Scottish Government

Background

Scottish Annual Business Statistics (SABS) is based on data from the Annual Business Survey (ABS) (formerly Annual Business Inquiry (ABI)) conducted by the Office for National Statistics (ONS).

The statistics have been produced under partnership procedures agreed between ONS and the Scottish Government (SG). These have resulted in an improvement in the quality of the underlying data and consistency in the figures used by ONS and SG.

The ABS is the UK’s key resource for understanding the detailed structure and performance of businesses across the UK, classified to the UK Standard Industrial Classification (SIC) system.  Estimates ¹, by industry (using SIC codes), are published for:

Local unit counts                                                              Increase in Stocks
Employment                                                                    Gross Wages and Salaries
Employee Jobs                                                                 Total Labour Costs   
Turnover                                                                         Total Output at basic prices
Purchases of goods and services                                        GVA per Head
Approximate Gross Value Added (GVA) at basic prices         Gross Wages and Salaries per Head
Taxes                                                                              Total Labour Costs per Head

Within SABS, estimates by industry sector are published for Scotland, Scottish local authority areas and business ownership groups. These estimates are presented as monetary values, and give a snapshot of business activity that can be used to understand the level of contributions to the Scottish economy from different industry sectors, local authority areas and ownership groups.

[1] Definitions for the employment and financial estimates are available at: http://www.gov.scot/Topics/Statistics/Browse/Business/SABS/Definitions

Coverage

The ABS is an annual survey of registered ² businesses covering the primary industries, manufacturing, construction and service industries (including distribution) which represent the UK Non-Financial Business Economy. This is about two thirds of the UK’s whole economy in terms of Gross Value Added. The statistics do not cover the whole economy, omitting the financial sector, parts of agricultural sector and parts of the public sector.

Exclusions

The following sub-classes of SIC 1 (Crop and animal production, hunting and related service activities) are omitted:

01.1 – Growing of non-perennial crops 
01.2 – Growing of perennial crops 
01.3 – Plant propagation
01.4 – Animal production
01.5 – Mixed farming

Within SABS, the services sector is defined as division codes 45 to 96 of SIC 2007 (SIC07). Although the publication refers to the services sector for simplicity, it should be noted that the figures quoted do not relate to the entire services sector, but only to those sectors covered by the ABS. The main industries excluded from the services sector are:

• Financial and Insurance activities (Section K);
• Public Administration and defence (Section O);
• Education (public provision in Section P); and
• Health (SIC 86.2, public provision in SIC 86.1 and 86.9 in Section Q).

Please see box below for information on exclusion of Insurance and Reinsurance sector (SIC 65.1 and 65.2) which falls under Section K.

Oil & Gas

ABS data relating to Oil & Gas extraction (SIC 6) is allocated to UK regions (including Scotland) according to the address at which the business is registered - onshore and offshore Oil & Gas extraction and activities are allocated in this way. GVA associated with off-shore activity, under UK regional accounts procedures, is normally allocated to a separate ‘Extra Regio’ category rather than allocated to a region within the UK.

[2] Businesses registered for Value Added Tax (VAT) and/or Pay As You Earn (PAYE)

Removal of Insurance and Reinsurance data (covers SIC 65.1 & 65.2)

In line with Office for National Statistics (ONS) ABS releases, data for the Insurance and Reinsurance sector (SIC 65.1 and 65.2) continues to be removed from the SABS results for all years from 2008 onwards. The previously published ABS data for the Insurance and Reinsurance sector has been excluded due to on-going volatility while ONS carry out a more detailed quality assessment. This does not affect any other industry sectors and, as the Insurance and Reinsurance sector data has been removed for all years in the series, this does not affect time series analysis.

Background history is that data for this small part of the Financial and insurance sector (Insurance & reinsurance only) has been collected by the ABS since 2008 and was previously included in results. This was the only part of Financial and Insurance Activities (Section K) covered by the survey. As with any new time-series, estimates for these industries remained experimental while ongoing quality assurance has taken place. This quality assurance led to data for this sector being revised substantially with a break in the series between 2009 and 2010. Following discussions with key users, ONS decided to remove this experimental series from ABS releases due to the continued volatility of the data and to allow for a more detailed quality assessment to be undertaken. Updates on this will be made available when known. As previously stated, removal of these series does not affect other industries published as part of this release and also has no impact on any other financial statistics published by ONS.

Although the estimated total for the UK Business Economy in the regional ABS results is constrained to equal that in the corresponding national ABS results produced by ONS, the published totals for the UK Non-Financial Business Economy will not now be the same following the removal of data for the Insurance & reinsurance industries (65.1 and 65.2) from the regional results after apportionment has taken place. For example an enterprise contributing wholly to Insurance & reinsurance at a national level (and therefore removed from the national totals) may have local sites in other industries which will still contribute to the regional totals. Likewise, an enterprise contributing wholly to the Distribution sector (and therefore included in the national totals) may have a local site in Insurance & reinsurance whose contribution will be removed from the regional totals.

