Lord Taylor of Warwick

The King’s Speech announced our intention to publish draft legislation this session that will introduce mandatory ethnicity pay gap reporting for large employers (those with 250 or more employees). This will help businesses to identify and close ethnicity pay gaps within their workforces.

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 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.

Accelerating to net zero will unlock a range of benefits for businesses, including new market opportunities, access to green finance and reduced energy bills.

Climate Change Agreements provide tax discounts for businesses reducing their emissions, and the Industrial Energy Transformation Fund supports industrial sites with high energy use to transition.

We are currently running a pilot in the West Midlands, providing energy audits and grants to small and medium businesses to support them in decarbonising.

Small and medium-sized businesses can visit the UK Business Climate Hub, which is run in partnership with government, for advice and sources of finance or support on reducing emissions.

The Government is interested in opportunities to reduce decommissioning costs in the North Sea/UK Continental Shelf. We work closely with the North Sea Transition Authority, Oil and Gas industry partners, and those working on new and emerging technologies in support of this aim.

The Government is committed to transforming Britain into a clean energy superpower and is working closely with Ofgem; to ensure energy is fair and affordable for consumers now and in the future.

Ofgem already regulate the cost of the transmission network, which safely and efficiently transports gas across GB, and under the current price cap represents an average annual cost of £7 per consumer.

Capacity of GB’s gas storage is not regulated by Ofgem however analysis published the Energy Security Plan Update in December 2023 shows we have sufficient and flexible gas storage to meet peak gas demand on any given day.

The Government will continue to deliver the Warm Home Discount, which provides a £150 rebate off energy bills for eligible low-income households. We expect around 3 million households to receive this support this winter.

My Hon. Friend the Minister for Energy Consumers has met with energy suppliers on several occasions and encouraged them to build on the Voluntary Debt Commitment for this winter, and we are continuing to work with suppliers to ensure consumers are supported.

The Government has announced work to strengthen cooperation on energy as per the joint-statement between the Prime Minister and the President of the European Commission at her visit to the UK in early October.

They agreed to work closely to address global challenges including, among others, climate change and energy prices.

GOV.UK Chat is a prototype chatbot developed by the Government Digital Service. It was first tested with users in November 2023. Results showed that nearly 70 percent of users found the chatbot’s responses useful and that its answers were accurate 80 percent of the time. These insights were used to improve the prototype ahead of the current pilot, which commenced on 7 November 2024. This pilot will be live for approximately 4 weeks, after which GDS will make an assessment of its effectiveness.

The government is committed to boosting the responsible adoption of AI across all parts of the economy to drive innovation and kickstart economic growth. The AI Opportunities Action Plan will set out a roadmap to achieve this, including how we can strengthen our AI skills and talent base to ensure AI can be used by workers across the economy. The establishment of Skills England will also be key to embedding the right skills in workers, tackling skills shortages and supporting sustained economic growth.

The AI Opportunities Action Plan will outline steps needed to support the growth of the AI sector, including training and attracting top AI talent. This will build on existing programmes including the AI and Data Science Masters Conversion courses. This year over 4,000 students are expected to graduate from these courses, and historically 90% employed graduates from these programmes work in a role related to AI or data science.

The Government is taking action to support the UK’s world-leading technology industry, which will be at the heart of our new industrial strategy. The Budget will see Research and Development spending rising to a record level of over £20 billion, with DSIT’s R&D budget increasing by 8.5% in real terms. The new Regulatory Innovation Office will reduce red tape for our most innovative companies and speed up technology development. And we are unlocking further investment in industries of the future, including from institutional investors, through the British Growth Partnership, the National Wealth Fund and the Pensions Review.

The Government recognises the value of human-centred creativity underpinned by copyright and is committed to supporting the creative industries and AI sectors to grow in partnership.

We are urgently considering the issues concerning generative AI training and copyright. Most recently, the Minister for AI and Digital Government and the Minister for Creative Industries, Arts, and Tourism held roundtables with the creative and AI sectors in September.

