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 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.

.

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.

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

As the first step towards the Warm Homes Plan, the Government has committed an initial £3.4 billion over the next 3 years towards heat decarbonisation and household energy efficiency, with £1bn of this allocated to next year. Additional funding will be considered in Phase 2 of the Spending Review, as the Warm Homes Plan is further developed.

In addition to the £3.4 billion of direct capital spend, the Government is ensuring continued further investment of up to £1.4bn through the supplier obligation schemes in 2025/26: the Energy Company Obligation (ECO4) and Great British Insulation Scheme (GBIS) which we are now reforming to improve delivery and ensure consumers save more on their energy bills.

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.

There are different levels of smart meter penetration across Great Britain. The Department collects and publishes annual statistics on electricity smart meter installation progress at a regional level.

The latest regional statistics show that at the end of March 2024, 64% of domestic electricity meters across Great Britain were smart.

Local Authorities with the highest number of smart meters (74% - 75%) are in the East Midlands, North East, and Yorkshire and The Humber. London and Scotland have experienced slower progress to date, where 54% and 51% of meters were smart respectively.

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.

Artificial Intelligence (AI) is at the heart of the Government’s plan to boost economic growth, transform public services, and boost living standards. The AI Opportunities Action Plan will set out how we achieve these goals, by securing the necessary infrastructure, talent and data access, and setting out steps to support AI adoption across the economy.

In the King’s Speech we committed to introducing new, binding requirements on the handful of companies developing the most advanced AI models which will support growth and innovation by ending uncertainty for AI developers, strengthening public trust and boosting business confidence in AI adoption.

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 is working closely with the live music sector to support an economically sustainable grassroots music sector.

The Government response to the Culture, Media and Sport Select Committee's report on grassroots music venues, published 14 November, sets out our commitment to working with the sector to support the sustainability of the entire music ecosystem. In particular, the Government is urging the live music industry to introduce a voluntary levy on tickets for stadium and arena shows, to help safeguard the future of the grassroots music sector.

Following the Autumn Budget, we are continuing to support Arts Council England’s (ACE’s) successful Supporting Grassroots Music Fund which provides grants to grassroots music venues, recording studios, promoters and festivals.

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 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.