Business Competitiveness Indicators

 Introduction  

The Department of Trade and Industry have been providing strategic indicators at the local area level since 1995. The Business Competitiveness Indicators (BCIs) were originally produced for (former) counties, Training and Enterprise Council (TEC) areas and Local Authorities. However the structure of the BCIs has evolved as geographic boundaries have changed and new boundaries have been introduced for the UK.

The indicator data provided in this edition of the BCIs reflect where possible, the Unitary Authority and Local Authority District (UA / LAD) boundaries drawn up between 1996 and 1998, and the Learning and Skills Council (LSC) areas drawn up during 2000.

The estimates of Gross Value Added (GVA) included are based on Nomenclature of Units for Territorial Statistics (NUTS) areas. These are a hierarchical classification of geographies, which provide a breakdown of the European Union's territory for producing regional statistics at levels that are compatible across the Union.

The package of indicators, updated twice a year, is based on those provided in the Regional Competitiveness and State of the Regions publication (RCSoR). The RCSoR (www.dti.gov.uk/sd/rci) provide indicator data for the countries and Government Office Regions of the UK, and are themselves published biennially with hard copies available from the DTI Publications Unit (email: [email protected]si.gov.uk).

The indicators in this edition of the BCIs include:      

  1. VAT registrations and de-registrations by business. 

  2. Survival rates for VAT-registered businesses.

  3. Gross value added (GVA) and GVA per head of population. 

  4. Employment. 

  5. Average earnings. 

  6. Unemployment.

  7. Claimant Count.

  8. Income Deprivation.

  9. Qualifications/skills.

With the exception of GVA and business survival rates, the data included in the BCIs are provided down to UA/LAD level. The UAs and LADs of Great Britain vary widely in both physical size and resident population ranging from Birmingham with a population of over 1 million to the Western Isles of Scotland, with a total population of less than 30 thousand people.

With the exception of the claimant count, all of the indicators included in the BCIs are based on sample surveys. As sample sizes are, in the main, proportionate to population, the UA/LAD level estimates may vary widely in their accuracy. In particular, care should be taken when interpreting year - on - year changes since, due to relatively small sample sizes in certain UAs and LADs, these would not be statistically significant in some instances.

ONS is currently reweighting Labour Force Survey data to make them consistent with population estimates revised in the light of Census 2001 results. The revised annual data are becoming available year by year. Until a sufficiently long time series has been published, BCI datasets containing annual LFS data will not be updated here. For further information see www.nomisweb.co.uk

Philip White
Strategy Unit
Department of Trade and Industry
10 Victoria Street, London
SW1H ONN
020 7215 3279

Email: [email protected]

Darren Stillwell
Strategy Unit
Department of Trade and Industry
10 Victoria Street, London
SW1H ONN
020 7215 3290

Email: [email protected] 


1(a). 
BUSINESS FORMATION

MEASURE

The number of new VAT registrations and de-registrations in the (calendar) year, and the number of registrations as a proportion of the total number of VAT-registered businesses at the start of the year.

SOURCE

These data are produced by the Small Business Service (SBS) Statistics Unit www.sbs.gov.uk, based on data collected from the Inter Departmental Business Register (IDBR).

The IDBR is primarily a sampling frame for a number of official business surveys. The Register holds information on the location, industrial classification, turnover and employment of over 1.9 million enterprises in the UK.

TIMING

Formation rates and levels down to UA / LAD level are presently available to 2001.

ISSUES

New businesses with a turnover below the mandatory VAT registration threshold (of £54,000 during 2001) may decide not to register and would not appear in the estimates.

The mandatory VAT threshold (introduced in 1973) is normally reviewed on an annual basis. Since December 1993, this threshold has increased by £1,000 per year. Prior to 1993 the increases varied between £10,000 (in 1991) to £1,600 (in 1992). Due to this, there may be discontinuity in the VAT registrations and de-registrations series prior to 1993.

