Value-added tax (VAT) registrations and deregistrations are the best official guide to the pattern of business starts and closures. Latest VAT data on the total number of registrations since 1997 and the number of these registrations that subsequently deregistered, to the end of 2004, are shown in the following table for (a) Ribble Valley and (b) Lancashire.
VAT registrations do not capture all start-up activity. Businesses are unlikely to be registered if their turnover falls below the compulsory VAT threshold, which has risen in each year since 1997. Only 1.8 million out of 4.3 million enterprises (42 per cent.) in the UK were registered for VAT at the start of 2004. Similarly, not all businesses that deregister will necessarily have closed.
VAT registrations and subsequent deregistrations, 1997 to 20041 Ribble Valley New registrations 1997 to 2004 2,435 Number deregistering by end of 2004 695 Percentage still registered, end of 2004 71 Lancashire New registrations 1997 to 2004 24,070 Number deregistering by end of 2004 8,010 Percentage still registered, end of 2004 67 1 VAT registration and deregistration data are not available by size of business. However, 98 per cent. of the total stock of VAT registered businesses are small (0-49 employees). Source: Office for National Statistics, UK Business: Activity, Size and Location—2005, available from http://www.statistics.gov.uk/StatBase/Product.asp? vlnk =933. Source: New analysis of VAT survival rates data 1994 to 2003, Small Business Service, available at http://www.sbs.gov.uk/survival: SBS analysis of ONS Inter Departmental Business Register data.
Business closures are part of the functioning of a dynamic economy and represent an increased willingness among the business population to take risks or the displacement of less productive and innovative firms by more productive ones. Regional disparities in start-up and closure rates can have their root in the different economic history and different opportunities available in each region. The Government's aim is for every region to achieve success and good economic growth, which is why increasing resources have been put at the disposal of each regional development agency.