(2) how many small businesses have closed in the last five years during their first (a) 12 months and (b) five years of trading, broken down by region;
(3) what assessment he has made of the impact of the rate of small business closures on (a) each region and (b) England.
Data on small business closures by region are not available.
However, data on the number of businesses of all sizes that de-register for VAT each year, and the proportion that remain registered for 1 and 4 years, in each UK region, are published by BERR.
The following table shows the number of VAT de-registrations in each UK region and country 2001-05.
De-registrations 2001 2002 2003 2004 2005 United Kingdom 155,890 162,405 165,530 163,400 152,945 England 136,520 142,375 144,740 142,870 133,230 North East GOR 4,110 3,995 4,010 3,850 3,600 North West GOR 15,500 16,220 15,955 15,650 14,265 Yorkshire and the Humber GOR 11,160 11,560 11,140 11,225 10,745 East Midlands GOR 9,905 10,155 10,695 10,615 9,765 West Midlands GOR 12,740 13,130 14,255 13,860 12,610 East GOR 15,225 15,475 16,115 15,995 14,690 London GOR 30,825 32,625 31,760 32,145 30,230 South East GOR 23,970 25,410 26,540 25,855 24,605 South West GOR 13,080 13,810 14,265 13,680 12,720 Wales 5,465 6,425 6,670 6,015 5,555 Scotland 10,955 10,820 10,930 10,920 10,160 Northern Ireland 2,955 2,785 3,190 3,595 4,005 Source: Business Start-ups and Closures: VAT Registrations and De-registrations 1994-2005, available at: http://stats.berr.gov.uk/ed/vat
The following table shows the number of businesses that de-registered for VAT within one and four years of registration, for each UK region and country, by year of registration for the latest five years worth of available data. Data for five years after registration are not produced at regional level.
Number de-registering for VAT within one year 2000 2001 2002 2003 2004 United Kingdom 16,996 14,621 13,977 13,385 14,519 England 14,992 13,003 12,306 11,778 12,685 North East GOR 428 405 373 353 348 North West GOR 1,870 1,583 1,356 1,254 1,428 Yorkshire and the Humber GOR 1,188 1,120 1,070 983 1,045 East Midlands GOR 1,150 945 898 911 941 West Midlands GOR 1,314 1,257 1,197 1,138 1,198 East GOR 1,463 1,282 1,301 1,218 1,300 London GOR 3,887 3,407 3,197 3,075 3,285 South East GOR 2,364 1,962 1,920 1,876 2,073 South West GOR 1,369 1,041 1,058 1,014 1,038 Wales 610 536 495 493 486 Scotland 1,089 944 902 887 1,030 Northern Ireland 249 220 244 235 332
Number de-registering for VAT within four years 1997 1998 1999 2000 2001 United Kingdom 72,524 74,340 71,651 71,920 65,966 England 63,814 65,748 63,341 63,757 58,439 North East GOR 1,661 1,691 1,720 1,757 1,618 North West GOR 7,700 7,650 7,290 7,222 6,660 Yorkshire and the Humber GOR 4,732 4,899 4,696 4,922 4,479 East Midlands GOR 4,469 4,541 4,250 4,507 4,185 West Midlands GOR 5,888 5,951 5,778 5,707 5,507 East GOR 6,764 6,630 6,384 6,770 6,112 London GOR 15,727 17,413 16,620 16,457 14,830 South East GOR 11,085 11,188 10,836 10,782 9,892 South West GOR 5,802 5,845 5,779 5,691 5,088 Wales 2,431 2,435 2,350 2,491 2,241 Scotland 5,092 5,086 4,832 4,583 4,315 Northern Ireland 1,077 1,120 1,069 981 987 Source: BERR analysis of VAT and survival rate data
VAT registration and de-registration data for 2006 will be published on 14 November 2007. Survival data will not be produced again until 2009.
New VAT registrations exceeded de-registrations in the UK (and in all regions) between 2001 and 2005. The stock of VAT registered businesses rose by 4 per cent. during the period.
VAT registrations do not capture all business activity. Businesses are unlikely to be registered if they fall below the compulsory VAT threshold, which was £60,000 at the start of 2006. Similarly, businesses that de-register may not have closed. Only 1.9 million out of 4.5 million UK enterprises (41 per cent.) were registered for VAT at the start of 2006.
Although data on the number of VAT de-registrations are routinely collected and monitored, there is currently no general information on the impact of business closures at regional and national level. However a study commissioned for the London Development Agency in 2005l showed that out of the 790,000 jobs lost through SMEs closing down in London between 2001 and 2003, 88 per cent. found immediate employment elsewhere, 8 per cent. went in self-employment and 1 per cent. into training. Only 3 per cent. went into unemployment.
At appropriate levels, business closures are a necessary part of the productive churn process, creating space for more productive and innovative firms to expand, and therefore an important step in boosting regional and national productivity. Data on closures, including data at a regional level, are routinely collected and monitored.
1 Business Closures in London: Final Report, 2005, TBR Economics