The Annual Business Survey (ABS) is the largest business survey conducted by ONS in terms of the combined number of respondents and variables it covers. ONS collects data from 62,000 businesses in Great Britain, which is supplemented by data collected by the Northern Ireland Statistics and Research Agency (NISRA) through its Annual Business Inquiry (NIABI) on 11,000 businesses in Northern Ireland. It is the main resource for understanding the detailed structure and performance of businesses across the UK and is a key contributor of business information to the UK National Accounts.
However, the relevance and public value of ABS data is being diminished by the availability of more-detailed data from other data providers, the lengthy time taken to collect and process ABS data and a lack of investment in ABS staff and systems. In particular, the lack of investment has hampered the development of several initiatives from the statistical team to improve the availability of detailed business data for users. For example, ideas to produce more-detailed data to inform the development and targeting of the Levelling Up Fund have had to be put on hold until such time as resources can be found to progress this crucial work.
As a statutory annual survey, the ABS produces business data under the Statistics of Trade Act 1947 to be used in the compilation of the National Accounts. ABS is the main source of data used to populate the Supply and Use Tables (SUT), one of the main data sources used for the compilation of Gross Domestic Product (GDP). Several adjustments are required to ABS data before they can be used in the compilation of GDP. For example, since the ABS does not cover all of the economy’s activity, coverage adjustments are made for the activity of public corporations, including local and central government bodies, Non-profit Institutions Serving Households (NPISH), and parts of the agriculture industry. Conceptual adjustments are also made to ABS data for economic activity not captured in the total turnover of businesses – for activity such as benefits in kind, company cars, property provided by businesses to their employees and tips paid to restaurant staff.
In addition to conceptual adjustments, ABS data are subject to quality and balancing adjustments, which are required to ensure that the three approaches to measuring GDP – production, income and expenditure – are equal. Reduced resources have resulted in a reduction in scrutiny of SUT data sources. This in turn has led to growing incongruence between the unbalanced measures of GDP, and to the production measure of GDP (which is mainly built up using ABS data) being adjusted downwards for issues such as over-recording.
Since 1996, the ABS and its predecessor surveys have supplied structural business data to Eurostat. The UK’s departure from the EU means that ONS will no longer need to fulfil this regulatory requirement, but ONS has agreed to provide similar data to the OECD. Nonetheless, ONS needs to also take account of users’ demands for more timely and detailed structural business data.
ONS publishes headline results from the ABS in annual bulletins on its website. These provide several high-level indicators relating to UK business activity, such as turnover, purchases and employment costs. They also include estimates of Approximate gross value added (aGVA), which represents the income (turnover) of UK businesses, less the cost of goods and services consumed in the production process (purchases). ABS data can be used to answer the following questions:
- How much value has been created in a particular industry?
- Has there been a shift in activity from one industrial sector to another, and which industry groups, classes or sub-classes are contributing to the change?
- Are any industries particularly dominant in specific regions or countries of the UK and are there structural changes over time?
- How productive is a particular industry and what is its operating profitability?
The productive contribution of different industries to overall economic activity can be assessed by combining ABS with employment information from the Business Register and Employment Survey (BRES). It is also possible to get a measure of value added and costs per head to allow better comparison between industrial sectors of different sizes.
ABS microdata are also available to users through the UK Data Service Secure Lab (DSSL). ABS statistics and microdata are used extensively by industry analysts, economists, and policymakers across government, the private sector and academia to track productive performance and measure investment activity of UK businesses, to inform the development of economic policies such as the Levelling up Fund and selective industrial policies which form an important part of the UK’s Industrial Strategy. The analytical demand on ABS data is increasing, with users wanting business data to answer a range of questions including the impact of climate change legislation on the competitiveness of UK business, the adoption of advanced technology and the use of intangible assets by UK firms and the impact of immigration on productivity.
ABS data are also used by ONS to corroborate the data of other business surveys, including, for example, the Purchases Survey, the UK Manufacturers’ Sales by Product (Prodcom), the Annual Survey of Goods and Services (ASGS) and the Annual International Trade In Services Survey.
Brexit and the COVID-19 pandemic have resulted in a substantial increase in demand for data from economic policymakers to understand and address the effects of these shocks on UK business activities. As the UK’s largest annual business survey, the ABS should be expected to play a pivotal role in understanding the impact of these two significant economic shocks.Back to top