Whilst clarity is needed, this is a complex topic and we must take time to hear and carefully consider stakeholder views, so DSIT and DCMS continue to engage with them to inform our approach.

The Government agrees that every child should have the opportunity to play sport and do regular physical activity. Our mission-led Government puts children and young people at the heart of our priorities. This includes breaking down barriers to opportunity for every child to access high-quality sport and physical activity inside and outside of school, especially those who are less likely to be active.

It is ultimately for individual sports’ national governing bodies to decide on their specific aims and to evaluate progress against these.

The Government is committed to protecting time for physical education in schools. The upcoming expert-led review of the curriculum will ensure that all children can engage with a broad range of subjects, including PE and sport. The Department of Education also works closely with the FA to support schools to increase activity levels.

This Government recognises that grassroots facilities are at the heart of communities up and down the country and is acting to support more people to get active wherever they live through the delivery of the £123 million Multi-Sport Grassroots Facilities Programme in 2024/25.

Investment apps typically fall under the framework of financial services regulation, rather than gambling regulation, and would not typically be considered as offering a form of gambling. Within the framework of financial services regulation, HM Treasury is responsible for setting the overall legal framework and the Financial Conduct Authority (FCA) is responsible for regulating and supervising the financial services industry. One of the FCA’s primary operational objectives is to secure an appropriate degree of protection for consumers.

The FCA is empowered by legislation to make rules as it considers necessary or expedient to advance its objectives and in 2022, it published research raising concerns about design features in trading apps, including those with game-like elements, and warned stock trading app operators to review their design features. The research noted that some customers appeared to exhibit behaviours similar to harmful gambling. Under the FCA’s Consumer Duty trading apps are explicitly required to pay attention to the needs of customers who may be vulnerable. The Duty also contains an expectation that firms avoid designing features which exploit the behavioural biases of consumers and requires product manufacturers to undertake appropriate testing of their products. In June 2024, the FCA noted that it was keeping trading apps under review over concerns about gamification.

Within the framework of gambling regulation, we are aware of an increase in the number of novel products which blur the line between gambling and other markets such as financial investment. The Gambling Commission has enhanced its licensing approach to novel products and in 2021 strengthened its Memorandum of Understanding with the FCA to ensure effective cooperation. The Gambling Commission has made clear that it will not normally grant a licence to products that use language usually associated with investments or financial products.

The Regulator will be independent from the Government, tightly focused on the financial sustainability of the game. This is consistent with UEFA's governing principles.

The FA gave evidence to the bill committee in the previous Parliament that a tightly focused bill on football governance “is not likely to present huge or significant problems” to UEFA. We have clarified the independence of the regime, by removing a clause from the previous bill requiring the Regulator to have regard to the Government’s foreign policy and trade considerations to be considered when approving takeovers.

Growth is the number one mission of the government. Our new Industrial Strategy is central to that Growth Mission, developing a credible, 10-year plan to deliver the certainty and stability businesses need to invest in the high-growth sectors. The creative industries, including music, are one of our priority growth sectors, and we are committed to celebrating our nation's wealth of talent and driving economic growth in communities across the country.

To support this growth, we are considering investment, innovation, infrastructure and international impact alongside skills, and a quality creative education to nurture the next generation of musical talent. We have already launched an independent review of the curriculum and assessment to ensure it champions creative subjects.

The Government recognises the importance of the grassroots music sector in fostering the next generation of talent, which will support the growth of the music industry. We will respond to the Culture, Media and Sport Select Committee’s report on grassroots music venues in the coming weeks.

We will launch a consultation on new protections for ticket resales this autumn. We want to support fans, and ensure that ticket revenues go to the music sector and not to touts.

In order for the music industry to grow, it is crucial that we find the right balance between fostering innovation and ensuring protection for creators, which requires thoughtful engagement within the creative industries and with companies driving AI development. We will continue to work closely with stakeholders and will set out next steps on AI as soon as possible.