Please note that calculations referred to below were carried out on (final) 2015 and (provisional) 2016 data. The 2016 data has since been revised in SABS 2017 published in June 2019.

As described in Improving the Coverage of the Standard Business Survey Population, published by the Office for National Statistics on 21 December 2015, the coverage of the ONS Standard Business Survey Population has been expanded to include a population of solely Pay-As-You-Earn (PAYE) based businesses.

These businesses were included for the first time in the population for the Annual Business Survey (ABS) 2016.  At the UK level, there was an increase of approximately 92,000 solely PAYE-based businesses represents an approximate 4% increase in the number of businesses in the overall population, with nearly all (99.3%) in employment size-band one (zero to nine employees).  For Scotland, there was an increase of 6,875 solely PAYE-based businesses, which similarly represents an approximate 4% increase in the number of businesses in the Scottish population.  

To assess the impact of the additional businesses on the results for Scotland, new estimates for 2015 have been calculated using the new extended population (referred to as 2015paye). These results have been compared with the 2015 results published in the SABS 2016 publication.

Users should note that these additional businesses will not be included in historic SABS data. The new 2015paye estimates have been calculated so users can see year-on-year changes on a consistent basis – note that that these are only provided in the impact table (by division) available here, all other 2015 figures in the SABS 2016 publication exclude these additional businesses.

In the SABS estimates published in June 2018, the level of approximate gross value added at basic prices (aGVA) of the Scottish non-financial business economy for 2015 was estimated to be £87,374.5 million. The impact of the addition of solely Pay-As-You-Earn (PAYE) based businesses into the population would have increased the estimated aGVA by £734 million to £88,108.5 million; an increase of 0.8%.

The SIC 2007 divisions that have been most affected by the change are:

96 - Other Personal Service Activities

82 - Office Administrative, Office Support and Other Business Support Activities

74 - Other Professional, Scientific and Technical Activities

Combined, these three divisions would have seen an increase in estimated aGVA of £319.6 million; an increase in the level of aGVA from £2,846.0 million to £3,165.6 billion. Further detail on the impact of the additional businesses is provided in the table available here.

• 2015-16: Scotland by Division - Experimental results, additional Pay As You Earn (PAYE) units included in both years

Use

The Annual Business Survey (ABS) is a valuable source dataset which is used alongside a number of other datasets in the production of macro-economic statistics for Scotland and the UK as a whole.  It is important to note that overall growth rates associated with the ABS are not comparable to the official growth rates for the whole economy given that significant sectors of the economy are not included in the ABS and the results have not been balanced with other datasets.  The SABS statistics are therefore best suited to analyses of individual industries rather than the economy as a whole.

The SABS data allows analysis of business structure, ownership and location within detailed sectors of the Scottish business economy.  SABS figures are used extensively, by the Scottish Government, to inform sectoral policy (including the growth sectors) and regional/local economic development.

The SABS results can be used to answer questions such as:

• how much value has been created in a particular industry, and how many people are employed by it?
• has there been a shift in activity from one industrial sector to another, and which sub-industries are driving the change?
• are any industries particularly dominant in specific local authority areas?
• how productive is a particular industry and what is it that is having an impact on productivity?

Links to some examples of how the Scottish Annual Business Statistics results have been used are provided below:

A range of statistics from the SABS publication broken down by industry sector are used to monitor change within the growth sectors (covering Food & Drink, Creative Industries, Sustainable Tourism, Energy, Financial & Business Services and Life Sciences) of the Scottish economy. The Growth Sectors statistics database is available at:
http://www.gov.scot/Topics/Statistics/Browse/Business/Publications/GrowthSectors

Scotland's Marine Economy - sectors that depend on the marine environment. Sectoral data for this topic is mainly derived from SABS at: http://www.gov.scot/Topics/marine/Publications/TopicSheets/tslist/economy

Scottish Enterprise – The “Tourism industry in Scotland” statistics includes GVA from SABS at: https://www.scottish-enterprise.com/learning-zone/research-and-publications/components-folder/research-and-publications-listings/scotlands-tourism-facts

Falkirk Council – Provides a range of statistics including GVA & Turnover from SABS for Falkirk Local Authority area at: http://www.falkirk.gov.uk/services/council-democracy/statistics-census/docs/economic-info-analysis/business-statistics/Insight%20Business%20Statistics%202016.pdf?v=201811061201​

Change in Purchases apportionment methodology

Data on purchases for 2012 onwards has been produced using a new Purchases Apportionment Methodology (PAM) for the apportionment from the reporting unit purchases to the local unit level. This new method was introduced to preserve the additivity of purchases components values to the total purchases. This has introduced a discontinuity in the purchases and GVA data series with 2008 to 2011 still calculated using the original method.

