Borough Business Profiles

  • By Stephen King

This briefing alerts members to some of the key findings from recent research into London’s business base, which is being used to help inform borough’s local economic strategies.

Overview

London Councils commissioned the Centre for Business and Economic Research to undertake a survey of London’s business base. The review looked at all businesses, but had a specific focus on registered micro-businesses. The research was developed in consultation with boroughs and sub-regional partnerships, aiming to support boroughs in developing their local economic development strategies. The research also looks to inform London’s Local Industrial Strategy, which is being developed by the Greater London Assembly (GLA), and frame future discussions with national government on a range of economic issues.

Background

London has over 1 million businesses in total, but this research focused on businesses registered for VAT or PAYE. These businesses make the biggest contribution to London’s economy and their turn-over and location can be analysed effectively, thanks to the greater amount of data available. There was also a particular focus on micro businesses, those employing less than 10 people, but with a turnover large enough to be VAT or PAYE registered. Using published data, the survey looked at a range of indicators, including business density, specialisms, complexity, business sector, turnover, employment and business rates.

Individual reviews were undertaken for all 32 boroughs, plus the City of London. This provides information on the size of the borough business base, its diversity and complexity. The borough profiles show the key sectors by business count, employment rates and turnover. The borough profiles map to Middle Super Output Area, providing information on the scale of micro-businesses, as well as the number of rateable properties and highlighting any specific business clusters within the borough. An interactive database is also published online, providing the raw data and details on the methodology used in some of the economic analysis, for example around turnover and employment estimates.

Analysis

The research uncovered a number of pan-London features:

Business size

  • There are over 1 million businesses in London. However, more than 600,000 of these are so small that they are unregistered (meaning they have a turnover below the VAT threshold and are not registered for PAYE). The highest proportion of unregistered businesses are in construction (70 per cent), followed by manufacturing (56 per cent), while finance and insurance (32 per cent) and information and communications (34 per cent) have the lowest percentages.
  • There are 495,000 local business units registered for VAT or PAYE across London and 87 per cent are micro-businesses (businesses with fewer than 10 employees).

Economic impact

  • Although 55 per cent of businesses in London are unregistered, their small scale means they generate just 2 per cent of London’s overall turnover, an average of £41,500 per business.
  • By contrast, registered micro-businesses (outside of the finance industry) generate 20 per cent of the total turnover across London, an average of £475,000 per business.

Business growth

  • The micro-business count grew by 50 per cent between 2010 and 2018 across London as a whole, but with significant variations. Newham’s micro-business count was the fastest growing, expanding by 145 per cent.
  • Electric power generation, transmission and distribution shows one of the steepest increases with growth of 43 per cent to 1,245 micro-businesses, following deregulation of the sector.
  • E-commerce also saw a steep increase to just over 6,800 business, an increase of 14 per cent.

Knowledge economy

  • 50 per cent of London’s micro-businesses operate in knowledge-intensive industries, 13 per cent higher than the UK average (37 per cent) and rising to 57 per cent in Central London.
  • All boroughs show significant growth in the strength of business consultancy in their local economy.
  • London hosts 29 per cent of the country’s information and communication sector businesses, accounting for almost half (49 per cent) of their turnover.

Business space

  • Across London, there were 0.48 rateable properties on average per local unit, suggesting that even among registered businesses approximately half do not occupy a purpose-built commercial property or operate out of a shared workspace.
  • Central London boroughs, generally home to larger businesses, show a higher ratio of rateable properties per business, with Tower Hamlets being the highest ratio at 0.68, driven by the very dense office space in Canary Wharf.
  • Harrow, which is home to the highest proportion of micro-businesses, also has the fewest rateable properties per business at 0.31.

Commentary



Each borough has been provided with their borough-level survey. This has been shared with Leaders, cabinet lead members for economic development, and key borough officers. All the surveys are also online. In addition, the interactive database allows boroughs to dig deeper into their individual local database.



A number of boroughs are already using the data to inform their local economic strategy. We hope that boroughs will find this helpful when defining their business engagement activity and policy around specific issues, such as mapping the skills needs of business sectors and the provision of affordable workspace.



This work also aims to support boroughs to engage with local business, working towards the goals set out in London Councils’ Pledges to Business.

Stephen King, Head of Business and Enterprise