Developing the Business Structure Database (BSD) as a tool to support sub-national business policy analysis in the UK

The Local Growth White Paper, published by the UK government in October 2010, announced a major change in the institutional framework for delivering business support in England. The nine regional development agencies were to close and, instead, business support would be organized through Local Economic Partnerships (LEPs). The LEPs need for data also brings into sharper focus some data-related constraints which have restricted progress in our own programme of research linking firm-level performance with labour market adjustment processes. In two different areas - measuring the incidence and impact of high growth firms and in the construction of job creation and destruction accounts - the missing link between the ONS firm-level and establishment-level data has made it impossible to answer properly questions about the dynamics of employment change which are of importance both to policymakers and researchers.

Currently, the BSD consists of two independent - firm and establishment - sets of annual snapshots of the Inter-Departmental Business Register (IDBR). Each firm-level snapshot has nearly 2 million records and each establishment-level snapshot has around 5 million records. The significance of the distinction between these two is that the firm-level records locate all of the firm's jobs at the address of the firm's headquarters. But, of course, in a multi-establishment firm many of the jobs will be elsewhere located at an establishment's address. So if we wish to construct sub-national level job accounts we need a mixture of firm and establishment-level information. To do this we need to construct longitudinally-linked datasets for firms and establishments in order to enable us to identify where jobs are located. This is a considerable computational task. We have already constructed the longitudinal firm-level dataset covering the years 1997-2010. The initial task in this project is to construct the longitudinal dataset for establishments. Because of the number of records involved this can only be done incrementally (we have investigated doing this at the regional level and this does seem feasible).

Once this is done we can then link the two together. However, there are a number of additional and significant complications. First, when we come to connect these two firm- and establishment-level datasets: establishments can and do move from firm to firm. Second, establishments in one region may be part of a firm which is located in another region. Finally, birth and death dates of establishments may need some adjustment to ensure that they do match those of their associated firms.

Having completed this infrastructure investment phase we will have a unique resource which has never previously been available. The code used to construct this new dataset will be made available as one output of this project (of course the raw data will still only be accessible to ONS Approved Researchers). Extending our own work at the national level the main outputs of the project will be job creation and destruction accounts and an assessment of the incidence and impact of high-growth firms for each of the 39 English LEPs as well as three devolved Administrations. These two sets of analyses are of substantive interest to academics but even more to policymakers concerned with driving economic growth at the local level. The analyses will also serve as a demonstration of the value added by the creation of this new dataset.

Who will benefit? - There are a number of individuals and organisations in the public sector who will benefit from this research project. These include the two key government departments/agencies responsible for business statistics and economic and enterprise policy, namely the Office of National Statistics (ONS) and the Department for Business, Innovation and Skills (BIS) and its equivalent in Northern Ireland (DETI); Scotland (Scottish Executive) and Wales (Welsh Government); the 39 English LEPs and other public sector organisations with a sub-national focus for their activities such as the Leeds City-Region. In addition, academic scholars (economists and geographers) and those charged with providing SME statistics across Government who work with micro-datasets in the UK (e.g., those involved in the Business Population and Demographics Statistics (BPDS) User Group and the ONS MAUS User Group) will be the important beneficiaries.

How will they benefit? - The construction of a new integrated firm and establishment-level dataset for the whole of the UK economy provides a new dataset for researchers and opportunities to provide a range of more robust analyses at the sub-national level. For example, the missing link between the ONS firm-level and plant-level data has made it impossible to answer properly questions about the dynamics of employment change which are of importance both to policymakers and researchers. The public availability of the computational code to create this dataset will enable a wide range of researchers to undertake their own lines of enquiry on other topics driving local economic performance which will add significant value to current analese using the ONS Business Structure Database (BSD).