The change in the calculation of purchases (and hence GVA) has minimal impact for the large majority of sectors. However, the industry affected to the greatest extent is 'Gambling and Betting (SIC 92)' where there is volatility for a small number of multi-site businesses. The sampled businesses within this Division provide details of the “amounts payable to winning customers” as part of their purchases. The new apportionment method has led to volatile local estimates of payments to winning customers which then also affects other associated variables, like total purchases and GVA. Additional work and analysis is required by ONS to identify further improvements to the methodology, and estimates, to reduce this impact while maintaining the additivity. Until this is completed, regional Purchases and GVA figures for Division 92 (Gambling and betting activities) should be viewed with caution.

More detail of PAM change can be found in this Information Paper. A detailed 2012 region by industry impact assessment has also been published by ONS.

Major Time Series Analysis Caveats

SABS 2017

Continuing impact of Purchases Apportionment Methodology (PAM) on purchases variables as detailed below under SABS 2013 to 2017.

SABS 2016

As described in Improving the Coverage of the Standard Business Survey Population, published by the Office for National Statistics on 21 December 2015, the coverage of the ONS Standard Business Survey Population has been expanded to include a population of solely Pay-As-You-Earn (PAYE) based businesses.

These businesses were included for the first time in the population for the Annual Business Survey (ABS) 2016.  At the UK level, there was an increase of approximately 92,000 solely PAYE-based businesses represents an approximate 4% increase in the number of businesses in the overall population, with nearly all (99.3%) in employment size-band one (zero to nine employees).  For Scotland, there was an increase of 6,875 solely PAYE-based businesses, which similarly represents an approximate 4% increase in the number of businesses in the Scottish population.  

To assess the impact of the additional businesses on the results for Scotland, new estimates for 2015 have been calculated using the new extended population (referred to as 2015paye). These results have been compared with the 2015 results published in the SABS 2016 publication.

Users should note that these additional businesses will not be included in historic SABS data. The new 2015paye estimates have been calculated so users can see year-on-year changes on a consistent basis – note that that these are only provided in the impact table (by division) available here, all other 2015 figures in the SABS 2016 publication exclude these additional businesses.

In the SABS estimates published in June 2018, the level of approximate gross value added at basic prices (aGVA) of the Scottish non-financial business economy for 2015 was estimated to be £87,374.5 million. The impact of the addition of solely Pay-As-You-Earn (PAYE) based businesses into the population would have increased the estimated aGVA by £734 million to £88,108.5 million; an increase of 0.8%.

The SIC 2007 divisions that have been most affected by the change are:

96 - Other Personal Service Activities

82 - Office Administrative, Office Support and Other Business Support Activities

74 - Other Professional, Scientific and Technical Activities

Combined, these three divisions would have seen an increase in estimated aGVA of £319.6 million; an increase in the level of aGVA from £2,846.0 million to £3,165.6 billion. Further detail on the impact of the additional businesses is provided in the table available here.

SABS 2013 to 2017

Data on purchases for 2012 onwards has been produced using a new Purchases Apportionment Methodology (PAM) for the apportionment from the reporting unit purchases to the local unit level. This new method was introduced to preserve the additivity of purchases components values to the total purchases. This has introduced a discontinuity in the purchases and GVA data series with 2008 to 2011 still calculated using the original method.

The change in the calculation of purchases (and hence GVA) has minimal impact for the large majority of sectors. However, the industry affected to the greatest extent is 'Gambling and Betting (SIC 92)' where there is volatility for a small number of multi-site businesses. The sampled businesses within this Division provide details of the “amounts payable to winning customers” as part of their purchases. The new apportionment method has led to volatile local estimates of payments to winning customers which then also affects other associated variables, like total purchases and GVA. Additional work and analysis is required by ONS to identify further improvements to the methodology, and estimates, to reduce this impact while maintaining the additivity. Until this is completed, regional Purchases and GVA figures for Division 92 (Gambling and betting activities) should be viewed with caution.

More detail of PAM change can be found in this Information Paper. A detailed 2012 region by industry impact assessment has also been published by ONS.

SABS 2012 

In line with Office for National Statistics (ONS) ABS releases, data for the Insurance and Reinsurance sector (SIC 65.1 and 65.2) has been removed from the SABS results for all years from 2008 to 2012. The previously published ABS data for the Insurance and Reinsurance sector has been excluded due to on-going volatility while ONS carry out a more detailed quality assessment. This does not affect any other industry sectors and, as the Insurance and Reinsurance sector data has been removed for all years in the series, this does not affect time series analysis.

SABS 2011 (impact on 2008-09 data)

Please note that validation of data returns for 2011 highlighted that a small number of businesses within the Insurance and Reinsurance sector (SIC 65.1 and 65.2) were returning global figures rather than UK only. A revised 2010 estimate (together with new 2011 data) are now available in this publication. However, any global figures reported will remain in 2008 and 2009 published data in line with current Annual Business Survey (ABS) revisions policy. This can have a significant impact on Insurance, reinsurance, professional, scientific and technical activities (Section KM) time series data, as well as overall Totals, in particular local authority areas. Results for this sector are experimental and any comparisons between years should be undertaken with caution.