Artists and creators should be appropriately remunerated, as this is what allows them to invest their time, effort, and money into creating music. That is why this Government is enabling fresh and meaningful conversations with stakeholders to explore concerns around creator remuneration from streaming, in the form of a working group.

And it is also our priority to ensure that UK artists continue to thrive and grow on the global stage. The Government will explore how best to help touring artists operating in the EU without a return to free movement, and we are working collaboratively across departments and with industry representatives on this issue.

The Football Governance Bill was announced as part of the King’s Speech on 17 July 2024. We will introduce this legislation as soon as parliamentary time allows.

The government is committed to supporting the aspiration of every person who meets the requirements and wants to go to university. The student finance system removes upfront financial barriers so that everyone with the ability and desire to enter higher education (HE) can do so.

Tuition fees will increase in line with inflation for the 2025/26 academic year for new and continuing full-time, part-time and accelerated degree domestic undergraduate students. HE providers are autonomous and responsible for setting their own fees under this level. In deciding to keep charging full fees, providers will want to ensure that they can continue to deliver courses which are fit for purpose and help students progress their qualifications.

Eligible students will be able to apply for upfront loans to meet the full costs of their tuition. Student loan borrowers will not see their monthly repayments increase as a result of this change, because monthly repayments depend on earnings, not on interest rates or the amount borrowed. Student loan borrowers are protected. Borrowers only make repayments when earning over the relevant student loan repayment threshold. At the end of the loan term, any outstanding loan debt, including interest accrued, will be written off, with no detriment to the borrower.

Borrowers who would be forecast not to repay their loans in full under the 2024/25 academic year fee and maintenance levels will see no increase to their lifetime student loan repayments.

To help break down barriers to opportunity, this government will deliver a curriculum which is rich and broad, inclusive and innovative, and ensures that all young people get the opportunity to learn digital and creative skills as part of their education. To meet this ambition, the government announced an independent Curriculum and Assessment Review on 19 July, chaired by Professor Becky Francis CBE. As part of its work, the review will look at whether the current assessment system, including qualification pathways, can be improved for young people aged 5 to 18, while protecting the important role of examinations. The review group has recently launched a call for evidence, which sets out key questions and themes where it would particularly welcome input.

Information about how to respond to the call for evidence, or to register to join a live event, is available here: https://www.gov.uk/government/groups/curriculum-and-assessment-review. The call for evidence is open until 22 November 2024, and the review will publish its recommendations in 2025. Ministers will then consider any changes to curriculum and qualifications in the light of these recommendations.

The government’s ambition is for a curriculum that delivers excellent foundations in reading, writing and maths, and ensures every young person gets the opportunity to develop creative, digital, and speaking and listening skills. To achieve this, the government has established an independent Curriculum and Assessment Review, chaired by Professor Becky Francis CBE, who is an expert in education policy, which will take on board the views of experts, parents, teachers and leaders in making recommendations. The review will consider how children will acquire the key digital skills needed for future life, throughout their educational journey.

This government also provides a range of academic and technical qualifications relevant to cybersecurity and AI skills.

To provide a basis for further study and careers in digital, including in AI and cybersecurity, the computing curriculum ensures that pupils are taught the principles of information and computation, how digital systems work and how to put this knowledge to use through programming. The department has invested significantly in the National Centre for Computing Education to improve the teaching of computing and increase participation in computer science at GCSE and A level.

Developed in partnership with employers, there are currently 33 apprenticeship standards spanning Levels 3 to 7 in digital occupations, including at degree level and in areas like cyber and AI. The department’s reformed growth and skills levy will deliver greater flexibility for learners and employers and is aligned with its industrial strategy to create routes into good, skilled jobs in growing industries, including in digital.

