Regional Report for the North West of England Region The National Business Survey
Prepared for The RDA Network
August 2008
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Table of Contents 1. Introduction ....................................................................... 2 Introduction .......................................................................................2 Background and objectives...............................................................2 Methodology and sample sizes ........................................................2 Report content, layout and contextual information............................3 Publication of the Data......................................................................4 Acknowledgements...........................................................................5
2. Executive Summary.......................................................... 6 Methodological Note .........................................................................6 The Current Business Climate ..........................................................6 Outputs and Investment....................................................................6 The Labour Market ...........................................................................7 Other Key Business Factors .............................................................7
3. The Business Climate ...................................................... 9 National Economic Performance ......................................................9 The Consumer Market and Inflation..................................................9 The Business Climate in the North West ........................................10 Business trends in the Region ........................................................12
4. Prices and Inflation......................................................... 14 Passing Costs on to Customers .....................................................16
5. Investment Prospects .................................................... 18 National Statistics: Output Trends ..................................................18 NBS Findings: Levels of Output......................................................19 NBS Findings: Output Trends .........................................................20
Š 2008 Ipsos MORI. Contains Ipsos MORI confidential and proprietary information. Not to be disclosed or reproduced without the prior written consent of Ipsos MORI.
Domestic Orders.............................................................................22 National Statistics: Investment Levels ............................................24
6. Labour Market in the Region ......................................... 25 Unemployment: National Context ...................................................25 The Labour Force in the North West...............................................25 Unemployment Rates .....................................................................26 Addressing Skills Gaps in the Labour Market .................................28 NBS Findings: Staff Vacancies .......................................................29
7. Other Key Business Metrics .......................................... 34 Business location............................................................................34 Business competitiveness factors and location ..............................35 The Regional Market: Sales and Purchases...................................39
8. Strategic Business Planning ......................................... 43 Expenditure on Research and Development ..................................44
9. Environmental Performance.......................................... 48 Greenhouse Gas Emissions, 1990 – 2005 .....................................48 Emissions by Industry Sector .........................................................49 Environment and North West Business ..........................................50
Appendices ............................................................................ 55 Appendix A: Topline data................................................................55 Appendix B: Notes on statistical reliability ......................................62 Appendix C: Bibliography ...............................................................64
Š 2008 Ipsos MORI. Contains Ipsos MORI confidential and proprietary information. Not to be disclosed or reproduced without the prior written consent of Ipsos MORI.
1. Introduction Introduction
This report is based on findings from wave one of the National Business Survey (NBS), Spring 2008, conducted by Ipsos MORI on behalf of the RDA Network. It explores perceptions of businesses across the North West of England region, on current and recent business conditions as well as looking forward to potential issues and views on projected change over the coming months. This report is accompanied by a national level publication on the findings of the National Business Survey.
Background and objectives
The NBS is a large scale research study conducted across England with businesses and organisations from all sectors of the economy (both private and public sector). The survey is conducted on behalf of the RDA Network and as such, fieldwork is divided between England’s nine Government Office Regions, with varied sample sizes within each region (as set out in the sample profile appended to this report).
The survey builds on the findings and work of the previously titled, “UK Survey of Regional Economic Trends” which ran over nine consecutive waves, from Spring 2003. The methodology and questionnaire remain largely unchanged from this previous survey to ensure consistency of approach between survey waves and data (see below for more on research methods).
Methodology and sample sizes
The NBS uses a postal methodology, with the option of completing the survey online for those who find this more convenient.
An initial mail-out was sent out to a randomly selected, representative sample of businesses and organisations across the country. Following this, supplementary postal reminders were sent out to all organisations which had not responded to
2
the original mailing, as well as email reminders to all organisations with email contact details.
Fieldwork was conducted between April and June 2008 and the final achieved sample size was 4,797, divided between all regions, with a response rate of 6%. The table below shows how responses were broken down by each region.
Region
Sample size
Yorkshire and Humber
1,144
West Midlands
319
South West
454
South East
657
North West
357
North East
307
London
414
East Midlands
735
East of England
410
England
4,797
Northern Ireland
438
TOTAL (England and NI)
5235
Data has been weighted by region and business units by employee size bands to reflect the national profile.
Report content, layout and contextual information
The report includes a number of sections aimed to highlight the key findings from the survey, and makes extensive use of secondary data and comparator information in order to contextualise the findings. The sections include: y
Introduction: Introduction to the survey objectives, methods and notes on interpreting the findings and using the report.
y
Executive summary: A stand-alone interpretive summary of the key survey findings.
3
y
Business climate: The NBS findings on business climate are placed within the context of national statistics on economic performance.
y
Prices and Inflation: The NBS findings on prices and costs are placed within the context of inflationary trends.
y
Investment Prospects: The NBS findings on output levels and planned spending are placed within the context of national statistics on output and investments levels.
y
Labour Market in the Region: The NBS findings on employment levels and skills gaps are placed within the context of a range of labour market statistics.
y
Location Drivers: This section includes findings on satisfaction with a range of key business location factors.
y
Strategic Business Planning: This section includes usage and attitude findings on business support services
y
Environmental Performance: NBS findings on actions taken to improve environmental performance are placed with the context of national level progress in reducing environmental emissions.
ƒ
The appendices contain a copy of the questionnaire used in the study, marked up with topline findings for each question. They also contain a statistical guide relating to the interpretation of data.
Publication of the Data ƒ
As with all our studies, these findings are subject to our standard Terms & Conditions of Contract. Any press release or publication of the findings of this survey requires the advance approval of Ipsos MORI. This would only be refused on the grounds of inaccuracy or misinterpretation of the findings.
4
Acknowledgements ƒ
We would like to place on record our thanks for the input and support provided during the study from Andy Mowlah at the North West Development Agency and Bethan Sheridan-Jones, Andrew Lowson and Patrick Bowes at Yorkshire Forward, as well as Ian Kay at ONS. We would also like to thank all businesses who took the time to take part in the survey. ŠIpsos
Joe Marshall
MORI/31229 Ronan Smyth Paul Carroll
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2. Executive Summary Methodological Note Please note that at the sector level of analysis, sample numbers are reduced and caution should therefore be applied in the interpretation of results.
The Current Business Climate
The National Business Survey1 (NBS) has found that business confidence in the North West is in decline, with almost half (45%) of businesses expecting the business climate to deteriorate in the next 12 months, and only one in eight (13%) expecting it to improve2. This challenging picture is widespread, with little difference by English region and business sector, though pessimism is more pronounced in the hotels and catering and construction sectors.
Nine out of ten businesses have found that energy costs have increased, while three quarters reported that transport costs have increased.
Profit margins are being squeezed - half of businesses in the region said profit margins were lower in the last 12 months, and only 13% said they were higher. The expectations for the next 12 months are along similar lines. Manufacturers have been particularly hit by increased transport costs as well as the cost of raw materials.
A significant proportion of businesses in the North West are increasing their prices to counteract the pressures on profit margins – four in ten businesses have increased prices in the past 12 months and only one in ten have reduced them.
Outputs and Investment
In the manufacturing, transport and distribution sectors, at least a third of firms stated that output levels will drop in the next 12 months, while few think it will
1 2
All findings in this report are from the National Business Survey unless otherwise stated Wave One fieldwork conducted May-June 2008
6
increase. Well over half of all businesses say their current level of output is below capacity, rising to nearly three quarters in amongst hotel / catering businesses and those in the distribution sector.
The picture is more positive in financial and public services, with around a third of businesses in these sectors expecting increased output and less than a quarter predicting a decline.
A higher proportion of businesses expect to increase investment in buildings, training, product and process development and plant and machinery compared to those that expect to decrease investment. These findings suggest that despite the lack of confidence in the overall business climate, many businesses are planning to invest further, with manufacturers particularly likely to invest in plant and machinery and product and process development.