SABS 2010

Further Education (FE) Colleges were reclassified as Central Government entities on 13 October 2010, transferring FE Colleges from the private/business sector to the public sector.  This change brings FE Colleges out with scope of ABS survey from 2010 onwards, which represents a step change in the 2010 results for SIC 85 compared to data for earlier years.

SABS 2009

The data, from 2008 onwards, are published on a Standard Industrial Classification (SIC) 2007 basis – data pre-2008 were published on a SIC 2003 basis.  Updates to the SIC are required to enable it to more accurately reflect the structure of the modern economy - SIC 2003 was replaced by SIC 2007 in January 2008. The revision was motivated by the need to adapt the classification to changes in the world economy. The revised classification reflects the growing importance of service activities in economies over the last fifteen years, mainly due to the developments in information and communications technologies.

More information on SIC (2007) is available at:  http://www.gov.scot/Topics/Statistics/Browse/Business/Corporate/sic2007note#top  and https://www.ons.gov.uk/methodology/classificationsandstandards/ukstandardindustrialclassificationofeconomicactivities/uksic2007

The employee/employment data published in SABS, from 2008 onwards, are based on Business Register and Employment Survey (BRES) – previous years SABS employee data were based on the employment part of the Annual Business Inquiry (ABI/1).  The BRES replaced and integrated the Business Register Survey (BRS) and the ABI/1 in 2009 (note that there was a pilot of BRES in 2008 which allowed 2008 BRES estimates to be produced).  For businesses that are surveyed by BRES, the regional and local estimates of employment are more accurate (than those from the ABI/1) because, rather than producing data by a headquarter-based apportionment model, they are obtained directly from data reported at site level (shop, office, factory, etc).  More information on BRES is available on the ONS website at: http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/businessregisterandemploymentsurveybresprovisionalresults/previousReleases

The 2008 and 2009 ABS followed a similar sample selection criteria (see Sample Design section below) and were both sampled on a SIC 2007 basis.  It is important to note that 2009 marked the full introduction of the BRES, this and the change to SIC 2007 may lead to some discontinuity with businesses moving from one SIC to another between years.  It is not unusual for some businesses to change SIC code over time, but there are some particular movements between 2008 and 2009 that users should be aware of e.g. a large number of landscape business sites have moved from SIC 01 (Crop and animal production, hunting and related service activities) to SIC 81 (Services to Building and Landscape Activities) between 2008 and 2009 – this is a result of the change from SIC03 (where landscape businesses were included with the agricultural sectors) to SIC07 (where landscape businesses fall under the services sector).

Insurance and Reinsurance (SIC 65.1 and 65.2) data is published for 2008 onwards – this is the first time that these data have been included in SABS.  Please note that SIC 65.3 (Pension funding) is still omitted from the SABS results.

SABS 2008

ONS improved the sample design for the 2008 survey which means that the results for 2008 onwards cannot be compared with historical trends. Although this temporary loss of comparability over time is a downside - it means that the results for 2008 onwards are more accurate, and comparisons can still be made between sectors across the UK. More details are provided below on the change in sample design due to SIC 2007 and the complete re-allocation of the sample.

Notwithstanding, the change in sampling, the high energy prices in 2008 have had a significant impact on the "Remaining Sectors" results for Scotland in 2008.

Rounding of Figures 

Where necessary, figures have been rounded to the nearest final digit shown. Consequently, there may be slight discrepancies within a table between totals and the sums of constituent items.

Symbols and Abbreviations

The following symbols and abbreviations are used within the ABS data:

.. not available

- nil

* Information suppressed to avoid disclosure

Inter Departmental Business Register

The sampling frame used for the ABS is the Inter Departmental Business Register (IDBR), which consists of companies, partnerships, sole proprietorships, public authorities, central government departments, local authorities and non-profit making bodies. The main administrative source for updating the IDBR is the HM Revenue and Customs (HMRC) for VAT and PAYE details.

Each legal unit is classified to a single activity, whether it is wholly or mainly engaged in that activity. The nature of a business can change with time, possibly because another business has been absorbed in a take-over. Some businesses have a very significant secondary activity, perhaps completely different from their main activity, and a small change of direction can lead to a new main activity and to the reclassification of the business. Other changes may arise from improvements to classification data held on the IDBR as a result of new information received about individual businesses. The reclassification of businesses for reasons such as these contributes to the year on year changes in the figures published.

Further information on the IDBR can be found at: http://www.ons.gov.uk/ons/about-ons/products-and-services/idbr/index.html

Sample Design

The ABS sample is designed as a stratified random sample of UK businesses from the IDBR. The survey population or universe is stratified by Standard Industrial Classification, employment, and country using the information from the IDBR. The sampling scheme is designed to give best estimates of the population totals for a given sample size and involves selecting all the largest businesses with a progressively reducing fraction of smaller businesses. This method ensures the sample size is kept to a minimum.

