Lord Taylor of Warwick

The information requested falls under the remit of the UK Statistics Authority.

Please see the letter attached from the National Statistician and Chief Executive of the UK Statistics Authority.

The Lord Taylor of Warwick

House of Lords

London

SW1A 0PW

14 October 2024

Dear Lord Taylor,

As National Statistician and Chief Executive of the UK Statistics Authority, I am responding to your Parliamentary Question asking what assessment has been made of the levels of small businesses closing since (1) the start of the COVID-19 pandemic, and (2) the UK’s departure from the EU (HL1421).

The Office for National Statistics (ONS) produces an annual Business Demography, UK publication1. The data are produced from the Inter Departmental Business Register (IDBR) which contains all businesses registered for VAT and/or PAYE. Unfortunately, the numbers of business deaths shown in this release are not broken down by size band, so it is not possible to show the number of small businesses which have closed down since the start of the pandemic.

However, we have provided figures in Table 1 showing the total number of business deaths since 2020. The latest annual figures available are for the year 2022. As the start of the COVID-19 pandemic was in March 2020 and the UK’s departure from the EU was on 31 January 2020 it is possible to cover the two periods using the same data.

The ONS also produces a quarterly publication on business births and deaths2. The quarterly figures are useful because they provide up-to-date business demography estimates. Please note though that the figures are regarded as ‘Official Statistics in Development’ and should be considered as less reliable than the annual business demography numbers.

We have provided, in Table 2, the number of business deaths, by quarter, from the first quarter of 2020 until the second quarter of 2024. We do not have these figures available by sizeband and hence are not able to show the number of small businesses which have closed over this period.

Yours sincerely,

Professor Sir Ian Diamond

1https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/bulletins/business

demography/previousReleases

2https://www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/bulletins/business

demographyquarterlyexperimentalstatisticsuk/latest

Table 1: The total number of business deaths, annually, from 2020 until 2022, UK.

Source: Annual Business Demography, Inter Departmental Business Register

Table 2: The number of business deaths, by quarter, from the first quarter of 2020 until

the second quarter of 2024, UK3

Source: Quarterly Business Demography, Inter Departmental Business Register

3Quarterly business demography estimates are regarded as official statistics in development.

Quarterly estimates, when summed over a year, do not add to the annual estimates obtained from the annual business demography output.

My Rt Hon Friends the Chancellor of the Exchequer and the Secretary of State for Business and Trade are responsible for this Government’s priority of growth and advancing opportunities for investment across the country.

The government continues to monitor the impact of flexible working.

According to recent ONS data, the trend in working only from home has fallen since 2021, and a hybrid working model has become the ‘new normal’ for around a quarter of workers.

Reported benefits of remote working include improved recruitment, inclusivity, wellbeing, and productivity, and reduced employer overheads. Furthermore, the ONS’ Business Insights and Conditions Survey covering 18 November to 1 December 2024 found that, of those that have adopted or extended homeworking, 43% reported that this was due to increased productivity.

Delivering on our plan to Make Work Pay is a core part of the mission to grow the economy, raise living standards and create opportunities for all. We are committed to working in partnership with businesses to realise that ambition, enabling businesses and workers to thrive.

My department has published a set of Impact Assessments that provide a comprehensive analysis on the potential impact of the Employment Rights Bill. This analysis includes consideration of increases in labour costs for businesses and the subsequent effects. This analysis is available at: https://www.gov.uk/guidance/employment-rights-bill-impact-assessments

This government is committed to trade policy that is based on data, and the evidence is clear that better trading relations with the EU are crucial to the overarching goal of better economic growth.

However, as Minister Nick Thomas-Symonds said at the Business and Trade Select Committee on 21 January, we have a democratic mandate, as set out in our manifesto, not to return to the single market or join the Customs Union.

The Prime Minister has been clear that the UK’s economic regulators, including the Competition and Markets Authority, “the CMA”, have a vital role to play in delivering the Government’s growth mission. The Government will soon publish a new growth focused Strategic Steer to the CMA.