The registrations and de-registrations data included in the BCIs do not equate to ‘actual’ business closures or start - ups. Firms can be removed from the VAT register for a variety of reasons including; falling turnover, mergers, takeovers and relocations as well as the business actually ceasing to trade. However, VAT registrations and de-registrations are indicative of the underlying rate of business ‘births’ and ‘deaths’.

In Great Britain it is estimated that the total number of business start-ups is around twice the number of VAT registrations, with an estimated 530,000 new businesses formed between the years 1995 and 1999.

Comparisons of business formation rates between areas should be interpreted carefully.  In areas where the stock of businesses is relatively low, the rate of business formation will be artificially inflated.  Also, the rate of business formation can increase at a time when VAT registrations are falling if the stock of VAT registered businesses is decreasing at a faster rate.

QUESTIONS AND ANSWERS

Q.        How many supposedly ‘new’ business formations are the result of existing businesses relocating or expanding rather than new start-ups?

A.        The estimates presented here refer to the number of businesses, business registrations and business de-registrations within each UA/LAD and LSC area.  That is, the area where the VAT registered address (often the address of the head office) is located.  For example, a new factory or outlet owned by a business registered in another local area or LSC would not appear as a new registration.

Q.        How much is the business formation rate a result of the mix of industries within an LSC or UA/LAD area?

A.        Some sectors are known to have higher start-up rates than others (for example finance and business services) or tend to vary more than average across the course of recent economic cycles (for example construction and some manufacturing industries).  A high start-up rate can be due in part to concentrations of such units.

Q.        Do start-ups represent new business formations or simply a redistribution of existing business stock?

A.        An increase in start-ups may reflect genuine expansion.  Equally the trend for large firms to contract out many activities to smaller businesses and the self-employed is also likely to stimulate start-ups.  Changes in ownership and / or location as well as mergers reflect the redistribution of business stock. This is more common in certain sectors (for example, retail and catering).  High levels of displacement and change of ownership or location will inflate deregistration as well as registration rates differentially across local areas.

CONTACT:
Small Business Service 
0114 259 7788

www.sbs.gov.uk
[email protected]  


1(b). BUSINESS SURVIVAL RATES

MEASURE

The proportion of businesses remaining registered for VAT at set periods after their initial registration.

SOURCE

These estimates are produced by the Small Business Service based on IDBR information.

TIMING

Estimates are normally available in January each year. The estimates included in the October 2003 BCIs include both the one- and three–year survival rates of VAT-registered business to 2000.

ISSUES

Refer to the issues detailed in business formations. These also apply to business survival rates.

QUESTIONS AND ANSWERS

Q.   How long do businesses with turnover below the VAT threshold survive? 

A.   The limited evidence available suggests that those businesses that are below the VAT threshold, of which there are around 2 million, have the lowest survival rates.  This implies that VAT survival rate estimates could potentially over-estimate the actual survival rates for all businesses in an area. Business insolvency information, also published by DTI (www.dti.gov.uk/sd/insolv) may provide a broader picture of this.

Q.   To what degree is a high or low survival rate due to a particular sector mix?

A.  Certain industrial sectors are thought to have higher survival rates than others, on average. A high or low survival rate within an LSC or UA/LAD area could result from the industry composition of the area. It is often informative to compare the mix of industries within an LSC or UA/LAD area to that of England or the UK as a whole when interpreting these survival rates.  

Q.   To what degree is a high or low survival rate related to the ‘size’ of VAT registered businesses in an area?

A.   Among VAT-registered businesses, the tendency is for larger businesses (typically those with 50 employees or more) to have higher survival rates than smaller ones.  Consequently, if there are a high proportion of ‘larger’ businesses in an area it is reasonable to expect that survival rates may be above the average. Again, the size profile of the businesses within an LSC or UA/LAD area can be compared to that for England or the UK as a whole when interpreting these survival rates.

