared with the previous year; and worsening if the rate per 10,000 population decreases by 3 or more. Movement within +/- 3 suggests the position is maintaining. |
Future issues or reviews | For more information about the new approach to measuring business start-up activity please see: http://www.statistics.gov.uk/downloads/theme_commerce/Intro-Bus-Demography.pdf |