Over the last 20 years the UK (£720 billion) has attracted more Greenfield FDI than Germany (£305 billion) and France (£205 billion) combined. My department will continue to work with the Department for Science, Innovation and Technology and the Office for Investment to support significant overseas companies to invest and expand their footprint in the UK, and ensure that local communities benefit from the digital industrial revolution.

As set out in the AI Opportunities Action Plan presented earlier this month, AI Growth Zones will be established across the UK. Government will support these dedicated hotbeds of development to build the infrastructure needed to power and train cutting-edge AI. By partnering with the private sector, we will create vibrant hubs that attract investment, support new jobs, and rejuvenate communities.

The UK-US partnership is a cornerstone of the transatlantic alliance and we look forward to working with President Trump in the coming years. Our trading relationship with the US is worth around £300 billion and we have over £1.2 trillion invested in each other’s economies. We will explore various avenues to strengthen UK-US trade and support economic growth, alongside the development of our Industrial and Trade Strategies.

The Government views effective competition regulation as a key driver for growth of UK businesses. As outlined in the Industrial Strategy Green Paper, effective competition drives innovation and boosts productivity, enabling businesses to thrive. The Competition and Markets Authority (CMA) is the UK’s primary consumer and competition authority. The CMA has returned over £23 in savings to consumers for every £1 spent by UK taxpayers over the last 3 years.

A secure supply of critical minerals is vital for the UK's economic growth and security, industrial strategy, and clean energy transition. The government is developing a new Critical Minerals Strategy which will be more targeted towards the delivery of our industrial strategy and its eight core growth sectors. This new Critical Minerals Strategy will help secure our supply chains for the long term and drive forward the green industries of the future.

Economic growth is the number one mission of this Government. In November we published our Industrial Strategy Green Paper, which set out that Sector Plans will be designed in partnership with business, devolved governments, regions and other stakeholders. Sector Plans will identify key barriers to growth and describe how Government and industry intend to achieve long-term growth and create more good jobs in every part of the country.

In addition, the Government will continue to monitor carefully the impacts of the National Minimum Wage and National Living Wage on the economy. The Government's remit to the Low Pay Commission's (LPC) asked the LPC to take into account the impact on business, competitiveness, the labour market, and the wider economy when recommending rates.

The Department for Business and Trade sponsors two voluntary and business-led initiatives: the FTSE Women Leaders Review and the Parker Review on ethnic minority leadership. Both reviews encourage companies to achieve voluntary targets - 40% representation of women on boards and in senior management, and at least one ethnic minority director on company boards.

The 2024 report showed that 42.1% of the FTSE 350 board members were women behind only France who has adopted a quota approach to diversity and ahead of other countries with quotas. The 2024 Parker review reported that 77% of boards FTSE 350 boards had met their target.

Growth is the number one mission of the government. To encourage expansions, investment and recruitment, we are beginning to tackle barriers to investment, like skills, international talent, data, R&D, technology adoption, access to finance, competition, regulation, energy prices, grid connections, infrastructure, and planning – through a new Industrial Strategy that will support growth sectors to create more high-quality, well-paid jobs across the country, backed by employment rights fit for a modern economy.

The EU and the US are two of our largest trading markets, together accounting for over 64% of total UK trade. We are committed to strengthening our trade and investment relationships with both the EU and US and to working together to remove unnecessary barriers to trade

As set out by the Chancellor, we recognise that our markets are highly interconnected. This government’s main priority is growing the UK economy – strengthened trade with our most economically important partners is a major part of that.

Start-ups play a crucial role in fostering competition, inducing innovation and supporting the emergence of brand new sectors. The number of UK business births has fallen by 6%, to around 316,000 in 2023.

ONS UK Business Demography 2023, published 18 November 2024.