The inquiry results are grossed up to the register population, so that they relate to all active UK businesses on the IDBR for the sectors covered.

Scottish sample

Since 1998, the Scottish Government has funded an enhanced ABS sample in Scotland, to improve the quality of Scottish figures. In 2017, around 2,600 extra firms in Scotland were sampled as a result of this "boost", giving a total sample size in Scotland of around 8,200 firms.

Changes to the sample

From 2008 onwards, the sampling stratification (using the Neyman methodology) and resultant estimation has been carried out on a SIC 2007 basis.

Please note that a sample re-optimisation has been included in the estimates for 2016. This is carried out every five years by ONS to improve the efficiency of the sample estimation and reduce sampling variability as part of the regular process to improve estimates.

For sampling figures, please see 2007-2017 Sampling Framework table.

Response

Details of UK-wide ABS response rates are made available by ONS here.

Confidentiality 

The Statistics of Trade Act 1947 prohibits the disclosure of any information relating to an individual undertaking without the consent of the person carrying on that undertaking. Rigorous checks have been made to ensure that information relating to individual businesses has not been disclosed, either directly or by deduction, in any of the figures released. Similar precautions will be taken in safeguarding the confidentiality of returns in the preparation of any ad-hoc analyses.

Estimation 

Factors are produced to enable estimates for all businesses classified to each SIC(2007) to be compiled from data provided by responding businesses. These factors are calculated for each employment size-band within each SIC(2007) and are equivalent to the ratio of responding businesses to the total number of businesses. Northern Ireland and Scotland are sampled and estimated for separately, England and Wales are sampled separately but are combined for the estimation procedure.

Returns for the few large non-responders are estimated for individually. This estimation is normally based on summary data received from the business, or on the business's return to the survey in the previous year adjusted to take account of the likely change in the value of trading over the period.

Regional Estimation

The business unit to which ABS questionnaires are sent is called the reporting unit. For ABS, the reporting unit represents an enterprise, which may consist of one or more sub-units (called local units). For example, an enterprise might be the head office for a group of shops. An enterprise may therefore have local units at different locations, and may carry out more than one type of economic activity.

To produce the regional estimates, the reporting unit data returned by each business are divided amongst its local units. Each local unit’s allocation depends on the size of its employment, the industry it is in and its geographical location. This is achieved using a standard statistical modelling technique called regression analysis.

Local unit employment is obtained from the Business Register and Employment Survey (BRES), which collects data from local units, rather than enterprises. Results are then aggregated for each region /country and industry, using the industry classification of the local units.  Each local unit is assigned a single SIC code, which corresponds to the unit’s principal activity.  Where more than one type of economic activity is carried out by a local unit or enterprise, its principal activity is the activity which contributes most to the value of the unit. Hence, although the sum of the regional results for the whole business economy will match the total for the national results, the sum of the regional results by industry will not necessarily match the UK industry totals, as local units might not all share the same industry classification as their parent units.

Changes to the regional weighting methodology were introduced to ABS from the 2009 regional results onwards.  Further information on the methodology of the approach and analysis of the impact can be found in the ONS published note, ‘Weighting in the Regional System  - September 2011’, available  at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/business-and-energy/annual-business-survey/quality-and-methods/weighting-in-the-regional-system.pdf

Note that, as BRES is not carried out at the same time as ABS, differences in the timing of responses from ABS and BRES can lead to some reduction in the quality of the apportionment method.

For more information on the methodology used to compile regional ABS statistics, please consider the ONS background  document (which includes links to technical information) available on-line at: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/methodologies/annualbusinesssurveyabs#annual-business-survey-abs-quality-and-methods

Business Ownership

Within SABS, business ownership is defined as:

• UK (Scotland registered)
• UK (registered in RUK)
• Abroad

Country of ownership is either UK or Abroad (outside the UK).  Business country of ownership is determined by the nationality of the ultimate parent of the business (i.e. the institutional unit, proceeding up a business’ chain of control, which is not controlled by another institutional unit). Where control of the business is shared, country of ownership is determined by the country of residence of the majority ultimate owner.  Enterprise groups with foreign ownership are identified using data provided by Dun & Bradstreet.  All businesses that do not belong to an enterprise group, and are therefore not under the control of another institutional unit, are classified as UK-owned. 

Once it is determined that an enterprise is UK owned, the next step is to classify businesses into whether they are Scotland registered or registered in the Rest of the UK (RUK).  Enterprises, and their associated local units, are classified as Scotland registered if the enterprise’s VAT/PAYE registered office address is in Scotland.  Enterprises, and their associated local units, are classified as registered in RUK if the enterprise’s VAT/PAYE registered office address is, outside Scotland, elsewhere in the UK.  

Total Employees/Employment and Per Head variables

For 2008 data onwards, Scottish Government analysts have merged BRES (employment survey) and ABS (financial survey) results in order to produce consistent "per employment" totals (e.g. GVA per Head). However, the BRES and ABS are sampled at different times of the year so where a BRES employee/employment estimate cannot be found or is significantly different for a business within the ABS, employee/employment totals are set to their values from the Inter-Departmental Business Register (IDBR).