CONTACT:
Small Business Service 
0114 259 7788

www.sbs.gov.uk

[email protected]
 


2. GROSS VALUE ADDED AND GROSS VALUE ADDED PER HEAD 
(Data files updated 2 Feb 2004)

NOTE

The estimates published in this edition of the BCIs have been calculated on the basis of the latest European System of Accounts (ESA95). Under this system the term ‘Gross Value Added’ (GVA) is now used to denote estimates that were termed Gross Domestic Product (GDP) in previous editions.

These estimates are provided for Nomenclature of Units for Territorial Statistics (NUTS) areas. These are a set of standardised geographic classifications used by European Union member states, which were last revised in the UK during 1998. There are 133 NUTS level 3 areas in the UK. These areas are equivalent to individual counties, UAs, or groups of UAs and LADs.

SOURCE

Regional GVA are drawn from the regional economic accounts produced by Regional and Local Division in ONS.

TIMING

The latest estimates available run to 1998. ONS aim to release more recent estimates of GVA below the regional level during late 2003, which will include detail for individual industry sections.

ISSUES

The estimates of GVA included in the BCIs are ‘workplace–based’. That is the earnings of employees are allocated to the area of their workplace rather than the area where they live in those cases where the two are different.

The GVA provided are valued at current prices, that is, the estimates are not adjusted to take account of inflation in the prices of goods and services over time.

ONS do not directly produce estimates of GVA for LSC or LAD areas, although there are a number of NUTS level 3 areas that correspond to UAs for which estimates are produced.

ONS produces two separate indicators of economic activity below the regional level which fall under the broad heading of ‘GVA’. The data included here are drawn from the regional economic accounts that are calculated based on a wide range of economic and labour market survey data. These data conform to the ESA95 framework for GVA agreed between the EU member states. ONS also produce a separate GVA series based on a single survey, the Annual Business Inquiry (ABI). The latter GVA estimates cover a far narrower range of components than those covered in the former series and are also available for a far shorter time series at the present time.

QUESTIONS AND ANSWERS

Q. What is the difference between Gross Value Added (GVA) and Gross Domestic Product (GDP)?

A.  GDP is equal to GVA plus taxes (net of subsidies) on products, with Value Added Tax (V.A.T.) the major component of these. For the UK as a whole, taxes (less subsidies) on products amounted to around £110 billion during 2001, just less than 12 per cent of total GDP.

Q.  How does commuting affect this form of GVA per head in NUTS level 3 areas?

A.  Workplace–based estimates of GVA per head are calculated by dividing the estimate of workplace–based GVA for a NUTS level 3 area by the resident population within that particular area. Areas with a low resident population and high levels of inward commuting (such as Inner London–West) will have substantively higher levels of GVA per head. Conversely, areas with high levels of outward–commuting of workers and a high residential population (such as Berkshire) may have reduced estimates of GVA per head.

Q.  How is GVA estimated below national level?

A. At the regional level the Office for National Statistics produces income-based estimates of regional and sub-regional GVA. The income approach measures the income of the area, defined as the sum of all incomes earned from productive activity carried out within that area. The figures included in this publication are consistent with the national estimates of GVA published in the United Kingdom National Accounts (Blue Book).

Q.   What are the key components of income-based GVA?

A.   GVA at both the national and sub-national level is comprised of a series both actual and theoretical (or imputed) components. The three largest components are: Compensation of Employees (basically all employee earnings), the income from both labour and profits of sole trader businesses (termed mixed income), and the gross operating surplus of incorporated enterprises (basically the surplus, or profit, arising from the production of goods and / or services).

Q.   Does GVA per head measure the wealth of the residents within an area?

A.   The GVA included in the BCIs is workplace-based and, as such, says little about the areas to which the income that is generated flows. Due to this, it is possible for an area to have high GVA per head but conversely, a low level of residential income.  At sub-national level, it is more useful to use the household sector income estimates produced by ONS when investigating the income received by the residents of an area.