The Government is committed to hardwiring the voice of small business into everything we do. Our Small Business Strategy next year will set out our vision for all small businesses from tackling the scourge of late payments, tailored Business Support Advice, Access to finance, and Local Growth Hubs Networks, providing a strong business environment to drive economic growth in the UK.

The Government is creating a fairer business rate system by introducing permanently lower tax rates for retail, hospitality, and leisure businesses from 2026-27 and extending the current relief for 1 year at 40%. From 2026-27 the Government intends to introduce permanently lower tax rates for retail, hospitality and leisure properties with rateable values less than £500,000, which will be funded by the introduction of a Large Business Multiplier from 2026-27 on properties with a rateable value of £500,000 and above (less than 1% of all properties.)

The Government recognises the need to protect the smallest employers which is why we have more than doubled the Employment Allowance to £10,500, meaning more than half of businesses with NICs liabilities either gain or see no change next year. Businesses will still be able to claim employer NICs reliefs including those for under 21s and under 25 apprentices, where eligible. We will transform the apprenticeship levy into a more flexible growth and skills levy to support business and boost opportunity.

We are working further with the Hospitality Sector Council to address other strategic issues such as high street regeneration, skills, sustainability, and productivity.

The Government has developed a number of initiatives to increase the number of workers with AI-driven skills.

DBT’s Global Talent Network AI Futures programme attracts top young AI talents to the UK by focusing on exceptional international early to mid-career AI researchers, engineers, and entrepreneurs which will support the upskilling of our domestic workforce.

Skills England will build the highly trained workforce needed to deliver the national, regional and local skills needs of the next decade by setting both young people and adults up to succeed in an increasingly technology-driven world.

The AI Action Plan, commissioned by the Technology Secretary and drafted by the tech entrepreneur Matt Clifford, will set out, in part, the steps needed to equip our workforce with the right skills to support the AI sector’s growth.

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Stellantis announced a strategic review of the UK operations this July. We have regularly engaged with the company throughout and stand ready to help following its conclusion. Stellantis transformed their plant at Ellesmere Port to solely produce electric vans from 2023 following a £100m investment that was secured with HMG support. Stellantis also announced that they will make small volumes of the larger electric vans at their plant at Luton.

This Government is focused on its five-point plan to breathe life back into Britain’s high streets. We understand how important the high street is to our businesses which is why our plans include tackling retail crime, ensuring a level playing field between online and high street businesses, stamping out late payments and ending the blight of empty spaces. This work will ensure that our high streets are great places for our businesses, supporting economic growth across the UK.

I am looking forward to working with the Sector Councils for Retail and Hospitality on the strategic issues facing the sectors, including high street regeneration and investment, labour and retail careers, sustainability and supply chain resilience.

Steel is vital for a vibrant, secure economy. This Government is working in partnership with trade unions and industry to secure a green steel transition that’s both right for the workforce and delivers economic growth.

We have already agreed a better deal for steelworkers at Tata Steel and are continuing negotiations with British Steel. However, we are clear we need long-term jobs, not short-term subsidies.

We will publish a steel strategy in spring. This will guide our commitment to invest £2.5 billion in partnership with the private sector as part of our wider commitment to invest in jobs and boost growth across the UK.

We are committed to ensuring the UK remains a leading destination for companies to invest and do business. The International Investment Summit in October will showcase our commitment to partnering with global businesses to secure the investment we need for growth. We are answering investors’ calls for stability and predictability with our new Industrial Strategy, providing long-term confidence to invest. The National Wealth Fund will bring together key institutions to offer compelling propositions to investors.

We recognise that recent times have been challenging for business. The Government is committed to support small businesses. Our Plan for Small Business set out nine pledges, including a pledge to reduce the cost of energy bills. We will be setting out further detail over the coming months.

Total UK imports from Germany amounted to £89 billion in the 12 months to March 2024, a 6% increase in current prices (compared to the previous 12 months). The largest increase was for machinery and transport equipment up £5bn (13%), in particular cars up £4bn (22%) and aircraft up £1bn (153%).