The Labour Market
Around a quarter of businesses in the distribution and hotels/catering sector expect a fall in the numbers employed over the next 12 months, with one in ten in each sector expecting a rise. Manufacturing, transport and public / personal services are rather more optimistic about employment levels in the year ahead.
Around a fifth of businesses have vacancies which they find hard to fill or could not fill.
It is notable that the skills most in need of improvement in the next 12 months tend to more relevant to service industries: IT skills; sales and marketing and; management skills.
Other Key Business Factors
The NBS found that government regulations and business support from government are important for the competitiveness of organisations, but also that there is considerable dissatisfaction around these issues.
Seven in ten businesses conduct more than half of their sales within their own region, and over half conduct more than half of their purchases within their own
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region. This suggests that though global market trends are increasingly influential, many businesses are heavily dependent on regional markets. ƒ
Around one in eight businesses cooperate with universities for research and development activities and around a third belong to specialist industrial networks in order to keep up to date with new and emerging technologies.
ƒ
There remains considerable scope for businesses to increase their actions to help the environment. Less than one in ten have quantified their CO2 emissions, and around a quarter have actively taken steps to reduce CO2. Recycling schemes however, are widespread more than three quarters of businesses saying that they have undertaken this activity in the last 12 months, and around a half say they have adopted waste minimising and energy saving schemes.
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3. The Business Climate National Economic Performance The prospects for the UK economy remain uncertain. However, currently the key economic indicators point towards a continued economic slowdown, rather than contraction and recession. UK GDP grew by 0.3% in Q1 2008, a significantly lower rate compared to 20073. The latest summary of consensus forecasts from HM Treasury are for GDP to grow by 1.6% in 2008, a considerable slowdown on 2007 where growth was 3.1%4. Therefore evidence exists of slowing growth, rather than contraction, and the UK economy has been performed robustly alongside international benchmarks. In the United States, GDP growth was only 0.1% in the first quarter of 2008, which was at the same level as the fourth quarter of 2007, and this is fuelling concern that stagnation and possible contraction in the US economy will adversely affect the UK economy.
The Consumer Market and Inflation Despite concerns over the strength of the UK economy, inflationary pressures and a weakening housing market, UK consumer spending has remained resilient. Household consumption increased by 3.0% year-on-year in Q1 2008 and retail sales volumes increased by 3.4% in May compared to the previous month and by a massive 8.1% year-on-year5. The latest figures for 2008 showed a significant rise between January and February, followed by a dip in March, before the rise in May which was the largest monthly increase in over 20 years6.
3
HM Treasury Pocket Databank, 1st July 2008 HM Treasury Forecasts for the UK Economy, July 2008 5 HM Treasury Pocket Databank, 1st July 2008 6 Office of National Statistics/BBC News Online 4
9
Inflation remains a key threat to the stability of the UK economy. Consumer Price Inflation increased from 3.3% in May to 3.8% June, significantly higher than Bank of England’s 2% target and considerably above historical trends7. This reflects the increasing pressure on key consumer prices in the food and energy sectors, illustrated by a 9.5% rise in food prices in the 12 months to June8. There is strong concern that rising prices may impact consumer confidence and spending if there is a downturn in the rate of average earnings or other shocks such as a sharp decline in house prices or employment levels. Headline average earnings grew by 3.9% in the 3 months to April 2008, suggesting that earnings growth is matching price rises, with the consumer price index having grown at the level of 3.8% in the 12 months to June 20089. As consumers feel the impact of increasing prices on their incomes, there is also strong concern that employers will be pressured to increase wages among their employees to make up the shortfall, fuelling a wage / price inflationary spiral.
The Business Climate in the North West In spite of the predictions of growth, albeit slowing, business opinion is largely pessimistic. Fewer than one in seven businesses (13%) in the North West expect the climate in which they operate to improve over the year ahead, a similar figure to England as a whole (12%).
7
Office of National Statistics Office of National Statistics/BBC News Online 9 HM Treasury Recent Economic News, July 2008 8
10
Figure 1
Business climate Q Over the next 12 months do you expect the business climate in which your business operates to generally improve, remain stable, or deteriorate? Improve England = 12% “Improve�
13%
Deteriorate
45% 43%
Remain stable
Base: All businesses in North West answering (348)
Those businesses with formal growth plans are more likely than those without to say that they think the climate will improve (25% compared to 6%), as are those who cooperate with universities for R&D (29% compared to 10%).
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Business trends in the Region Reflecting this pessimism, firms are more likely to say that output, domestic orders, and profit margins are now lower than they were a year ago.
This decline is
particularly pronounced for profit margins, with nearly half of businesses (49%) saying these are lower than a year ago, compared to just 13% saying they are higher. Furthermore, prices charged have increased over the last 12 months – four in ten businesses (39%) say that the prices they charge are higher, with only one in ten (10%) saying they are lower. Figure 2
Trends in past 12 months Q
Excluding seasonal variations, what has been the trend during the past 12 months with regard to..? Higher
Same
Lower
Volume of output (323)
Not applicable
39%
Prices charged (336)
29%
Domestic orders (328)
20%
Numbers employed (334)
18%
Profit margins (336)
13%
Export orders (305) 6%9%4%
% England Higher
47%
10% 3%
41
11%
30
32%
28% 33%
31%
54%
16% 17% 11%
37%
49% 81%
2%
24 15 17 7
Base: All businesses in North West answering (shown in brackets)
A similar trend is expected over the next 12 months. Prices charged are expected to go up (45% say they will increase, 10% say they will be lower), while profit margins will decline (49% saying these will be lower, 13% say higher).
12
Figure 3
Trends for next 12 months Q
Excluding seasonal variations, what are the expected trends for the next 12 months with regard to..? Higher
Same
Lower
Volume of output (299)
Not applicable
45%
Prices charged (311) 24%
Domestic orders (304)
16%
Numbers employed (303)
14%
Profit margins (314)
13%
% England Higher
43% 32%
33% 34%
10%
24
18% 11%
38%
Export orders (279) 8% 8%5%
44
15%
35%
58%
10% 2%
47% 79%
2%
18 14 15 7
Base: All businesses in North West answering (shown in brackets)
The financial sector is most optimistic for the next 12 months, with greater expectation that numbers employed (22% compared to 14%), volume of output (33% compared to 24%) and profit margins (22% compared to 13%) will increase over the year ahead. It is notable that in the region more businesses expect prices charged to increase over the next 12 months (45%), compared to the past 12 months (39%). Over the next 12 months less businesses expect higher volumes of output (24% compared to 29% in past 12 months); and less expect higher trends in domestic orders (16% compared to 20% in past 12 months). There is also more pessimism when asked about numbers employed, as 18% said trends were higher in the past 12 months, and only 14% expect them to be higher in the next 12 months.
13
4. Prices and Inflation The major cost increases for businesses in the North West, this year and ongoing, have been energy costs (89% say these have increased over the past year, 91% think they will increase over the next 12 months), followed by transport costs (75% this year, 72% next year), raw materials (63% this year, 68% next year), and staff costs (61% this year, 63% next year). Figure 4
Cost increases – past and future Q Which of the following costs have increased for your business over the past 12 months? Q Which of the following costs do you expect to increase over the next 12 % England months? % Past 12 months % Next 12 months
89 91
Energy costs 75 72
Transport costs
63 68 61 63
Raw materials Staff costs 39 37 34 38
Property Costs Cost of finance 9 11
Other costs None of these
1
88 85 75 75 60 63 61 63 37 38 34 37 8 10 1 1
Base: All businesses in North West answering (338 and 326)
Naturally, experiences and expectations vary according to sector. Manufacturers are more likely to say that raw materials (86% compared to 63% across the region) and transport costs (91% compared to 75% across the region) are more expensive. In contrast, only 39% of financial businesses say that raw materials are now more expensive than 12 months ago. Similarly, manufacturers are also more likely to say that certain costs will increase over the next 12 months, in particular raw materials (86% compared to 68%) and transport costs (86% compared to 72%).