CONTACT:   
Regional and Local Division, ONS
020 7533 5809 

www.statistics.gov.uk/CCI/nscl.asp?ID=6008

[email protected]

 


4.  EMPLOYMENT

MEASURE

The BCIs provide employment data on the basis of the areas where workers live and where they work (in cases where the two are different). Three separate sets of estimates are provided for UA/LADs and LSCs, drawn from the quarterly and annual Labour Force Survey (LFS), and the Annual Business Inquiry (ABI) employee jobs series.

SOURCE AND TIMING

Two sets of jobs data on a residential basis are provided in the BCIs. These are taken from the quarterly and annual LFS series respectively. Quarterly results are (under normal circumstances) published four months after the end of the quarter to which they refer, and are included up to winter 2001/02. Annual LFS data are taken from the Local Area Database and cover years to 2001.

The workplace-based employee jobs estimates are taken from the ABI. The ABI measure contains a number of structural and methodological improvements over its predecessor, the Annual Employment Survey (AES). Nationally, the number of employee jobs as measured by the ABI was around 1 million higher in 1998 than the AES level because of some undercounting and estimation problems with the AES.

ISSUES

The LFS and population estimates used in this edition of the BCIs are not yet consistent with the latest 2001 Census results. LFS estimates for all available years will be reweighted to the 2001 Census population level by the Office for National Statistics in due course.

The LFS measures employment among residents within each UA/LAD or LSC. This is appropriate if a high proportion of residents work within the area, but not so appropriate if there is a high level of commuting to work outside of that area (such as in many of the UA/LAD areas which surround London).

The ABI/1 measures the number of jobs within a given area (as distinct from the number of workers). If a person holds more than one PAYE job and earns wages above the taxation threshold in each, then they could be counted more than once in the ABI/1 estimates.

From 2000 onwards, the annual LFS estimates included in the BCIs incorporate data from the English Local Labour Force Survey (ELLFS). The ELLFS is a partnership project between the ONS, DfES, and the DWP aimed at enhancing the sample size of the existing LFS in England. When combined with annual LFS results (for 2000), the inclusion of ELLFS results has led to a boost of around 40 per cent in the number of households sampled. This means that the annual LFS estimates supplied in the BCIs should be interpreted with care as the increase in sample size arising from the inclusion of the ELLFS for 2000 and some adjustments to the estimation methodology for the latest year does mean that discontinuities could exist in the annual data between 2000 and earlier years.

The LFS annual and quarterly series include both employees and self-employed persons. The ABI/1 employee jobs series does not include self-employed people.

Other factors may also lead to differences between the LFS and ABI, for example, commuting effects or the recording of workers with more than one job.

The LFS is a quarterly sample survey of around 60,000 households across the UK. In some cases the estimates for certain UA/LAD areas may be based on relatively small sample sizes and therefore contain higher proportions of sampling error than those based on larger sample sizes. In particular, caution should be taken when interpreting changes between either quarters or years at UA/LAD level, as in some cases changes would need to be around 8 to 10 per cent of the original estimate in order to be deemed to be statistically significant.

The quarterly LFS data in the BCIs are not adjusted to account for seasonal variations in employment. Caution should be used when comparing consecutive quarters as the effects of seasonal variations on employment can often obscure changes caused by more fundamental factors (such as changes in the structure of the industry within an area over time).

ONS recognises that in certain years, the AES undercounted the level of employee jobs because of issues with both the data collection and estimation procedures. The total undercounting was thought to be around 1 million jobs in 1998. Furthermore, it is believed that this undercounting affected some industries more than others. With the move to the full ABI/1 survey for 1998 onwards, the 1995 to 1997 AES levels were adjusted upwards to compensate for this undercounting using industry-specific adjustment factors.

In certain years sub-regional areas may not sum to the respective regional totals. This is because estimates of employment in the agricultural industries (Standard Industrial Classification 1992, Division 01) are suppressed in certain areas due to disclosure issues.