This Government is committed to resetting our relationship with our European partners. The Secretary of State for Business and Trade has already met his German counterpart, Vice Chancellor Habeck, and discussed how we can grow trade further with Germany to support sustainable growth for our businesses, workers and consumers.

The first mission of this Government is to drive economic growth. As part of delivering that mission, the Government will publish a trade strategy, aligned with our industrial strategy, to support jobs and communities in every part of the UK. Free Trade Agreements have a critical role to play in delivering this.

The Government has set out its intention to deliver trade negotiations with key trading partners including the GCC and India. Our trade programme, which is driven by engagement with businesses and stakeholders, will play to the UK’s strengths, boost trade, and strengthen our ties with our international partners.

Through the Plan to Make Work Pay we will deliver a new deal for working people. A number of these measures already have strong support from businesses, and we will consult with them as we put these plans into practice to ensure they are as effective as possible. We also expect that stronger employment practices could aid recruitment and retention, and ultimately save business costs.

The Department for Business and Trade wants to reset our relationship with the EU and deepen ties with our European neighbours.

The Department will work to improve the UK's trade and investment relationship by tearing down unnecessary barriers to trade.

The Department will seek to negotiate a veterinary agreement to prevent unnecessary border checks, to help touring artists, and to secure mutual recognition for professional qualifications to open up priority markets for service exporters.

The Secretary of State has already held positive discussions with his European Commission counterpart Valdis Dombrovskis and has met with German Vice-Chancellor Robert Habeck to discuss UK-German shared trade interests.

We have watched with interest the deals struck in the US to use new nuclear power for the increasing demand for low-carbon, reliable energy to support the potential expansion of the data centres required for artificial intelligence. In the UK, nuclear remains a key part of the energy mix. The Government is committed to working with industry to support potential projects.

The Government is working closely with Ofgem to ensure consumers are put first. My Hon. Friend the Minister for Energy Consumers meets regularly with energy suppliers to outline the Government’s expectations of the standard of service that should be provided to their customers. The impact of the energy crisis is still being felt by people across the country, and the Government, Ofgem and energy suppliers are working together closely to help vulnerable households this winter.

In November Energy UK, in collaboration with the Government, published a Winter 2024 Commitment for this winter which promises £500m of industry support to billpayers this winter. It also outlines how fifteen energy suppliers representing almost the entire market will continue to provide a range of financial support tailored to the needs of their customers.

Together with our Warm Home Discount, households who are struggling to pay their energy bills this winter will receive £1 billion of support.

In the short-term, we are continuing to deliver the Warm Home Discount which provides an annual £150 rebate off energy bills for eligible low-income households. The Government and industry have worked together to deliver a £500m Winter Support Commitment for customers, and we applaud suppliers stepping up on this matter.

Our Warm Homes Plan will transform homes across the country by making them cheaper and cleaner to run, rolling out upgrades from new insulation to solar and heat pumps. Next year will see a total investment of £3.2bn from government, social housing providers and obligations on suppliers.

We will continue to provide substantial funding to Local Authorities to support those most in need. At the Autumn Budget 2024, the Government announced that £1 billion, including Barnett impact, will be invested to extend the Household Support Fund (HSF) in England by a full year until 31 March 2026, and to maintain Discretionary Housing Payments in England and Wales.

Electricity imports enhance security of supply by providing access to a more diverse generation pool that complements our domestic energy mix. They provide system flexibility by responding to changes in supply and demand, which is vital as we continue to integrate more renewable energy sources with intermittent generation.

In their Winter Outlook, the National Energy System Operator expects full interconnector availability for most of this winter, with 6.6GW of capacity obliged to import if needed through the Capacity Market. This is up 1.5GW from last winter and underpinned by comprehensive legal and treaty protections to ensure the market remains open.

Winter Outlook | National Energy System Operator