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The rising cost of energy and transportation is highlighted by around four in ten businesses selecting either energy costs (41%) or transport costs (39%) as the main upward pressure on costs. These were again closely followed by raw materials (37%) and staff costs (32%) Figure 5
Main upward cost pressure Q Which of the following costs presents the main upward cost pressure on your business at present? % % Main cost pressure
England
Energy costs
41
Transport costs
39 37
Raw materials
32
Staff costs 14
Cost of finance Property costs None of these All selecting more than one
39 35 31 15 13
12
6
6
Other costs
39
2
2 38
35
Base: All businesses in North West answering (283)
15
Passing Costs on to Customers The rising costs experienced by businesses in the North West have, to a large degree, resulted in higher prices for customers. Around six in ten businesses (61%) have passed at least some of their increased costs on to customers, with 7% passing all the increases on. Figure 6
Increased costs Q Have you passed on any increased costs to your customers in the past 12 months?
Yes - all 7%
No 38%
England = 64% “Yes� vs. 62% in North West
54%
Yes - some
Base: All businesses in North West answering (353)
Manufacturers are most likely to pass on costs to customers, with four in five businesses in this sector (80%) passing on some or all of their cost increases. By contrast, barely half of businesses in the financial sector (49%) have done so.
16
Figure 7
Increased costs by sector Q
Have you passed on any increased costs to your customers in the past 12 months? Yes - All
Yes - Some
No 73%
Primary/manufacturing (60) 7% Construction (27) 12% Distribution (89) 7% Hotels/catering (21) 5% Transport/storage/comms (12) 7% Financial Intermediation (101) 5% Public/personal services (43) 12%
% England No
44% 60% 47% 49% 44%
20% 44% 32% 48% 44% 51%
51%
37%
26 27 32 30 27 45 44
Base: All businesses in North West answering (shown in brackets)
Four out of five businesses (80%) in the primary/manufacturing sector have passed on some increased costs to customers, compared to three quarters nationally (74%). The financial intermediation sector is the least affected with around half in the region passing on increased costs (49%).
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5. Investment Prospects This section will assess investment prospects for businesses, by comparing the latest national statistics with the findings from the NBS which relate to the crucial areas of future spending plans.
National Statistics: Output Trends It is worth noting the latest national statistics on output levels, as an overall indicator of the current health of the economy, before comparing this with the views of businesses on past and expected trends. At a national level, service sector output was buoyant in the three months to February 2008, with growth of 3.1%. However output growth in manufacturing was lower at 1.0% over the same period, and industrial production was only at 0.6%, though figures are similar to the medium term trends over the last 12 – 18 months. Manufacturing productivity is approaching stagnation with growth of only 0.2% in the 12 months to quarter four in 2007. Whole economy investment levels have performed somewhat better with 0.9% growth over the same 12 month period, which compares to growth of 1.6% in 2006. However growth in exports remains strong at 2.4%, though imports are at a higher level of 3.0% with a trade deficit of £8.5billion in the last quarter of 2007. This points to a challenging picture in terms of manufacturing output and productivity, and to a lesser extent business investment. Clearly, strong growth in the service sector has been maintaining the overall growth levels in the economy.
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NBS Findings: Levels of Output At a regional level, there is greater optimism for increased output over the next 12 months in the financial and public / personal services sectors, where around a third of businesses (33% and 34% respectively) expect output to increase, compared to just one quarter of businesses (24%) across the region overall. As across the rest of England, around six in ten (60%) of businesses in the North West say that their present level of output is below capacity. Figure 8
Level of output Q Is your present level of output below capacity?
Yes England = 59% “Yes�
No 40% 60%
Base: All businesses in North West answering (348)
19
Figure 9
Level of output by sector Q Is your present level of output below capacity? Yes
No
Primary/manufacturing (60)
47%
53%
Construction (27)
52%
48%
Distribution (83)
71%
Hotels/catering (22) Transport/storage/comms (12) Financial Intermediation (101) Public/personal services (43)
29%
78% 62% 58% 54%
22% 38% 42% 46%
Base: All businesses in North West answering (shown in brackets)
This is most likely to be the case in the distribution sector, where around seven in ten (71%) of businesses say that they are operating below capacity. In contrast, over half (53%) of manufacturers say that they are not below capacity.
NBS Findings: Output Trends The charts below present the NBS findings on volume of output, when businesses were asked about past trends over the last 12 months and expected trends over the next 12 months. The views of North West businesses largely reflect the national picture. Those in the financial sector are more likely to say that output has been higher over the past 12 months (38% compared to 29% overall) while personal services are most likely to say that it will be higher in the year ahead (34% compared to 24%). Indeed, the latter is the sector with the highest “net higher� score for the next 12 months (+11%) – the score derived from subtracting the score of those who think that output will be lower from the proportion of those who think it will be higher.
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By comparison, hotels and distribution are most likely to say that output has been lower (37% and 44% respectively, compared to 32% overall) and, along with construction, are particularly pessimistic about the year ahead. These figures again suggest that prospects are sentiment is much more positive among businesses within the service sector compared to other sectors of the economy. Figure 10
Trends in past 12 months by sector: volumes of output Q
Excluding seasonal variations, what has been the trend during the past 12 months with regard to volumes of output? Higher
Same
Lower
Primary/manufacturing (56)
28%
Construction (25)
29%
Distribution (82)
27%
9%
44%
28%
38%
2%
30%
8% 24%
37%
46%
Financial Intermediation (95)
32%
32%
28%
Transport/storage/comms (11)
Public/personal services (37)
39%
20%
Hotels/catering (17) 11%
Net % higher
Not applicable
26% 22% 29%
18% 10% 30%
16%
10%
28%
-4 -1 -24 -26 +28 +8 +10
Base: All businesses in North West answering (shown in brackets)
21
Figure 11
Trends in next 12 months by sector: volume of output Q
Excluding seasonal variations, what has been the trend during the next 12 months with regard to volume of output? Higher
Same
Primary/manufacturing (51)
Lower 25%
Construction (25) 16% Distribution (78) 15% Hotels/catering (16) 12% Transport/storage/comms (9)
22%
Financial Intermediation (88)
33%
Public/personal services (32)
34%
Net % higher
Not applicable 38%
37%
9%
-15
43%
7%
-28
26%
22%
44% 31%
21%
-10
31%
44% 36%
2%
35%
26% 12% 25% 11%
22%
23%
-14 -22 +8 +11
Base: All businesses in North West answering (shown in brackets)
Domestic Orders On average around one third of businesses (35%) expect domestic orders to be lower in the next 12 months, while less than half that number (16%) expect them to be higher. The outlook is particularly gloomy in the manufacturing and distribution sectors, where around four in ten businesses (both 41%) expect orders to be lower in the year ahead.
22
Figure 12
Trends in past 12 months by sector: domestic orders Q
Excluding seasonal variations, what has been the trend during the past 12 months with regard to domestic orders ? Higher
Same
Primary/manufacturing (57)
Lower 18%
50%
Construction (25) 17%
Financial Intermediation (96) Public/personal services (39)
35%
41%
24% 31%
-10
4%
-23
30% 26% 18% 15%
12% 34%
21%
39%
4%
40%
34%
Hotels/catering (20) 10% Transport/storage/comms (10)
28%
38%
Distribution (81) 13%
Net % higher
Not applicable
30%
30% 20% 36%
-28 -10 +9 -6 +15
Base: All businesses in North West answering (shown in brackets)
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National Statistics: Investment Levels In terms of expenditure over the next 12 months, around one third of businesses in the region (34%) expect to spend more on buildings. Around a quarter expect to spend more on plant and machinery (24%) and training (23%). One in five (21%) expect to spend more on product and process development. Similar proportions are seen at the national level. Figure 13
Expected future expenditure Q
Do you expect to spend more or less in the next 12 months on..? More
Same
Buildings (350)
Less
Not applicable
% England More
38%
35
34%
Plant and machinery (342)
24%
Training and retraining (344)
23%
Product and process development (341)
21%
25%
24
13% 18%
24
40%
24
17%
35%
45%
27%
12% 18%
12%
Base: All businesses in North West answering (shown in brackets)
Manufacturing businesses are more likely than the regional average to expect increased expenditure on plant and machinery (36% compared to 24%) and on product and process development (33% compared to 21%).
