The ups and downs of survival stats

The Institute of Chartered Accountants predicted 'even more business failures' in the SME sector, at the same time as the DTI released figures from a previous year to show that more businesses were surviving.

Failure

The Institute warned that the one per cent increase in National Insurance Contributions will contribute to even more business failures in the SME sector, basing its information on figures from Dun & Bradstreet which showed that business failures in the SME sector rose by 7.2 per cent in 2002.

The Institute reasoned that as SMEs employ 43 per cent of the UK workforce, it would be the smaller companies that would pick up a significant proportion of the £4 billion in revenue the NIC hike intends to raise.

The Institute's tax experts warned that the one per cent rise, combined with a sluggish economy, could leave small businesses struggling to cope and has called on the Treasury to look at measures that may offset the burden on SMEs, given they are the engines of growth the Government has committed to encourage.

Mark Lee, Chair Elect of the Institute's Tax Faculty said: "It is easy to say there's been plenty of time to plan for this, but many small businesses are having serious problems coping with the additional burden. It is a financial drain which may tip the balance between success and failure, especially in fledgling businesses.

"Small businesses concerned about how they will cope with the increase need to take a close look at the books and speak to their advisors. Whatever happens after April, at least make sure it isn't a nasty shock."

Survival

Meanwhile the Government released figures which painted a more positive picture with business survival rates increasing in every UK region in 2000.

The latest statistics from the DTI's Small Business Service show that more than nine in 10 businesses are still going after a year, up from 85.5 per cent in 1993 and businesses surviving three years or more have increased from 60 per cent to 64 per cent.

Nigel Griffiths, Small Business Minister, said: "These figures prove that small businesses are very competitive and form the backbone of the UK economy.

"With interest rates and inflation at their lowest levels for over 40 years, the economic climate is set for them to continue growing and prospering.

"The Government is committed to helping anyone with the talent, potential and drive to succeed in business get the necessary support to do so. The challenge now is to ensure the entrepreneurship start-up and survival potential in all regions is maximised."

The units of measurement are based on the registration and de-registration of VAT-based enterprises.

The detailed figures show:

One year survival rates

Table shows percentage still trading for 1993 & 2000 1993 2000 Change 1993-2000 United Kingdom 85.5 91.4 5.9 England 85.5 91.4 5.9 Wales 85.2 90.4 5.3 Scotland 85.2 91.1 6.0 Northern Ireland 87.6 93.8 6.2 North East 83.1 91.2 8.1 North West 83.9 90.6 6.7 Yorks & Humber 85.1 90.9 5.8 East Midlands 86.2 90.1 3.8 West Midlands 84.2 91.1 6.9 Eastern 86.4 91.3 4.9 London 85.6

91.6

6.0 South East 86.5 92.7 6.2 South West 86.2 91.9 5.6 Three year survival rates

Table shows percentage still trading for 1993 & 1998 1993 1998 Change 1993-1998 United Kingdom 58.8 64.0 4.2 England 59.6 64.0 4.4 Wales 58.6 63.9 5.2 Scotland 60.6 62.6 2.0 Northern Ireland 66.0 70.8 4.7 North East 55.9 64.0 8.1 North West 56.8 62.8 6.0 Yorks & Humber 58.1 62.4 4.3 East Midlands 60.3 63.7 3.4 West Midlands 58.8 63.7 4.9 Eastern 61.4 66.6 5.2 London 59.4 60.3 0.9 South East 61.2 67.5 6.3 South West 60.8 66.5 5.6