This topic relates to businesses whose main activity is the provision of business services to other businesses and also to the public.
Publications
The Annual Business Inquiry (ABI) is conducted in two parts: employment and financial information. This release deals with the financial inquiry which collects information for about two thirds of the UK economy, covering agriculture (part), hunting, forestry and fishing; production; construction; motor trades; wholesale; retail; catering and allied trades; property; service trades. The financial variables covered include turnover, purchases, employment costs, capital expenditure and stocks. Approximate Gross Value Added (GVA) is calculated as an input into the measurement of Gross Domestic product (GDP).
The Annual Business Survey (ABS) collects financial information for about two thirds of the UK economy, covering agriculture (part), forestry and fishing; production; construction; motor trades; wholesale; retail; catering and accommodation; property; service trades. The financial variables covered include turnover, purchases, employment costs, capital expenditure and stocks. Approximate Gross Value Added (aGVA) is calculated as an input into the measurement of Gross Domestic Product (GDP).
Use of Information and Communication Technology (ICT) and e-commerce activity by UK businesses
Developed the Index of Internet Connectivity as part of a package of measures to help monitor the UK's use of the Internet and the growth of e-commerce.
Provides information on the value of the economic activity that businesses generate and associated expenditure across the main industrial sectors in Northern Ireland.
Overview
Activities include:
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publishing of books, newspapers, journals, software, computer games
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production of motion pictures, videos, television programmes, sound recordings and music
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radio and television broadcasting, telecommunications
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computer consultancy and related activities
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legal and accounting services
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management, architectural, engineering and technical consulting services and scientific research
Also included are advertising, photography, film processing, translation and interpretation services, quantity surveying and veterinary activities. Renting and leasing, security and investigation services, cleaning services, landscape services, office administration services, call centres and other business support services are also included.
Technical Data
Data are collected from a selection of businesses in the business services sector via the Annual Business Inquiry (ABI/2) and the Monthly Inquiry into the Distribution and Service Sector (MIDSS). Both are sample surveys but the data collected are weighted to provide an estimate covering the total population of the sector.
ABI/2 data totalled to industry level for the main variables feed into the UK National and Regional Accounts. They are also used to derive Gross Value Added (GVA), which measures the contribution of the manufacturing sector to the economy. Other measures such as turnover per head are derived using employment data collected by the Annual Business Inquiry (employment).
Monthly turnover data for business services industries are used to calculate short-term indicators for the services sector, which in turn feed into the Index of Services (IoS) and Gross Domestic Product (GDP). All data produced are at current prices and non-seasonally adjusted.
Total Turnover
The total turnover of the business is collected by both the annual and monthly surveys. The annual turnover, together with the other variables, is used to derive industry level GVA. Monthly turnover data are used as a proxy for GVA as it is not possible to collect the individual variables each month.
Other main variables collected and used in the calculation of GVA are:
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employment costs
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purchase of energy goods, materials and services
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tax, duties and levies paid
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subsidies receivable
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value of stocks held
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capital expenditure
Gross Value Added (GVA)
GVA is used in the estimation of Gross Domestic Product (GDP), which is a key indicator of the state of the economy. In the UK, three theoretical approaches are used to estimate GDP: ‘production’, ‘income’ and ‘expenditure’. All three approaches are balanced annually using the Input-Output Supply and Use Tables accounting framework. The GVA for the manufacturing sector is used in the estimation of the GDP ‘production’ approach.
The link between GVA and GDP can be defined as:
GVA (at industry level current basic prices)
plus taxes on products (available at whole economy level only)
minus subsidies on products (available at whole economy level only)
equals GDP (at current market prices; available at whole economy level only)
The Standard Industrial Classification (SIC) defines the activities covered by the business services sector. The main or principal activity of a business is defined as the activity that contributes most to the business’s total value added. In practice, variables such as employment, salaries and gross output are used instead of value added.
The SIC is based on the European Communities (EC) classification of Economic Activities, NACE (from January 2008 a major revision to NACE was introduced, NACE Rev.2). The Office for National Statistics (ONS) is in the process of converting its surveys to NACE Rev.2, with the ABI/2, to be despatched early in 2009, among the first selected on the new classification SIC 2007.
For the business services sector as a whole, the change in classification has resulted in the transfer of publishing of books, newspapers and journals from the manufacturing sector to a new section within the business services sector called information and communication. Within the business services sector there are a number of changes reflecting the decline of some industries and the emergence of others, for example, call centres. These will feed through to the statistics produced on the new classification.
All ONS business surveys will be converted to SIC 2007 over the next few years, with the National Accounts system being the last to be converted in 2011. In order to take full advantage of the change in classification, all survey samples will be re-optimised as each survey converts to SIC 2007.