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6. Labour Market in the Region This section will review the national and regional statistics on the labour market, before presenting the NBS findings on the following topics: skills gaps and needs affecting businesses; staff vacancies; and the provision of training. The NBS findings are placed within the context of the Leitch Review10, and the findings of the 2007 National Employer and Skills Survey.
Unemployment: National Context The recessions of the early 1980’s and early 1990’s were characterised by unemployment levels rising to over three million. Claimant unemployment rate in the UK was just over 819,000 in May 2008, representing 2.5% of the working age population11. The economic forecasts of independent city institutions predict a ten per cent rise in claimant unemployment12 between 2008 and 2009, with a further seven per cent rise by 201113. In particular concern exists about further job losses in certain sectors that have been particularly affected by the credit crunch, such as the housing and financial services industries.
The Labour Force in the North West The labour force size in the region has increased from 3,205,000 in 2003 to 3,255,000 in 200714. This equates to an increase of 1.6%, which compares to a national rise of 2.9%. In the region, 15.1% of those in employment are working part time, compared to a national average of 15.5%. 7.9% are self employed, which is below the national average of 9.2%
10
Leitch Review of Skills, Prosperity for all in the global economy - world class skills , December 2006 11 Office of National Statistics, NOMIS Labour Market Statistics (May 2008) 12 This is a different measure from the ILO definition. The claimant count is based on those receiving Jobseekers Allowance. 13 HM Treasury Forecasts for the UK Economy, July 2008
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The number of self employed females has decreased from 115,000 in 2004 to 96,000 in 2006, a decline of 20%. The number of self employed males has increased from 272,000 in 2004 to 286,000 in 2006, a rise of 5%. The decline in the number of self employed females is a concern, and also means that there has been no overall growth in the self employed sector.
Unemployment Rates15 Figure 14: Unemployment rates by region, 2003 – 2008 (second quarter of each year). 2003
2004
2005
2006
2007
2008
Yorkshire 5.2 and the Humber
4.7
4.9
5.9
5.7
5.4
North East
6.2
5.6
6.8
6.2
6.6
7.0
North West
5.0
4.5
4.5
5.4
6.0
6.1
East Midlands
4.3
4.3
4.3
5.5
5.1
5.4
West Midlands
5.8
5.7
4.8
5.9
7.1
6.4
East
4.0
3.8
4.0
5.2
4.8
4.5
London
7.4
7.1
7.3
8.0
7.5
6.9
South East
4.0
3.8
3.9
4.7
4.3
3.8
South West
3.5
3.8
3.3
3.8
4.1
4.0
Scotland
5.3
6.1
5.5
5.5
4.6
4.4
Wales
4.7
4.4
4.7
5.9
5.8
5.3
Northern Ireland
5.4
5.3
5.1
4.4
3.8
3.9
UK
5.0
4.9
4.9
5.6
5.5
5.3
14
ONS Labour Force Survey. Seasonally adjusted data for people of working age, men aged 16-64 and
26
The unemployment level in the North West decreased between 2003 and 2004, but it has since increased from 4.5% in 2005 to 6.1% in 2008, which is above the national average of 5.5%. In the region unemployment levels continued to rise between 2006 and 2007, though nationally the trend has fallen slightly. The NBS survey shows that within the region, 14% of businesses expect the trend in the next 12 months for numbers to be higher and 18% expect it to be lower, equating to a net score of -4. The chart below shows that the net score is positive for businesses in manufacturing and public/personal services sectors. Businesses in the distribution and hotels/catering sectors expect the numbers employed to be lower in the next 12 months. Figure 15
Trends in past 12 months by sector: numbers employed Q
Excluding seasonal variations, what has been the trend during the past 12 months with regard to numbers employed ? Higher
Same
Primary/manufacturing (58) Construction (25)
Lower 22% 21%
Distribution (86) 9%
Transport/storage/comms (11) Financial Intermediation (94) Public/personal services (40)
60% 48%
65% 28%
19% 30%
7%11% 22%
9%
24% 8%
58%
Hotels/catering (20) 9%
Net % higher
Not applicable
21% 5% 44%
51% 45%
+15 -2 -15 -11
18% 10%
+10
17% 13%
+2
9%
16%
+21
Base: All businesses in North West answering (shown in brackets)
women aged 16 to 59. 15 ONS Labour Force Survey. For those people of working age, seasonally adjusted.
27
Addressing Skills Gaps in the Labour Market In 2006, the government published a major report on the state of labour force skills in the UK (The Leitch Review of Skills). The report concluded that the economy has a serious legacy of low skills, is deficient at intermediate and technical levels and is also likely to fall behind at degree level. It was estimated that by 2020 nearly 20 million additional people will need higher skill levels than at present. The report concluded that a major plank of government reforms needs to be focused on improving the skills of the existing workforce. Addressing these skills gaps is therefore a key priority for maintaining the competitiveness of the UK economy in the global marketplace. This section contrasts the NBS findings on the labour market, with the longitudinal National Employers and Skills Survey (NESS) conducted by the Learning and Skills Council, which was set up to tackle these skills deficits. The table below shows how skill gaps have changed at a regional level between the NESS results of 2005 and 2007. Figure 16: The Incidence and Number of Skills Gaps by Region (NESS, 2007) Regions are ranked in descending order of the incidence of experiencing skills gaps % of establishments with any Number of employees not fully skills gaps proficient (i.e. number of skills gaps) 2005
2007
Overall
16
15
North East
21
19
61,900
London
13
17
287,300
South West
15
16
137,600
South East
18
15
211,000
East Midlands
15
15
114,700
Eastern
15
15
145,500
Yorkshire and the Humber
23
14
110,800
North West
16
14
166,500
West Midlands
16
14
125,800
1,361,100
28
In the region, 14% of employers have vacancies, according to the National Employer and Skills Survey (NESS) 2007. This has fallen from 16% in 2005 and is just above the England average (15%).
NBS Findings: Staff Vacancies The NBS asked businesses about whether they found that staff vacancies were hard to fill or could not be filled. Nearly one quarter of businesses in the North West (23%) say that they have had difficulty filling vacancies in the past year. Slightly fewer (18%) think they will have difficulties in the year ahead. Businesses with smaller turnover, less than £2 million, are more likely to say that they had no difficulty filling vacancies over the past 12 months (75% compared to 71% overall) or will not have difficulty in the next 12 months (65% compared to 61% overall). Figure 17
Staff vacancies Q Did you have any staff vacancies that you found hard to fill, or could not fill, during the past 12 months, and do you expect to have any in the next 12 months? % Yes
% No
% Don’t know
Past 12 months
6%
23%
71%
Base: All businesses in North West answering (336)
Next 12 months
England = 22% “Yes” in past 12 months, 19% in next 12 months
20%
18%
61%
Base: All businesses in North West answering (331)
29
Businesses in the North West see IT skills and sales and marketing as the skills most in need of improvement in the next 12 months. Around half see these two skill sets as needing to be improved. Predictably, given the lack of sales and purchases from overseas, as discussed above, just 5% of businesses see foreign languages as being in need of improvement. The relative importance of IT skills and marketing skills (and unimportance of foreign languages) is reflected in the figures for England as a whole. Figure 18
Skills in need of improvement Q Do the following skills need improving in the next 12 months to meet your business needs? % % Yes
% No
England Yes
% Not applicable
IT skills (319)
50
37
13
47
Sales and marketing (322)
49
38
13
53
13
40
15
36
Management skills (320)
38
Office administration (321)
36
Technical, specialist or job-specific (318)
34
Business/financial planning (318)
34
Customer care (313)
32
Communication skills (312) 28 Science, technology and engineering (308) 14 Foreign languages (304) 5 35
49 49 35
35
31 52
35
15
62 62 38
48 60
6
36
10
33 15 9
Base: All businesses in North West answering (shown in brackets)
As one might expect, different skills are valued by different sectors. For example, improved IT skills are more sought after in the financial sector than elsewhere (58% compared to 50% overall), as is improved business/financial planning (42% compared to 34% overall).
