Umunna: Desperate Ministers are massaging the figures on business creation
A government claim that over half a million new companies have been created since May 2010 has been exposed as misleading, Shadow Business Minister Chuka Umunna MP has said.
A Conservative Party press release last month claimed that according to August figures from Companies House, 506,000 businesses had been created since the Tory-led government took office. Business Minister Mark Prisk said “up and down the country entrepreneurs are turning their great ideas into the next generation of successful, innovative British firms”.
However, it has emerged that the data refers only to gross numbers of new business registrations and does not take into account de-registration, owing to liquidation or other reasons, over the period. Taking into account de-registrations, in net terms only 108,000 new businesses were created from May 2010 to August 2011, and 99,000 in the year to 1 August 2011.
According to September’s Companies House statistics, the net increase since 9 May 2010 stood at 124,000 – far lower than the 500,000 figure cited by ministers.
The August 2011 Companies House registry statistics, from which the 500,000 figure is taken, are returns from administrative systems and lack the kite mark status of National Statistics. Therefore, their reliability has been questioned and it is unclear whether seasonal variation has been taken into account.
The ‘workload statistics’, from which the 506,000 figure was are used internally to monitor how well Companies House is performing in registering new firms, and are not treated as a measure of the number of new firms created.
The Office of National Statistics (ONS) publishes a range of official data sets on business creation. The first set of post-2010 election ONS figures on business creation, providing a snapshot of UK business numbers, are due to be published on Wednesday October 5th next week. This will be followed by BIS business population estimates and ONS business demography later this year.
Statistics from Equifax on the number of business failures in Q2 2011 show that business failures are up 2.2% on the previous quarter, have increased by 3.4% compared with the previous year. In some regions, such as the North East, the rise in failures is far higher than the national average.
ONS unemployment statistics this month show that while the number of people employed in the public sector fell by 111,000 between March and June of this year, private sector employment increased by 41,000 – a gap of 70,000.
In March, Prime Minister David Cameron said: “We need to see a country where new businesses are starting up on every street, in every town; where entrepreneurs are everywhere.”
Commenting, Shadow Minister for Small Business and Enterprise Chuka Umunna MP said:
“It is shocking that ministers are misleading on the number of businesses being created and are seeking to mask the true picture of the UK economy by using a gross, rather than net, figure from Companies House.
“We are looking to the private sector to deliver the growth and jobs we need. As well as growing existing businesses, it is crucial that new businesses are created and that start-ups get the support they need.
“By cutting too far and too fast, the government has dented confidence and is holding back the creation of new businesses. Tens of thousands more public sector jobs are being lost than those created in the private sector to compensate.”