The Total Employees/Employment variables included in SABS are based on a head count and not a Full Time Equivalent (FTE) measure. This distinction is particularly important for sectors with high levels of part time employment (e.g. Retail and Accommodation & Food Service activities) especially when comparing Per Head figures ³.

Employees in BRES are defined as: An employee is anyone aged 16 years or over that an organisation directly pays from its payroll(s), in return for carrying out a full-time or part-time job or being on a training scheme. It excludes voluntary workers, self-employed, working owners who are not paid via PAYE.

Employment in BRES is defined as: Employees + Working owners who are not paid via PAYE.

Please note that SABS now provides just “per employment” figures for the productivity measures – older SABS publications led with “per employee” figures. Change was made due to a change in the treatment of working owners, in the underlying BRES data (used in SABS).  From the 2011 survey, BRES treats working owners of limited companies as employees rather than working owners (as was previously the case) – and as part of this change in the BRES survey it was identified that in the past there was some double counting of working owners of limited companies (i.e. they were being counted as working owners and employees).  The BRES employment and employee data from 2010 onwards used in SABS have been adjusted to take account of these changes – however, this presents a break in the series with the  employee/employment data for 2010 onwards not being strictly comparable to the 2008-09 employee/employment data. Although the employee and employment data have both been affected by these changes, the impact was larger for the employee data than it was for the employment data - and therefore to maintain as consistent a time series as possible the SABS publication now just provides “per employment” measures of productivity.

Data Reliability

SABS figures are based on an annual survey of businesses. In the context of overall Scottish figures, year-on-year differences are sometimes less obvious as they can be compensated for by other changes. However, at a more disaggregate level, such as sectoral or local authority area, changes in a small number of large companies can have a have a very marked effect on figures from one year to the next.

Structural changes

The business economy is constantly evolving as businesses merge, are taken over, or simply change the main focus of their business. These changes can result in the industry classification of a business changing. For example, if a business undertakes both manufacturing and wholesale activities, but most of its employment is within manufacturing, it will be classified to manufacturing. If the employment were to change substantially so that the majority worked in wholesale then the industry classification would change and the whole of the businesses turnover, for example, would move from manufacturing to wholesale. In industries where movements are common, or where large businesses are involved, these changes can themselves sometimes cause large changes in ABS estimates. This should be taken in to consideration when changes over time are being assessed.

Quality Measures

Estimates derived from samples invariably produce results which differ from those that would have been obtained from a complete census of all businesses. If a number of different samples were selected then each would produce a different result. Sampling errors measure the extent to which these estimates can be expected to differ from the 'true' value. The standard error is the estimated value of the sampling error – the closer the standard error to zero, the more reliable the estimate.

From July 2014, Standard Errors and Coefficients of Variation for regional (includes Scotland) ABS data at 2-digit SIC level have been published by the Office for National Statistics (ONS). Please see link to latest Table here.

From August 2015, in order to provide Standard Errors at Local Authority area level, the Scottish Government purchased this ad-hoc analysis from ONS. Please see link to Tables here.

Note that quality measures have not been provided for the employment or employee variables. The employment and employee estimates are largely based on Business Register and Employment Survey (BRES) data, and sampling errors for BRES estimates are provided at a regional and local level, by ONS, at: http://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/businessregisterandemploymentsurveybresprovisionalresults/previousReleases

Please note that Standard Errors Tables at links above replace alternative quality measures tables previously produced by the Scottish Government.

In addition to sampling errors there is the potential for non-statistical errors which cannot be easily quantified. Examples where these errors may occur are deficiencies in the sampling frame (IDBR) and errors made by respondents in completing the inquiry forms.

For more information on ABS data reliability, please consider the ONS background document (which includes links to technical information) available on-line at: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/methodologies/annualbusinesssurveyabs#annual-business-survey-abs-quality-and-methods

Revisions Policy

In general, SABS follows the Revisions Policy for the ONS ABS results i.e. the latest results are provisional until the following year when they may be revised as a result of late returns or information received in the course of the following year's inquiry. So, for example, within SABS 2017 the latest results for 2017 are provisional and will be made final when they are re-published within SABS 2018 - at which point they may be revised due to late returns. Likewise the results for 2016 within SABS 2017, have been revised since SABS 2016 and are now final.

Although the general rule is to only revise back one year, if revisions have a significant impact on estimates for Scotland, then we may revise back the entire time series. Significant revisions of this sort, and their treatment within SABS, will be highlighted at the time of the release.