30
Figure 19
Skills improvement by sector: IT skills Q
Do the following skills need improving during the next 12 months to meet your business needs? – IT Skills Yes
No
Don’t know/Not applicable
Primary/manufacturing (52) Construction (24)
38%
Distribution (80) Hotels/catering (15)
37%
51%
49%
44% 19% 57%
Financial Intermediation (95)
58%
19% 40%
40%
54%
13%
37%
Transport/storage/comms (13)
Public/personal services (40)
12%
35%
8%
38% 28%
3%
19%
Base: All businesses in North West answering (shown in brackets)
Skills needs in IT are greatest in the financial intermediation (58%) and transport/storage/communications sectors (57%) and lowest in the hotels and catering sector (18%).
31
Figure 20
Skills improvement by sector: business and financial planning Q
Do the following skills need improving during the next 12 months to meet your business needs? – Sales and Marketing Yes
No
Don’t know/Not applicable
Primary/manufacturing (53) Construction (24) 13% Distribution (80) Hotels/catering (16)
71%
34% 18%
46%
20% 38%
77% 42%
Financial Intermediation (93)
30%
14% 17%
44%
Transport/storage/comms (13) 8%
Public/personal services (39)
46%
40%
15% 52%
56%
6% 14%
Base: All businesses in North West answering (shown in brackets)
Skills needs in IT are greatest in the financial intermediation (42%) and primary/manufacturing sectors (38%) and lowest in the transport/storage/communications sector (48%).
32
Figure 21
Provision of staff training Q Did you provide any formal external or internal training for your staff over the last 12 months? % Yes
% No
External
52%
Internal
48%
Base: All businesses in North West answering (328)
England = 49% provided external training, 63% internal
36% 64%
Base: All businesses in North West answering (325)
Nearly half (48%) of businesses in the North West have provided external training to their staff in the past year, with even more (64%) providing internal training. Public services are most likely to have provided external training (71% compared to 48% across the region). Smaller businesses, those employing less than 10 people, are most likely to say they have not provided any sort of training, be it external (61% saying they have not, compared to 52% across the region) or internal (40% compared to 36%).
33
7. Other Key Business Metrics The following addresses the other key business metrics that are crucial for assessing the health of an economy and the prospects for growth and investment. The National Business Survey asked businesses to provide their views on the importance of a series of business location factors. The findings on importance have been compared with the satisfaction levels for these factors. The results of this analysis are then placed alongside a profile of sales and purchases at a regional, national and international level.
Business location Pessimism about business prospects for the year ahead do not appear to be driven by negative attitudes to the local area. Over a third of businesses do not have an opinion on whether or not their location is a good place for businesses to invest (34%) and four in ten (41%) express no opinion on whether they expect the area to become more attractive to investors. However, of those who do express an opinion, positive views outweigh negative ones. Over half (55%) agree that their location is a good place to invest (11% disagree) while four in ten (41%) agree it will become more attractive to investors in the future (18% disagree).
34
Figure 22
Attitudes to the area Q To what extent do you agree or disagree with the following statements? Strongly disagree Tend to agree
Tend to disagree Strongly agree
This location is a good place for business to invest
5% 6%
21%
34% 34%
Neither / nor Don't know
I expect the area to become more attractive to investors in future
England = 57% “Agree” the area is good for investment, 45% believe it will become more so
Base: All businesses in North West answering (348)
5% 13%
14% 27%
41%
Base: All businesses in North West answering (343)
The distribution sector is more likely to disagree with these statements than the regional average – 21% disagree that the location is attractive to investors and 30% disagree that it will become more so in the future.
Business competitiveness factors and location In the NBS survey, businesses were asked which factors were most important to their businesses competitiveness.
In the North West, the most important factors in a
business’ competitiveness are perceived to be workforce skills (73%) and management skills (71%), also considered the most important factors across England as a whole. They are closely followed by government regulations (67%), proximity of customers (64%) and current location (62%). International trade links are least important both within the region (16% saying they are important) and nationally (17%). Again, this possibly reflects the low level of overseas trade discussed earlier.
35
Figure 23
Importance of business location factors Q Are the following factors important or not important to your organisation’s competitiveness? % % Important
% Not important
Workforce skills (337) Management skills (335) Government regulations (336) Proximity of customers (338) Current location (338) ICT and broadband infrastructure (338) Transport infrastructure (340) Business support from government (335) Access to specialist expertise (333) Availability of premises (340) Access to finance (339) Proximity of suppliers (334) International trade links (334)
% Don’t know/Not applicable
73 71 67 64 62 55 52 51 48 47 45 34 16
36
17 16 19 29 28 26 31 28 33 35 37 53 49
England Important
10 13 14 6 10 19 17 21 20 18 18 13
78 74 68 64 63 60 54 52 51 48 44 33 17
Base: All businesses in North West answering (shown in brackets)
Importance understandably varies according to sector.
Amongst manufacturers,
transport infrastructure (67% compared to 52%) is much more important than compared to the region overall. Proximity of customers (76% compared to 64%) and current location (77% compared to 62%) are more important to the distribution sector. The financial sector sees access to specialist expertise (63% compared to 48%) and ICT and broadband infrastructure (70% compared to 55%) as more important than average. Satisfaction with these factors is highest for current location, with four in five (81%) businesses saying they are satisfied, as similar proportion to nationally (80%). This if followed by proximity of customers (75% satisfied) and management skills (70% satisfied).
36
Figure 24
Satisfaction with business location factors Q Are you satisfied or dissatisfied with each of the following in the area in which your business is located? % % Satisfied
% Dissatisfied
Current location (314) Proximity of customers (312) Management skills (311) Workforce skills (314) Proximity of suppliers (306) Availability of premises (317) ICT and broadband infrastructure (312) Access to finance (316) Access to specialist expertise (311) Transport infrastructure (312) Government regulations (304) International trade links (302) Business support from Government (308)
81 75 70 68 66 63 57 55 53 48 21 17 14
England Satisfied
% Don’t know/Not applicable
10 8 12 18 5 17 15 16 10 28 59
6
29 20 28 30 37 25 20
77 57
8 16 18 14
29
80 75 67 65 63 67 59 50 53 45 20 19 14
Base: All businesses in North West answering (shown in brackets)
Interestingly, whilst government regulation is deemed to be very important to competitiveness, only one in five businesses (21%) express satisfaction with this factor. Such contrasts are illustrated in the chart below, which plots satisfaction with each factor against the perceived importance. The factors in the top right hand quadrant – workforce skills, management skills, proximity of customers and current location register high levels of satisfaction and importance. However, those in the bottom right quadrant – government regulation and government support for business – are seen as important but register low levels of satisfaction. That is, these factors are seen as having a strong effect on performance but businesses in the North West are not satisfied with them.
