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Source Department for Business, Innovation and Skills
Date Released November 2008
National Indicators Link to NI171
Hampshire LAA targets Local indicator
Date range 1994 - 2007

Commentary

VAT registrations are used as a proxy measure for business start ups.  Data is taken from the Department for Business, Enterprise and Regulatory Reform (BERR)at: http://stats.berr.gov.uk/ed/vat/

In terms of wider monitoring through the National Indicator set, the Hampshire LAA and regional strategies, NI 171 is defined as the proportion of business registrations per 10,000 resident population aged 16 and above. The population denominator is taken from ONS Mid Year Estimates.  The Hampshire LAA and the South East Regional Economic Strategy measure the proportion of new registrations per 1,000 residents.  This is analysed on the corresponding Profile Online page. 

Latest data relates to 2007. This will be the final time these statistics are released. The Office for National Statistics have released a new National Statistics series on business births, deaths and survival rates, also on 28th November 2008.  For data from 2008 onwards, this will be the only official source of information on business start-ups and closures.


Confidence Levels

VAT registration and de-registration are proxy measure for business start ups and closures. In interpreting the data, there are two key points to note.

Firstly, that there may be many reasons for de-registration for VAT and as such it is not necessarily an indication of business failure but could be due to business turnover falling below the VAT threshold.

Secondly, these figures do not necessarily give a complete picture of business start-ups and closure. Some VAT exempt sectors and those operating below the VAT threshold are not covered. At the start of 2008, the VAT threshold was an annual turnover of £67,000. At the start of 2007, 2m of the estimated 40.7m enterprises in the UK were VAT registered.  However, government estimates that there are 4.7million enterprises in the UK (including the very smallest businesses not registered for VAT and/or PAYE.  Furthermore, some enterprises are VAT exempt such as education, health and public administration.  VAT registration does not always happen at the time the business starts trading - evidence shows that 11% of VAT registered SME`s registered prior to start up, nearly two thirds registered within 6 months, and a small number registered two years or more after starting up.  VAT registrations and de-registrations, whilst providing a guide to trends of business start ups and closures, are likely to be an under-estimate.      

However, some businesses do voluntarily register for VAT even though their turnover is below the threshold. Data for 2007 shows that around a fifth of all registrations have turnover below the VAT threshold.

When considering time-series data, or a new year`s VAT registrations published for the first time, it is usual to see revisions of previous years.  This can be due to "lag adjustments" as late notifications come in.  

Data

In 2007 there were 715 registrations, 390 de-registrations resulting in a net increase of 330.  Note that the data is rounded to the nearest 5: net change in the published statistics does not therefore equal precisely the difference between start ups and closures.  

VAT registrations - net change
2007

Basingstoke & Deane

Registrations

715

De-registrations

390

Net change

330



Data for registration rates (for example, per 10,000 or 1,000 population), can be found at:
http://www.basingstoke.gov.uk/about/facts/profile/economic/jobs+business+and+industry/Registrations+per+1000+residents/2007.htm

By industry

Data is available by broad industry group. Note that a low number of registrations does not imply the size or health of a sector as this data records start ups and closures not existing stock.  A sector stock analysis can be found elsewhere on the Profile Online.  Note that data is rounded to the nearest 5.  Rounding may result in a net change figure that does not precisely represent a net position of start ups against closures.  

The data below shows larger numbers of registrations in construction, wholesale/retail/repairs, and real estate and business support. 

Basingstoke & Deane 2007 - VAT by broad industry group

Registrations

De-registrations

Net-change

1 : Agriculture; Forestry and fishing (SIC A,B)

15

15

0

2 : Mining and quarrying; Electricity, gas and water supply (SIC C,E)

0

0

0

3 : Manufacturing (SIC D)

25

25

0

4 : Construction (SIC F)

85

55

30

5 : Wholesale, retail and repairs (SIC G)

75

60

15

6 : Hotels and restaurants (SIC H)

40

15

25

7 : Transport, storage and communication (SIC I)

30

20

10

8 : Financial intermediation (SIC J)

5

5

0

9 : Real Estate, renting and business activities (SIC K)

400

165

235

10 : Public administration; Other community, social and personal services (SIC L,O)

25

25

0

11 : Education; health and social work (SIC M,N)

15

5

10

Time Series

Summary

The graph below shows the number of registrations, de-registrations and the net change position over the last decade or more.  Generally, the data shows more start ups than closures with the exception of 1995 when the number of registrations and de-registration was equal. 

While the number of registrations and de-registrations at county and regional level will be different, the general trend seen in the borough data is echoed in that for Hampshire and the South East: that is, an increasing and positive net change in the mid to late 1990`s, falling in 2000 - 2002, and increasing gradually from 2003.  With the exception of the year 1995, all years in this time series show a positive net change with registrations exceeding de-registrations to some degree.  Note that a greater degree of fluctuation will probably be seen at local authority district level when compared to county or region because of the relatively small numbers of business start ups and closures in each authority. 

  
By industry 

The graphs below show the number, and relative number of start ups by broad industry group over the last few years since 2000.  In each graph, the "mining, quarrying, electricity, gas & water supply" sector has been omitted as, according to this data, there have been few, or no, VAT registrations. 

The first graph shows the relative position, in terms of registrations, of the "real estate, renting and business activity support" sector compared to the other sector groups.  Varying from 225 to a high point in 2007 of 400 registrations, the graph clearly shows how this sector sees the highest number of registrations, consistently, for the last decade.  

   

The second graph shows the relationship of the other sectors excluding real estate, renting & business support.    

 

       

Comparisons

The preferred way to make comparisons between certain local authority areas is to look at the registration rate ie: per head of population.  This is  because the number of start ups and closures can vary greatly between areas depending, among other things, on the size of the area. This analysis can be found on the Profile Online at:   
http://www.basingstoke.gov.uk/about/facts/profile/economic/jobs+business+and+industry/Registrations+per+1000+residents/2007.htm

A comparison of the number of VAT registrations and de-registration can be found below.  Comparator authorities selected are those neighbouring the borough geographically, those which fall all or partly into Western Corridor & Blackwater Valley sub-region, and all Hampshire authority areas.  Data is given for the latest year only - for other local authority data for previous years follow the link to:  http://stats.berr.gov.uk/ed/vat/ 

Registrations

De-registrations

2007

2007

South East

31,970

23,170

Bracknell Forest

435

265

Portsmouth

455

345

Reading

630

400

Slough

470

285

Southampton

590

505

West Berkshire

790

545

Windsor and Maidenhead

795

570

Wokingham

715

460

South Bucks

405

315

Wycombe

710

580

Hampshire

4,825

3,385

Basingstoke and Deane

715

390

East Hampshire

510

380

Eastleigh

500

335

Fareham

345

260

Gosport

155

100

Hart

460

310

Havant

295

245

New Forest

575

455

Rushmoor

315

170

Test Valley

460

330

Winchester

490

420

Surrey Heath

400

400

Guildford

655

445

Notes

See the PDF below for an explanation of the changes to this dataset.

The key points are:
  • A new Office for National Statistics series has been published in November 2008 providing data on business births, deaths and survival rates.  This is called Business Demography: Enterprise Births and Deaths.   
  • 2008 will be the final update to Business Start Ups and Closures: VAT registrations and De-registrations.
  • From 2009, users will be directed to the more comprehensive Business Demography statistics.
  • The key difference between the old and new statistics is the inclusion of PAYE registered units in the Business Demography.  Therefore, the Business Demography will additionally include the births and deaths of employing businesses which are not VAT registered, thus providing a more comprehensive view of business activity.          

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