QUESTIONS AND ANSWERS

Q.  What are the differences between workplace- and residence-based estimates?

A.  The estimates provided for UA/LAD and LSC areas from the LFS are residence-based which is appropriate if most people work within the area the area that they reside. However, at UA/LAD level this is often not the case.  The ABI/1 estimates are workplace-based and indicate the number employee jobs within an area, irrespective of where the people who do them live.

Q.  Are the employee jobs indicators included in the BCIs influenced by the time of year?

A.  The quarterly LFS employee jobs indicator provided in the BCIs are not seasonally adjusted (i.e. there are no adjustments made to the estimates to compensate for ebbs and flows in industries such as tourism which are affected by the time of year). The ABI/1 estimates included in the BCIs now refer to December of each year and because of this, there may be seasonal variations in the number of jobs between certain areas, especially below the regional level. For example, a UA/LAD areas’ share of total regional jobs may vary throughout the course of the year with fluctuations in certain seasonal industries.

Q.  How accurate are the estimates of employment?

A.  Both the ABI and LFS are sampl –based surveys rather than a full census of either businesses or households and will be subject to sampling error. In other words, had different selections of business or households been used, the results would almost certainly have been different.

CONTACT: 
Labour Market Helpline
020 7533 6094

www.nomisweb.co.uk 

[email protected]
[email protected]     



5.  AVERAGE EARNINGS
                

MEASURE

Average hourly earnings, (including overtime and premium pay), for full-time employees only.

SOURCE AND TIMING

The New Earnings Survey (NES) is sampled during April each year. Initial results are normally available the following November, with the inclusion of late returns around 4 to 6 months after this. Provisional UA/LAD and LSC estimates for 2001 are included in this edition of the BCIs.

ISSUES

Businesses in NES are sampled directly and the estimates are workplace-based.  

The boundaries of the geographies for which NES earnings results are presented in the BCIs may change slightly over time as the boundaries of the electoral wards, from which these geographies are comprised, are amended. Since 1991, ward boundaries have been revised for the years 1993, 1995, 1997 and 1998. As such, the estimates provide a ‘snapshot’ of the state of a particular area as it stood in each year, rather than providing a strictly comparable geographic series over time.

Comparisons of the value of hourly earnings both between areas and across time should be interpreted with caution. NES estimates of earnings do not take account of variations between areas in the cost of living, and as such do not represent the ‘actual’ buying power of the earnings. No Retail Price Indices are produced below the national level in the UK.

In some instances the NES estimates for certain UA/LAD areas may be based on relatively small sample sizes and could contain a high proportion of sampling error. Care should be taken when interpreting estimates of average earnings and in particular, changes between years at this level.

The estimates of average hourly earnings for 2000 included in this edition of the BCIs have been revised since the last release in December 2001. When provisional earnings estimates for 2000 were published in October 2001, there were a higher than usual number of responses not included in the survey as the returns were awaiting validation. These have now been incorporated into the revised 2000 results, with the most notable amendments arising from the inclusion of data for high earners in the financial, business services, media and marketing sectors. This has led to revisions in average pay, in particular, for areas within London and the South East Government Office Regions where there are concentrations of jobs in these industries.  

QUESTIONS AND ANSWERS

Q.   Are high average earnings a good thing?

A. Not always. Interpretation of earnings data is quite complex and requires a comprehensive knowledge of the local economy.  High earnings can be indicative of prosperity, and that an area’s economy is growing.  Alternatively, they could be a result of skill shortages or high living costs both of which could undermine the competitiveness or the attractiveness of an area to outside investors.

Q.  Why are the earnings of part–time employees not included in the BCI estimates?

A.   Due to the sampling design of the NES, in certain UAs and LADs the proportion of part–time employees can vary quite substantially between years. In addition to this, the NES can pick up very high-earning part-time employees (for example, non–executive company directors). In areas where sample sizes are relatively low, both of these factors can make the earnings of all employees very volatile and less representative of the area as a whole than the information for full-time employees alone.