37
Figure 25
Business location: Importance vs. Satisfaction Q Are the following factors important or not important to your organisation’s competitiveness? Q Are you satisfied with each of the following in the area in which your business is located? 80 70
Proximity of suppliers
Satisfaction
60
Availability of premises
Current location Proximity of customers
Access to finance
50
ICT/broadband infrastructure
Access to specialist expertise
40 30
Govt regulations
Business support from Govt
10
Workforce skills
Transport infrastructure
International trade links
20
Management skills
0 0
10
20
30
40
50
60
70
80
Importance Base: All businesses in North West answering
38
The Regional Market: Sales and Purchases Figure 26
Proportion of sales Q Please estimate the proportion of your sales in the following areas: 0%
1-10%
11-25%
26-50%
51-75%
8
13
23
Within region 2 13 (338)
Rest of UK (298)
Overseas (262)
7
28
24
76-99%
100%
71
68
11 1
20
22
3132*
5
4
35
16
10
70
8
20
% % EngNW land 50%+ 50%+
Base: All businesses in North West answering (shown in brackets)
The NBS asked businesses about the proportion of their sales and purchases conducted at the regional, national and international level. Seven in ten businesses in the North West (71%) say that at least half of their sales are within the region, slightly higher than the national average (68%). However, they are slightly less likely to say that at least 50% of their sales are to the rest of the UK (20% compared to 22%). Just 5% of businesses say that at least half of sales are made to overseas, similar to the national average (4%).
Indeed, seven in ten
businesses in the North West (70%) say that none of their sales are to overseas, whereas over a third (35%) say all of their sales are within the region.
39
Figure 27
Proportion of sales within region by sector Q
Please estimate the proportion of your sales within your region Greater than 50%
Primary/manufacturing (59)
56% 84%
Construction (27) Distribution (87)
75%
Hotels/catering (19)
77%
Transport/storage/comms (13)
53% 71%
Financial Intermediation (97) Public/personal services (36)
75%
Base: All businesses in North West answering (shown in brackets)
The proportion of businesses with over 50% of sales within region rises to around four in five for the construction, distribution, hotels/catering and public/personal services sectors.
By
comparison,
the
primary/manufacturing
and
transport/storage/communications sectors are more dependent on sales outside the region.
40
Figure 28
Proportion of purchases Q Please estimate the proportion of your purchases in the following areas: 0%
Within region (313)
1-10%
7
Rest of UK (287)
Overseas (236)
15
23
11-25%
13
15
26-50%
10
51-75%
15
22
62
76-99%
16
100%
54
51
12 4
26
29
6 4 62
12
13
23
14
10
12
8
% % EngNW land 50%+ 50%+
Base: All businesses in North West answering (shown in brackets)
There is a similar story when looking at purchases by geographical region. Four in ten businesses (39%) say that at least three quarters of their purchases are from within the region. overseas.
Six in ten (62%) say that none of their purchases are from
The proportions of businesses making at least half of their purchases
within region (54%), across the UK 26%) and from overseas (12%) are similar to the national averages.
41
Figure 29
Proportion of purchases within region by sector Q
Please estimate the proportion of your purchases within your region Greater than 50%
Primary/manufacturing (56)
41% 79%
Construction (26) Distribution (77)
41%
Hotels/catering (16) Transport/storage/comms (12)
87% 41%
Financial Intermediation (89)
62%
Public/personal services (37)
62%
Base: All businesses in North West answering (shown in brackets)
The proportion of businesses with over 50% of purchases within the region rises to around nine in ten for the hotels/catering (87%) and eight in ten for construction (79%) sectors, compared to only around four in ten for the distribution, transport and manufacturing sectors (41%).
42
8. Strategic Business Planning This section considers the NBS findings that relate to strategic business planning. The level of co operation with universities and specialist industrial networks will be considered within the context of national statistics on research and development spending. The use of these resources can be a crucial support for planning business development and future investment. To shed further light on this, the NBS asked businesses if they have a formal business growth plan, with the findings displayed in the chart below. Figure 30
Formal business growth plans Q Does your company have a formal business growth plan? Don’t know
Yes
3% 32%
England = 35% “Yes�
No 65%
Base: All businesses in North West answering (352)
Approaching one third of businesses in the North West (32%) have a formal business growth plan, a similar proportion to England as a whole (35%). The distribution sector is more likely than the regional average to say that it does not have a formal growth plan (77% compared to 65%).
43
Expenditure on Research and Development The Office of National Statistics publishes expenditure data on research and development for three sectors: businesses; government; higher education institutions. Research and development expenditure within businesses was £1,892 million in the North West in 2005, having increased from £1,739 million in 2004 (a rise of 9%). Expenditure within the government sector has increased slightly from £84 million to £86 million, whilst for higher education institutions it has increased from £416 million in 2004 to £474 million in 2005 (a rise of 12%). In the region, total research expenditure has increased from £2,239 million in 2004 to £2,452 million in 2005. Research and development expenditure has been growing rapidly in the business and higher education sector and the region has the third highest overall spend, after the South East (£4,366 million) and the East of England (£4,174 million). Around one in seven businesses in the North West (14%) co-operate with universities for research and development. Figure 31
Co-operation with universities Q Does you business co-operate with universities for research and development activities? Yes 14%
England = 13% “Yes”
No 86%
Base: All businesses in North West answering (352)
44
Such co-operation is far more likely amongst public / personal services than the region overall (34% compared to 14%). Figure 32
Co-operation with universities by sector Q
Does your business co-operate with universities for research and development activities? Yes
Primary/manufacturing (60)
No 20%
80%
Construction (26) 11%
89%
Distribution (89)3%
97%
Hotels/catering (22) 5%
95%
Transport/storage/comms (13) 8%
92%
Financial Intermediation (100) 15% Public/personal services (42)
34%
85% 66%
Base: All businesses in North West answering (shown in brackets)
Over one quarter of businesses (27%) are part of a specialist network which keeps them up-to-date with emerging technologies.
45
Figure 33
Specialist industrial networks Q Do you belong to any specialist networks designed to help you to keep up-to-date with emerging technologies? Yes
27%
England = 30% “Yes�
No 73%
Base: All businesses in North West answering (352)
46
Figure 34
Specialist industrial networks by sector Q
Do you belong to any specialist industrial networks designed to help you to keep up to date with emerging technologies? Yes
No
Primary/manufacturing (60)
40%
Construction (26)
38%
60% 62%
Distribution (89) 16%
84%
Hotels/catering (21) 14%
86% 45%
Transport/storage/comms (13) Financial Intermediation (100)
27%
Public/personal services (43)
28%
55% 73% 72%
Base: All businesses in North West answering (shown in brackets)
Manufacturers are more likely than average to belong to these networks (40% compared to 27%).
47
9. Environmental Performance The level of environmental emissions was the key issue at the recent G8 summit which was held in Hokkaido, Japan. Businesses have a major role to play in reducing emissions, and this can be achieved by the implementation of a wide range of initiatives. The National Business Survey asked businesses about whether they have undertaken some of the most well known actions aimed at improving their environmental performance, such as adopting a recycling scheme or an energy saving scheme. Monitoring environmental performance was a key part of the Kyoto agreement on climate change and an important part of the G8 discussions at Hokkaido. This section briefly summarises the progress made on key environmental targets over the Kyoto agreement period, and places this in the contest of NBS findings on how businesses are quantifying and reducing their CO2 emissions.
Greenhouse Gas Emissions, 1990 – 2005 Emissions of the ‘basket’ of six greenhouse gases in 2006 were provisionally estimated to have been about 15% below the base year (the base year is 1990 for carbon dioxide, methane and nitrous oxide, and 1995 for fluorinated compounds) 16. Emissions of carbon dioxide, the main greenhouse gas, were provisionally estimated at some 561 million tonnes (CO2 equivalent), which is just over 5% lower than in 1990. Emissions increased by about 1.2% between 2005 and 2006, due to an increased use of coal in electricity generation.
16
All data is from The Sustainable Development Commission (DCLG) National Indicators unless
otherwise stated.