Major Historical Revisions

SABS 2013

Change in Purchases apportionment methodology – Data on purchases for 2012 and 2013 has been produced using a new method for the apportionment from the reporting unit purchases to the local unit level. This new method was introduced to preserve the additivity of purchases components values to the total purchases. This has introduced a discontinuity in the purchases and aGVA data series with 2008 to 2011 still calculated using the original method.  This change in the calculation of purchases (and hence GVA) has minimal impact for the large majority of sectors. The industry affected to the greatest extent is 'Gambling and Betting (SIC 92)' which falls within the services sector. And therefore the fall in purchases and subsequent increase in GVA, between 2011 and 2012, for SIC 92 and the wider services sector should be considered alongside this methodological change. More detail of this change can be found in this Information Paper. A detailed region by industry impact assessment has been published by ONS.

SABS 2012

In line with Office for National Statistics (ONS) ABS releases, data for the Insurance and Reinsurance sector (SIC 65.1 and 65.2) has been removed from the SABS results for all years from 2008 to 2012. The previously published ABS data for the Insurance and Reinsurance sector has been excluded due to on-going volatility while ONS carry out a more detailed quality assessment. This does not affect any other industry sectors and, as the Insurance and Reinsurance sector data has been removed for all years in the series, this does not affect time series analysis.

SABS 2011

Please note that validation of data returns for 2011 highlighted that a small number of businesses within the Insurance and Reinsurance sector (SIC 65.1 and 65.2) were returning global figures rather than UK only. A revised 2010 estimate (together with new 2011 data) are now available in this publication. However, any global figures reported will remain in 2008 and 2009 published data in line with current Annual Business Survey (ABS) revisions policy. This can have a significant impact on Insurance, reinsurance, professional, scientific and technical activities (Section KM) time series data, as well as overall Totals, in particular local authority areas. Results for this sector are experimental and any comparisons between years should be undertaken with caution.

SABS 2010

Within industry 46.3 (Wholesale of food, beverages and tobacco), there has been a significant revision to the 2009 data.  This revision was expected as it was identified in the analysis of SABS 2009 that there was an under-reporting of data within the Scottish results for 2008 and 2009.  This under-reporting was a result of business data being inadvertently excluded from the Scottish results in both years.  This error has now been corrected in the 2009 results contained in SABS 2010 – but the 2008 data remain erroneous given the overarching ABS revisions policy of revising back the previous year only.

SABS 2009

Within industry 20.14 (Manufacture of other organic basic chemicals), a significant downwards revision has been made to the 2008 data, which has an impact on turnover and GVA for this group. This revision was required as it became apparent that previous data submitted was incorrect as it included turnover generated in other European countries. This error has been corrected for the 2008 data onwards.

Within industry 46.3 (Wholesale of food, beverages and tobacco), there is a significant under-reporting of data within the Scottish results for 2008 and 2009. This under-reporting is a result some business data being inadvertently excluded from the Scottish results in both years. This data is included in the overall UK results but not the Scottish results. This error in the Scottish results cannot be amended until the 2010 data and revised 2009 data are published in summer 2012.

Comparable Data  

Statistics for the UK, English Government Office Regions, Scotland, Wales and Northern Ireland are available here.

Other Sources of Economic and Business Statistics 

Gross Value Added (GVA)

The SABS results include approximate GVA at 'basic prices'. There are differences between the ABS approximate measure of Gross Value Added and the GVA measures published in UK and Scottish National Accounts data. It is important to emphasise that ABS GVA does not cover the whole economy and that it does not include all the National Accounting adjustments that reconcile the ABS data with other data sources (especially taxes and subsidies, margins and the 'mixed income' economies).

The quarterly GDP index is the Scottish Government's preferred source for measuring real (inflation-adjusted) GVA change over time – for the Scottish economy as a whole and for broad sectors of the Scottish economy: http://www.gov.scot/Topics/Statistics/Browse/Economy/PubGDP 

Quarterly National Accounts Scotland (QNAS) published data series is the Scottish Government’s preferred source for current price (non-inflation-adjusted) GVA change over time - for the Scottish economy as a whole and for broad sectors of the Scottish economy: http://www.gov.scot/Topics/Statistics/Browse/Economy/QNAS/Publications

Detailed information of the differences between ABS approximate GVA at 'basic prices' and National Accounts/Regional Accounts GVA is available in Section 9.1 in the ABS Technical Report published by ONS at: https://www.ons.gov.uk/businessindustryandtrade/business/businessservices/methodologies/annualbusinesssurveytechnicalreportaugust2018​

ONS has also published an article on A Comparison between Annual Business Survey and National Accounts Measures of Value Added at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/business-and-energy/annual-business-survey/quality-and-methods/a-comparison-between-abs-and-national-accounts-measures-of-value-added.pdf

Business Register and Employment Survey

Employee jobs/employment data, largely sourced from the Business Register and Employment Survey (BRES), are provided in the SABS results. These employment estimates are provided in SABS to enable consistent productivity measures to be calculated.  The employee jobs/ employment estimates in SABS will tend to be lower than those published in BRES since BRES has wider industrial coverage than the ABS.  There will also be differences between the employment estimates in BRES and the employment estimates as published in SABS as a result of differences in the samples selected for each survey.