Learners can study three Digital T Levels which include cyber and AI content, and there are 77 Higher Technical Qualifications approved and quality marked as providing the skills demanded in the workplace by employers, including cyber and AI skills. Furthermore, the majority of Skills Bootcamps are in the digital sector, with 61% of starts in 2022/23 being in digital.

Across government, the new Industrial Strategy will channel support to eight growth-driving sectors in which the UK excels today and will propel it forwards tomorrow. Digital technologies have been identified as one of the eight growth-driving sectors and the department is currently consulting on the barriers to growth, including skills, in this sector. Furthermore, my right hon. Friend, the Secretary of State for Science, Innovation and Technology has commissioned an AI Opportunities Action Plan which will set out the essential role that equipping the UK’s workforce with the right skills and attracting top talent will play in supporting the growth of the AI sector.

The government also supports young people to build their tech skills through extracurricular initiatives. For example, the CyberFirst programme delivered by Department for Science, Innovation and Technology and the National Cyber Security Centre is designed to help students aged 11 to 25 build their cyber and tech skills through a range of initiatives including competitions, an online gamified learning platform and undergraduate bursaries. The programme is supported by over 250 industry, academia and government partners and has reached over 360,000 students so far.

In line with research from the independent Institute for Fiscal Studies the government does not anticipate the ending of the VAT exemption that private schools enjoy to prompt notable movement into the state sector, and any movement is expected to take place over several years. This research is attached and can also be found here: https://ifs.org.uk/publications/tax-private-school-fees-and-state-school-spending.

There is significant spare capacity in existing state schools. The department collects pupil forecasts and school capacity data from local authorities annually through the school capacity survey and this data shows that in May 2023, 11.7% of primary capacity and 11.5% of secondary capacity was unfilled nationally, meaning school places are available in many parts of the country. The department will monitor demand and capacity using its normal processes and continue to work with local authorities to meet any pressures.

​​​​​​​High quality teaching is the factor that makes the biggest difference to a child’s education. There are now 468,693 full-time equivalent (FTE) teachers in state-funded schools in England, but we must do more to ensure we have the workforce needed to provide the best possible education for every child in all parts of the country, which is why the government has set out the ambition to recruit 6,500 new expert teachers with a focus on key shortage subjects.

​The first crucial step towards achieving this is to ensure teachers get the pay they deserve, which is why the department has accepted in full the School Teachers’ Review Body’s recommendation of a 5.5% pay award for teachers and leaders in maintained schools from this September.

​The department wants to ensure teaching is once again an attractive and respected profession. It is committed to resetting the relationship with the teaching profession. My right hon. Friend, the Secretary of State for Education, has already spoken to various stakeholders and teachers working at the front end and continues to do so. The department is now developing the Social Partnership to work more closely with the sector unions to ensure they have a stronger voice on policies that affect their work.

​Alongside teacher pay, financial incentives are one of the most effective ways to increase teacher supply, and we are continuing to support teacher trainees with tax-free bursaries of up to £28,000 and scholarships of up to £30,000 in shortage subjects. For 2024/25 and 2025/26, we are also offering a Targeted Retention Incentive worth up to £6,000 after tax for mathematics, physics, chemistry and computing teachers in the first five years of their careers who choose to work in disadvantaged schools.

​Recruiting more teachers is a key part of the department’s Opportunity Mission. This government is also committed to tackling long standing retention challenges to ensure teachers stay and thrive in the profession, including by addressing teacher workload and wellbeing, and supporting schools to introduce flexible working practices. The department has made key resources available to help teachers better manage their workload.

Ofwat independently monitors the financial position of water companies and acts when companies need to strengthen their long-term financial resilience. Ofwat expect water companies to maintain a level of financial headroom to manage short term volatility and shocks to their financial structures and meet their obligations and commitments.

We are clear consumers must be protected. Ofwat has strengthened its powers to improve financial resilience, including stopping water companies paying dividends where financial resilience is at risk.

Our Water (Special Measures) Bill will put water companies under tough special measures, by strengthening regulation as a first legislative step towards improving the sector.