48
Emissions by Industry Sector In 2005 carbon dioxide emissions in the transport sector were 14% higher than in 1990, whilst emissions in the domestic and industrial sectors were 5% and 19% lower respectively. Manufacturing accounts for roughly 14% of UK Gross Value Added (monetary output), employs about 10% of UK workers and is responsible for 24% of UK carbon dioxide (CO2) emissions. Manufacturing GVA rose by 5% between 1990 and 2005. However reductions in emissions of CO2 by 16%, nitrogen oxides (NOx) by 33%, particulates (PM10) by 44% and sulphur dioxide (SO2) by 62%, were made over the same period. The service sector is the largest and fastest growing UK sector. It employs about half of the workforce and generates just under half of Gross Value Added (monetary output). Service sector GVA increased rapidly in the 1990s and in 2005 was 91% higher than in 1990. Carbon dioxide (CO2) emissions from the sector’s energy showed little or no change between 1990 and 2005. Emissions of nitrogen oxides (NOx) reduced steadily over the period and by 2005 were 47% less than in 1990.
49
Environment and North West Business Figure 35
Quantified CO2 emissions by sector Q
Have you quantified the CO2 emissions from your activities?
Yes
Primary/manufacturing (60) Construction (27) Distribution (85) Hotels/catering (20)
England 5%
+5 +5
7% 6%
+5 +7
5% 23%
Transport/storage/comms (13)
+16
Financial Intermediation (102)
7%
+7
Public/personal services (43)
7%
+6
Base: All businesses in North West answering (shown in brackets)
Less than one in twenty businesses (7%: compared to 6% for England) have quantified CO2 emission, consistent across most sectors.
This level rises to
approaching one in four for the transport, storage and communications sector (23%; compared to 16% for England), although this finding should be treated with caution due to the extremely small base size (see chart below).
50
Figure 36
Reduce CO2 Emissions by Sector Q
Have you reduced the CO2 emissions from your activities?
Yes
Primary/manufacturing (60) Construction (27) Distribution (86)
England 17%
+25
20%
Hotels/catering (19)
+23 31% 38%
Transport/storage/comms (13) Financial Intermediation (101) Public/personal services (43)
+26
25%
28% 21%
+ 27 +37 +28 +24
Base: All businesses in North West answering (shown in brackets)
Approaching a quarter of businesses (23%: compared to 26% nationally) have taken steps to reduce CO2 emissions, rising to four in ten (38%; compared to 37% nationally) for the transport, storage and communications sector as presented in the chart below. However, only around one in five businesses in the distribution (20%) and, in particular, the manufacturing sectors (17%) have taken any steps to reduce CO2.
51
Figure 37
Environmental performance by sector: recycling schemes Q
Have you undertaken or do you plan to undertake any of the following actions to improve your environmental performance? – Adopting a recycling scheme % Undertaken
Primary/manufacturing
(36) (26)
Construction
(15) (8)
Distribution (46) (33) Hotels/catering Transport/storage/comms
(14) (8) (9) (8)
Financial Intermediation
(62) (44)
Public/personal services
(28) (22)
% Plan to Undertake 75% 38% 81% 50% 65% 51% 93% 63% 55% 47% 84% 43% 86% 38%
Base: All businesses in North West answering (shown in brackets)
Around eight in ten businesses (78%) have undertaken a recycling scheme in the past 12 months, by far the most common method of improving environmental performance, rising to nine in ten (93%) of hotel / catering businesses.
52
Figure 38
Environmental performance by sector: energy saving schemes Q
Have you undertaken or do you plan to undertake any of the following actions to improve your environmental performance? – Adopting an energy saving scheme % Undertaken
Primary/manufacturing
(36) (26)
Construction
(15) (8)
Distribution
(46) (33)
Hotels/catering
(14) (8)
Transport/storage/comms
53% 49% 46% 11%
(9) (8)
Financial Intermediation
(62) (44)
Public/personal services
(28) (22)
% Plan to Undertake
46% 49% 64% 74% 79% 50% 43% 57% 47% 41%
Base: All businesses in North West answering (shown in brackets)
On average in the region, around half of businesses (49%) have adopted an energy saving scheme, rising to almost eight in ten in the transport sector (79%).
53
Figure 39
Environmental performance by sector: waste minimising scheme Q
Have you undertaken or do you plan to undertake any of the following actions to improve your environmental performance? – Adopting a waste minimising scheme % Undertaken
Primary/manufacturing
(36) (26)
Construction
(15) (8)
Distribution (46) (33) Hotels/catering Transport/storage/comms
(14) (8) (9) (8)
Financial Intermediation
(62) (44)
Public/personal services
(28) (22)
% Plan to Undertake 47% 47% 67% 37% 55% 39% 30% 61% 43% 50% 45% 45% 55% 31%
Base: All businesses in North West answering (shown in brackets)
Similarly, around half of businesses (49%) have adopted a waste minimising scheme, rising to two thirds in the construction sector (67%).
54
Appendices Appendix A: Topline data
Q1.
Questionnaires were sent by post to business in the North West in April 2008. Reminders were sent to non-respondents in May 2008, along with a “booster” sample. An online survey was also available to postal respondents, and email invitations were sent where addresses were available.
Fieldwork closed on 13 June 2008. 357 questionnaires were received.
Where figures do not add up to 100, this is due to multiple coding or computer rounding.
Results based on “all answering” in each case, excluding those not stating a response.
Data has been weighted by region and business units by employee size bands to reflect the national profile.
An asterisk (*) represents a value of less than one half of one percent, but not zero.
Over the next 12 months do you expect the business climate in which your business operates to generally improve, remain stable, or deteriorate? (Base: 348) % 13 43 45
Improve Remain stable Deteriorate Q2.
Excluding seasonal variations, what has been the trend during the past 12 months, and what are the expected trends for the next 12 months, with regard to… Past 12 months Next 12 months
Domestic orders Export orders
Base 328 305
Higher
Same
Lower
Not applicable
% 20 6
% 33 9
% 31 4
% 16 81
Base 304 279
Higher
Same
Lower
% 16 8
% 34 8
% 35 5
Not applicable % 15 79
55
Numbers employed Volume of output Prices charged Profit margins
Q3.
334 323 336 336
18 29 39 13
54 28 47 37
17 32 10 49
11 11 3 2
303 299 311 314
14 24 45 13
58 33 43 38
18 32 10 47
11 10 2 2
Which of the following costs… (A) have increased for your business over the past 12 months? (Base: 338) (B) do you expect to increase over the next 12 months? (Base: 326) (C) presents the main upward cost pressure on your business at present? (Base: 283)
Energy costs Transport costs Raw materials and bought-in services (other than energy) Staff costs Property costs Cost of finance Other costs None of these All selecting more than one response
(A) Past 12 months
(B) Next 12 months
% 89 75
% 91 72
(C) Main upward cost pressure at present % 41 39
63
68
37
61 39 34 9 *
63 37 38 11 -
32 12 14 6 2 -
Q4.
Have you passed on any increased costs to your customers in the past 12 months? (Base: 353) % Yes – all these increases 7 Yes – some increases 54 No 38
Q5.
Is your present level of output below capacity (i.e. are you working below a full rate of operation)? (Base: 348) % Yes 60 No 40
Q6.
Did you have any staff vacancies that you found hard to fill, or could not fill, during the past 12 months, and do you expect to have any in the next 12 months?
Base: Yes No Don’t know
Past 12 months
Next 12 months
336 % 23 71 6
331 % 18 61 20
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Q7.a
Did you provide any formal external or internal training for your staff during the last 12 months? - By external we mean training provided by an external training provider - By internal we mean training provided by someone employed within your business External 328 % 48 52
Base: Yes No
Q7.b
If yes, approximately what proportion of staff undertook such training? External
Internal
156
188
% 19 22 20 18 20
% 13 13 19 13 42
Base (all answering who provided training during last 12 months): 1-10% 11-25% 26-50% 51-75% 76-100% Q8.
