Written evidence from the BETA Model
This submission focuses on recommendations to
help ensure accountability and value for money based around standardising
and developing the approach to monitoring data on enterprise dynamics.
The BETA Model has been providing data and analysis
to local authorities, development agencies and other organisations
involved in economic development since 2004. We manage a database,
based on Experian's National Business Database, that provides
information on trends in numbers of enterprises and employment,
across the UK and which can be interrogated by sector and or post
code defined geographies and by enterprise formations, enterprise
closures and movements. This has allowed us a unique understanding
of enterprise trends and, importantly, trends relative to other
areas and sectors but also an understanding of the way in which
economic development programmes have been designed.
Where economic strategies have included targets
based on outputs in terms of enterprises created (or the GVA of
or employment within these enterprises), there is a risk that
the net change in an area created by the strategy will not be
in line with reported outputs. Despite successfully meeting targets
for enterprises created or supported it is possible that:
the net number of enterprises in the
target area has not changed; or
has not changed relative to trends before
the programme started; or
the share of the UK's enterprises that
is within the target area has not changed.
So, for example, if a programme reports an increase
in the number of enterprises that have been helped to start this
result could be consistent with:
no change in the number of enterprises
in other datasets, for example VAT registrations;
a commensurate increase in deformations
despite an increase in VAT registrations; and
the increase in net formations being
in line with trends in similar areas where there has been no support
or in line with trends within the wider area of which the target
area forms a part.
Even where there has been an increase in the
number of enterprises relative to other areas which can be attributed
to the programme, an increase in net number of enterprises relative
to benchmark areas could mask a decline in the number of employees
as more larger enterprises close than smaller enterprises start.
Our recommendations focus on the requirements
for effective monitoring and evaluation of enterprise programmes.
1. The approach to setting targets and monitoring
performance should be established from the start and should be
shared across programmes. There should still be opportunities
for partnerships to measure other indicators of performance relevant
to local conditions. This requires clarity on the objectives of
a strategy and, in particular, whether these relate to changes
in employment or productivity.
2. The data sets that are used to monitor performance
need to be updated and available to those delivering programmes
in the same, or similar, timescales. Where data on performance
is only available one or more years after the activity, it is
not possible to respond quickly. Staff responsible for delivering
activity need to see the impact of their work fast enough that
they can respond.
3. Any monitoring needs to compare trends in
a target area against trends in benchmark areas, including areas
comparable in terms of enterprise structure, and trends in the
wider area of which the target area forms a part.
4. Targets need to be understood in the context
of wider enterprise dynamics, for example, enterprise starts should
be understood in the context of enterprise closures as well as
enterprises that move in and out of an area.
5. Where the targets include numbers of enterprises
that have been helped to start, the first challenge is for these
enterprises to be tracked to monitor how many get to a point where
they enter the datasets being used to monitor trends and benchmarks.
Only numbers of those enterprises that do enter these datasets
can be compared. Survival rates of enterprises in different data
sets should not be compared without being clear about different
characteristics within different datasets. For example the "survival
rate" of enterprises that operate from home below the VAT
threshold is likely to be higher than the "survival rate"
of enterprises that are registered for VAT.
6. There should be a move from reporting numbers
of enterprises that have been helped to start and have, for example,
become VAT registered or have entered Experian's National Business
Database, to reporting on trends in the target dynamic and other
dynamics which contribute to change. For example, reporting not
only enterprise formations but also enterprise closures and movements
and growing and shrinking enterprises within the area, and relative
to other areas.
11 August 2010