Q.  Would the hourly earnings estimates be affected by the time of year that they are collected?

A.   Yes. NES results are collected in April of each year. Although information gathered at this point in time may be influenced less by fluctuations in earnings within the known seasonal industries (i.e. retail and tourism), for many businesses the financial year ends in April. This could affect some of the components of employee earnings, particularly in the case of the earnings from overtime that are available.

CONTACT:
Earnings Helpline 
Office for National Statistics
01633 819 024 

[email protected]

 


6.  UNEMPLOYMENT RATES

MEASURE

Unemployment rates are based on the International Labour Organisation (ILO) definition and are drawn from the Labour Force Survey.

SOURCE AND TIMING

The ILO definition of unemployment includes as unemployed; all persons out of work, who want a job, have actively sought work in the last four weeks and are available to begin employment in the next two weeks.

Unemployment rates for UA/LADs are modelled estimates based on (annual) Labour Force Survey information in addition to a range of other economic and demographic variables.

ISSUES

Unemployment rates are residence-based. They are calculated as the number of people resident in an area who are classified as unemployed divided by the number of economically active people resident in that area.

 The LFS and used in this edition of the BCIs are not yet consistent with the latest 2001 Census results. LFS estimates for all available years will be reweighted to the 2001 Census population level by the Office for National Statistics in due course.

The ONS have not produced modelled estimates of ILO unemployment for LSC areas or regions. This publication only contains UA/LAD level estimates.

CONTACT:
Labour Market Helpline
020 7533 6094

www.nomisweb.co.uk 

[email protected]     

 


7.  CLAIMANT COUNT 

The Claimant Count is the number of people claiming Job Seeker’s Allowance and is taken from monthly records.

SOURCE AND TIMING

The claimant count (CC) is an administrative count of people claiming Job Seekers Allowance at an Employment Service office.

QUESTIONS AND ANSWERS

Q.   Are claimant count rates workplace- or residence-based based?

A.  Following a recent labour market review, the denominator for calculating claimant count rates at a sub-regional level has moved from being workplace-based (i.e. expressed as a proportion of the number of workforce jobs plus claimants in that area), to being residence-based (the number of people living in an area).

CONTACT:
Labour Market Helpline
020 7533 6094

www.nomisweb.co.uk 

[email protected] 


8.  Deprivation

MEASURE

The number of people within families that are dependant on means-tested Income Support (IS) benefits by UA/LAD and LSC areas.

SOURCE AND TIMING

The data used are counts of IS dependent persons originally supplied by the Department of Work and Pensions (DWP) as well as estimates of the population as at midyear (1998) developed by Oxford University.

The numbers of IS dependants have been drawn from the Income Strand of the ward level Indices of Deprivation and the Index of Multiple Deprivation 2000 ('IMD 2000'). These contain six separate domains:

 - Income
 - Employment
 - Health Deprivation and Disability
 - Education, Skills and Training
 - Housing
 - Geographical Access to Services

ISSUES

These analyses deal with the percentage of people dependant on IS benefits and not the value of the IS benefits claimed in each area.  Whilst IS dependants may occur with some frequency in the majority of the wards, it may well be that the average value claimed in the most deprived wards is higher than in the less deprived. This could mean that the difference between areas may be greater than is indicated here.

 The Indices of Deprivation although updated periodically (for example the last two updates were for 1998 and subsequently during 2000), they are not necessarily consistent over time. With every update of the Indices of Deprivation, new indicators are added and the latest geographical classification of wards are used

QUESTIONS AND ANSWERS

Q:  How often are the Indices of Deprivation updated?

A: The Indices of Deprivation (ID) are a periodic series that are generally published every 2 to 3 years after a series of user consultations. Development of the ID 2000 began in 1998 with estimates published during 2000. Consultation began during 2002 to update ID 2000.