Base 319 322 320 321 318 318 313 312 308 304
Internal 325 % 64 36
Do the following skills need improving during the next twelve months to meet your business needs? Yes No Not applicable % % % IT skills 50 37 13 Sales and marketing 49 38 13 Management skills 38 49 13 Office administration 36 49 15 Business/Financial planning 34 52 15 Technical, specialist or job-specific 34 35 31 skills Customer care 32 62 6 Communication skills 28 62 10 Science, Technology and 14 38 48 Engineering skills Foreign languages 5 35 60
Q9.a
Are the following factors important or not important to your organisation’s competitiveness?
Q9.b
Are you satisfied or dissatisfied with each of the following in the area in which your business is located? Q9a – Importance
Availability of premises Access to finance Transport infrastructure
Base 340 339 340
Important
Not important
% 47 45 52
% 35 37 31
Q9b – Satisfaction Don’t know/not applicable % 18 18 17
Base 317 316 312
Satisfied
Dissatisfied
% 63 55 48
% 17 16 28
Don’t know/not applicable % 20 30 25
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Workforce skills Management skills Access to specialist expertise Current location ICT and broadband infrastructure Government regulations Business support from government Proximity of suppliers Proximity of customers International trade links
337 335
73 71
17 16
10 13
314 311
68 70
18 12
14 18
333
48
33
20
311
53
10
37
338
62
28
10
314
81
10
8
338
55
26
19
312
57
15
28
336
67
19
14
304
21
59
20
335
51
28
21
308
14
57
29
334 338 334
34 64 16
53 29 36
13 6 49
306 312 302
66 75 17
5 8 6
29 16 77
Base 350 342 341 344
Do you expect to spend more or less in the next twelve months than you spent in the last twelve months on‌? More Same Less Not applicable % % % % Buildings 34 38 12 16 Plant and machinery 24 35 17 25 Product and process development 21 27 12 40 Training and retraining 23 45 13 18
Q11.
To what extent do you agree or disagree with the following statements?
Q10.
Base 348
343
Q12.
Base 338 298 262 Q13.
Base 313 287 236
This location is a good place for business to invest I expect the area in which this business is located to become more attractive to investors in the future
Strongly agree
Tend to agree
Tend to dis-agree
Strongly disagree
%
Neither agree nor disagree %
%
%
%
21
34
34
6
5
14
27
41
13
5
Please estimate the proportion of your sales in the following areas:
Within region Rest of UK Overseas
0 % 2 28 70
1-10 % 13 24 20
11-25 % 8 16 3
26-50 % 7 10 1
51-75 % 13 8 3
76-99 % 23 11 2
100 % 35 1 *
Please estimate the proportion of purchases (e.g. raw materials and bought-in services) in the following areas:
Within region Rest of UK Overseas
0 % 7 23 62
1-10 % 15 15 12
11-25 % 13 22 8
26-50 % 10 14 6
51-75 % 15 10 4
76-99 % 16 12 6
100 % 23 4 2
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Q14.
Does your business co-operate with universities for research and development activities? (Base: 352) % Yes 14 No 86
Q15.
Do you belong to any specialist industrial networks designed to help you to keep up-to-date with emerging technologies? (Base: 352) % Yes 27 No 73
Q16.
Does your company have a formal business growth plan? (Base: 352) % Yes 32 No 65 Don’t know 3
Q17.
Have you undertaken or do you plan to undertake any of the following actions to improve your environmental performance?
Base: Adopting a recycling scheme Adopting an energy saving scheme Adopting a waste minimisation scheme Introducing/purchasing environmentally friendly products Adopting a water saving scheme Accessing consultancy or advice on environmental improvement Accessing external support grants for environmental improvement Achieving formal environmental accreditation
Undertaken in last 12 months 210 % 78 49
Plan to in next 12 months 149 % 45 49
49
43
42
45
30
32
19
27
11
36
9
29
59
Q18.
Have you quantified the CO2 emissions from your activities? (Base: 350) % Yes 7 No 65 Don’t know 6 Not applicable 22
Q19.
Have you taken any steps to reduce the CO2 emissions of your business? (Base: 349) % Yes 23 No 44 Don’t know 7 Not applicable 25
Q20.
Q 21.
Has your business introduced a new product or process innovation in the past three years? (Base: 341) % Yes 27 No 67 Don’t know 6
Q22.
How many employees are there at this workplace? (Base: 307) % 1-9 67 10-49 27 50+ 6 Proportion giving an estimate 10
Q23.
Approximately how long has your business been in operation? (Base: 355) % Less than 1 year 3 At least 1 year but less than 2 4 At least 2 years but less than 3 3 At least 3 years but less than 5 7 At least 5 years but less than 10 16 10 years or more 67 Don’t know -
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Q24.
What is your annual turnover at this site? (Base: 349) 0 - 1.9 million £2 – 4.9 million £5 – 9.9 million £10 – 24.9 million £25 – 49.9 million £50+ million Don’t know Not applicable
Q25.
Please indicate which type of business you are: (Base: 349) Independent Limited Liability Partnership Subsidiary of UK parent Ultimate holding company Subsidiary of foreign parent Don’t know/not applicable
Q26.
% 81 6 3 1 * 1 2 6
% 74 13 3 3 1 6
Is this site your headquarters? (Base: 351) Yes No Not applicable
% 85 11 4
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Appendix B: Notes on statistical reliability The variation between the sample results and the “true” values can be predicted from knowledge of the size of the samples on which the results are based and the number of times that a particular answer is given. The confidence with which this prediction can be made is usually chosen to be 95% - that is, the chances are 95 in 100 that the “true” value will fall within a specified range, based on a random ‘pure’ sample of the population. The table below illustrates the predicted ranges for different sample sizes and percentage results at the “95% confidence interval”.
Sample size
1,000 800 500 400 300 200 100
Approximate sampling tolerances applicable to percentages at or near these levels 10% or 90% + 2 3 3
30% or 70% + 3 4 4 3 4 5 6
50% + 3 4 5 56 66 77 910
Therefore, with a total sample size of 1,000 completed interviews, where 50% give a particular answer, the chances are 19 in 20 that the “true” value (which would have been obtained if the whole population had been interviewed) will fall within the range of +3 percentage points from the sample result; in fact the actual result is proportionately more likely to be closer to the centre (50%) than the extremes of the range (47% or 53%). When the results are compared between separate sub-groups within a sample, different results may be obtained. The difference may be “real,” or it may occur by chance (because not everyone in the population has been interviewed). To test if the difference is a real one - i.e. if it is “statistically significant” - it is again necessary to know the total population, the size of the samples, the percentage giving a certain
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answer, and the degree of confidence chosen. Assuming the “95% confidence interval�, the differences between the two sub-sample results must be greater than the values given in the table below:
Differences required for significance Sample sizes at or near these percentage levels 10% or 90% 30% or 70% 50% + + + 890 and 500 (Total vs sub-group) 5 6 6 890 and 200 (Total vs sub-group) 6 8 9 500 and 300 (Sub-group vs sub-group) 3 4 4 500 and 100 (Sub-group vs sub-group) 6 9 9 300 and 200 (Sub-group vs sub-group) 7 9 9 300 and 100 (Sub-group vs sub-group) 9 11 12 100 and 100 (Sub-group vs sub-group) 10 14 14
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Appendix C: Bibliography 1. HM Treasury, Pocket Databank, 1st July 2008 2. HM Treasury, Forecasts for the UK Economy, July 2008 3. HM Treasury, Recent Economic News, July 2008 4. Office of National Statistics, NOMIS Labour Market Statistics 5. Leitch Review of Skills, Prosperity for all in the global economy - world class skills , December 2006 6. Learning and Skills Council, National Employer and Skills Survey, 2005 & 2007 7. Sustainable Development Commission (Department of Communities and Local Government), National Indicator Set
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