If employee jobs/employment data by industry only is required (and so not to construct labour productivity measures), then the BRES is the preferred source for Scotland and local areas within Scotland.  The latest BRES data is available here.

Businesses in Scotland

Businesses in Scotland (formerly Scottish Corporate Sector Statistics) is another annual business statistics publication, released by the Scottish Government – the source of which is the IDBR.  The main purpose of this publication is to provide information about the number of enterprises operating in Scotland.  Like SABS, Businesses in Scotland provides estimates of employment and turnover by industry, local authority area and ownership.  However, the employment and turnover estimates are provided in Businesses in Scotland publication as auxiliary variables that enable users to determine what proportion of employment/turnover generated in the economy can be attributed to businesses of different size.  Employment and turnover, as published via Businesses in Scotland, do not relate to a single point in time and can be out of date for some small firms.  For this reason, it is not the preferred the source for comparing employment and turnover estimates over time.  More information on the key differences between Scottish Annual Business Statistics and Businesses in Scotland is available at: http://www.gov.scot/Topics/Statistics/Browse/Business/SourcesandSuitability/KeyDifferences

Regional Capital Expenditure 

It has been established that the estimation of regional capital expenditure is unreliable, and therefore Net Capital Expenditure figures are not now available on Scottish Annual Business Statistics website.

Please see Future Developments section below for on-going developments on this topic.

Office for National Statistics (ONS) has provided the following information:

Regional Capital Expenditure

Figures on regional capital expenditure are no longer made available on the ABS website pages. Accurate estimation of regional capital expenditure is dependent on there being a strong correlation between the variable on which any estimation is based, in this case local employment, and the variable for which we are attempting to produce estimates, here regional capital expenditure. It has been established that the relationship between regional employment and regional capital expenditure is, in fact, unreliable.

It will still be possible to obtain regional capital expenditure figures by requesting either standard extracts, for which there is no charge, or special analyses, for which a charge will be made. ONS does not recommend the use of these regional capital expenditure figures but recognises that some users will, nevertheless, wish to have them.

For more information about either of these services, please email ABS@ons.gov.uk

If you require Scottish Capital Expenditure figures only, you can alternatively contact the Scottish Government.

National Statistics Status

This is a National Statistics publication. National Statistics status means that our statistics meet the highest standards of trustworthiness, quality and public value, and it is our responsibility to maintain compliance with these standards.

These statistics last underwent a full assessment against the Code of Practice in 2012. Details of the assessment are available at: Assessment Report 189 - Statistics on Scottish Businesses and Research and Development (96.4 Kb, Pdf document)

Since the last assessment, we have continued to comply with the Code of Practice for Statistics and have made improvements to the statistical release - for example by:

• Providing more detailed breakdowns e.g. Purchases, Growth Sectors;
• Improving the timeliness of the release;
• Providing more information on the quality of the estimates e.g. Standard Errors;
• Improving accessibility e.g. Local Authority Area tables available in multiple formats.

Future developments regarding the quality of the ABS data and up-coming SABS data releases are as follows:

• The Scottish Government continues to work with ONS to explore what could be done to improve the methodology used to estimate regional net capital expenditure. The historical methodology for estimating regional net capital expenditure is known to be unreliable, leading to its continued exclusion from the ABS regional publications. ONS has carried out a high level feasibility study to assess the viability of collecting capex data at different geography levels. Findings from this exercise can be found here: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/business-and-energy/annual-business-survey/quality-and-methods/capturing-regional-capex-on-the-abs---feasibility-study---october-2015.pdf. The results of the feasibility work continue to be assessed by ONS and the Scottish Government.
• One of the key actions following the UKSA assessments, of the SABS and the ONS ABS publications, was to improve the timeliness of the ABS publications. Please note that SABS 2016 publication was brought forward by two months and published in June 2018 whilst SABS 2017 was published in June 2019 (just under a year since last publication). This is around 18 months after the reference period covered by the data.
  The Scottish Government continues to work with the ONS on changing the publication process to reduce the time lag for future SABS releases. ONS have previously published a progress note (written prior to 2018 publication timescale changes) on this work available at: http://www.ons.gov.uk/ons/guide-method/method-quality/specific/business-and-energy/annual-business-survey/quality-and-methods/review-of-abs-timeliness.pdf. 

User Engagement 

If you would like to be kept informed about ongoing developments with regards to the SABS publication and future releases of SABS data, please register to receive updates via Scotstat (under Economy topic pick Business and Industry and/or Productivity).

There is also the Scottish Economic Statistics Consultation Group (SESCG) and the Sub-Scotland Economic Statistics Group (SSESG) – more information on the groups is available at: http://www.gov.scot/Topics/Statistics/Browse/Economy/ScotStat/comms. If you would like to join either Group or provide feedback on the SABS publication, please contact us at:

Business & Innovation Statistics
Office of the Chief Economic Adviser
5 Atlantic Quay
150 Broomielaw
Glasgow G2 8LU

Telephone: 0131 244 6802

e-mail: industrystatistics@gov.scot