Glossary
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Annual Business Inquiry (ABI)
An annual business survey covering most sectors of the economy. ABI/1 collects data on employment while ABI/2 collects financial data such as turnover, stocks and capital expenditure.
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Capital Expenditure (including non-deductible VAT but excluding deductible VAT)
Capital Expenditure includes the purchase costs and disposal proceeds of fixed assets, together with any other amounts treated as capital items for taxation purposes. Grants and allowances from government sources, statutory bodies and local authorities should be included.
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Employment costs
The amount the business pays for its workforce to carry out the activities of the business. It includes wages and salaries paid to all employees (including overtime) and also the National Insurance and pensions contributions paid by the employer. Employment costs for subcontracted work where the employees are not directly employed by the business are excluded.
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Eurostat
The Statistical Office of the European Communities, based in Luxembourg.
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Generally Accepted Accounting Principles (GAAP)
The standard framework of guidelines for financial accounting. It includes the standards, conventions and rules accountants follow in recording and summarising transactions, and in the preparation of financial statements.
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Gross Domestic Product (GDP)
A measure of the value of the goods and services produced in the economy in the year. It is a good indicator of the wealth and economic development of a country. Developed countries typically have high GDPs and developing countries typically have low GDPs. Income earned abroad, such as overseas investments, is not counted in GDP, but is counted in a country’s Gross National Product (GNP).
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Gross Value Added (GVA)
A measure of the value of the goods and services produced in the economy and is used to monitor the performance of the national economy as a whole. It can also be used by individual businesses to monitor their performance, and therefore the profitability, of the business. GVA is calculated as: the value of sales of goods and services minus the cost of purchases of energy goods, materials and services.
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Monthly Inquiry into the Distribution and Services Sector
A survey collecting monthly information on sales from businesses within the Distribution and Services sector. It also collects information on new orders within the engineering sector and a limited amount of employment information.
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Nomenclature of economic Activities in the European Community (NACE)
This classification of economic activities has been developed by the Statistical Office of the European Communities (Eurostat) since 1970. It classifies statistical units (for example, companies and establishments) related to economic activity providing the base on which to develop a wide range of statistics such as products, consumption, capital formation and financial transactions (see Standard Industrial Classification.
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Purchases of energy goods, materials and services
The amount paid by the business for all energy goods, materials and services used to carry out the activities of that business. This figure is exclusive of VAT but inclusive of other taxes, duties and levies.
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Standard Industrial Classification (SIC)
The system used by the Office for National Statistics (ONS) to classify businesses to particular industries or economic activity. The UK classification is based on the Statistical Office of the European Communities (Eurostat) NACE classification of economic activities. This is used widely throughout the European Commission (EC) and enables comparisons to be made between national and EC statistics. Any revisions to NACE are made under EC Regulation. All Member States are obliged to adopt the changes. Along with other Member States, ONS is in the process of converting to the revised version of NACE (NACE Rev.2), which under the UK classification is called SIC 2007.
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Stocks held
Stocks, or inventories, include all goods and materials on hand for sale or processing, including work in progress owned by the business in the UK. They should be valued in accordance with UK GAAP (Generally Accepted Accounting Practice) or International GAAP. Balances on long-term contracts included in stocks should exclude any progress payments made.
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Subsidies on products
Amounts receivable from UK government bodies or the European Commission (EC) to reduce the price of products (goods or services) sold to customers. Grants received from any source as one-off payments to lessen the burden of purchasing capital expenditure items are excluded.
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Tax, duties and levies paid
The total amount payable in taxes (excluding VAT), duties or levies on the energy goods, materials and products purchased by the business in order to carry out the activities of the business. It is paid to government, other statutory bodies and local authorities. Any amounts payable in taxes, duties and levies on the outputs of the business are also included.
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Turnover (excluding VAT)
Turnover consists of total takings or invoiced sales and receipts of the business in connection with the sale of goods and services. It should include any indirect taxes, duties and levies (except VAT) invoiced to the customer. Interest and similar income, other operating income and extraordinary income are excluded as are the net proceeds on the sale of capital items.
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Weighting
The process of estimating a total from a sample (the process was previously called ‘grossing’ but the Office for National Statistics’ (ONS’) Methodology Directorate has revised the term to ‘weighting’).
Contact Details
For statistical enquiries about this topic, please contact:
ONS Customer Services
Email: info@statistics.gov.uk
Telephone: +44 (0) 845 601 3034
Office for National Statistics Room 1.015 Government Buildings Cardiff Road Newport NP10 8XG