Q.   What geographic level is the ID 2000 published for?

A.  ID 2000 is published for electoral wards with boundaries as at 1998. For the purpose of the analyses in the BCIs these wards have been aggregated to current Unitary / Local Authority as well as Learning and Skills Council areas.

Q.  What does the information taken from the Income Strand of ID 2000 measure?

A.  The information used in the BCIs measures proportion of people within families that are dependent on IS benefits (for example, because the principal wage earner receives a very low wage or is unable to work because of disability) As such, this only reflects one facet of deprivation. It is preferable to interpret these estimates alongside other sources of economic and demographic information such as: unemployment rates, average earnings, vacancies and skills, household income, mortality and illness breakdowns, homelessness, and housing condition information.

CONTACT:
Neighbourhood Renewal Unit, Office of the Deputy Prime Minister
08450 82 83 83

www.neighbourhood.gov.uk

[email protected] 


9.  Qualifications

MEASURE

The percentage of the working age population (16 to 64/59) with qualifications to either National Vocational Qualification (NVQ) level 1 or 2/equivalent, NVQ level 3 or 4 or a trade apprenticeship or with no formal qualifications.

SOURCE AND TIMING

Both the skills and working age population estimates have been drawn from the Annual Local Area Labour Force Survey (LALFS).  The LALFS sample is taken from the 1st and 5th waves of quarterly Labour Force Survey to provide the largest non-overlapping sample. For 1999/2000 LALFS, the non-overlapping sample amounted to approximately 95,000 households.

More detailed breakdowns of these skills information are available from this source. However, due to relatively small sample sizes in some UA/LAD areas the estimates in the BCIs have been combined into 3 broad groups. This is to ensure that results meet the National Statistics LFS publication thresholds for the majority of UA/LAD areas.

ISSUES

For 2000/2001 onwards the existing LALFS survey sample in England was boosted to ensure that the total sample size for local education authorities outside of London would reach a minimum sample size in each year of 875 economically active adults. This has led to a boost in England of around 40,000 economically active adults from 2000 onwards. This boost means that the skills estimates for the years 2000 and onwards may not be comparable with the annual results for previous years. The boosted LALFS samples for 2000 and onwards are weighted differently to previous years and will have different levels of precision to the estimates for earlier years. Caution should therefore be used when comparing the estimates for 2000 or later with earlier years.

The LFS and population estimates used in this edition of the BCIs are not yet consistent with the latest 2001 Census results. LFS estimates for all available years will be reweighted to the 2001 Census population level by the Office for National Statistics in due course.

QUESTIONS AND ANSWERS

Q. What does the breakdown of skills within a particular area tell us about the characteristics of jobs there?

A.  Low skill levels among the residents of an area can in some cases reveal a general low skill requirement /low quality profile of jobs in that area. However, it can also be indicative of a mismatch between the skills of the residents and the requirements of the jobs within that area. For example, some UA/LAD areas (and in particular those that encompass central or outer – central city areas) can have a relatively low proportion of qualified residents whilst also having a high percentage of jobs with high skill requirements located there. In such cases, these jobs are filled by more highly skilled workers who commute in from neighbouring areas. Further information covering commuting patterns and skills will be available from the 2001 Census during late 2003 or early 2004.

Q.  What else does a low proportion of adults with qualifications within an area suggest?

A.  A low percentage of adults with formal qualifications living within a particular area can be indicative of generally low skill levels. As mentioned, it can also be indicative of low skill requirements of jobs in that area. However, an area with a low proportion of adults with formal qualifications does not necessarily mean that the standard of education in that area is poor. Low proportions of adults with qualifications living in an area can often say as much about the economic ‘pull’ on people with qualifications (for example through higher earnings) of neighbouring areas as it does about the standard of education in that area.

CONTACT:
Department for Education and Skills
0114 259 1322

www.dfes.gov.uk