Industry Leadership Groups review

Annex E: Industry Leadership Groups and Sector Performance

Summary Analysis

While it is difficult to attribute the performance of a sector to the existence of an Industry Leadership Group (ILG), it is still useful to examine each sector's performance and compare to those which currently have no ILGs.

The analysis indicates no clear relationship between the operation of ILGs and sector performance or sector growth. In 2017 ILGs operated in slightly more large sectors than small sectors (eight out of the top 10 sectors for GVA, and five out of the bottom 10). However, in terms of GVA growth over time, only five of the 10 best performing sectors were represented by ILGs, and ILGs operated in all five of the lowest performing sectors.

When comparing Scotland's sectoral performance with Great Britain (GB), six sectors out of 13 experienced a higher rate of employment growth between 2012 and 2018 in Scotland (where ILGs operate) than in GB. Seven sectors out of 13 saw less growth in Scotland than in GB over this period.

There are a number of other industry trade bodies and groups which operate alongside ILGs. Building on previous work undertaken by Scottish Enterprise, these have been mapped alongside ILGs. The analysis highlights there is no strong relationship between the number of other industry groups and the performance of a sector, with some of the highest performing sectors having either a number of other industry groups (e.g. Technology, Software and Communications) while others have no industry body (Veterinary activities).

Current Sector Performance

Four of the five best performing sectors have at least one ILG, as well as at least one other industry group. Three out of the five sectors with the lowest GVA are represented by ILGs.

*GVA is in current prices, not adjusted for inflation

** GVA figures sourced from the Annual Business Survey (ABS); exceptions below

*** Employment data sourced from the Business Register and Employment Survey (BRES)

**** The Finance and Business Services, and Oil and Gas GVA figures are sourced from the GPD Quarterly National Account Statistics. These figures reflect onshore activity only.

***** The data for the Food and Drink sector for agriculture comes from the Economic Report on Scottish Agriculture (GVA) and the Agricultural Census (employment).

Change in sector performance over time

ILGs operate in three out of five of the sectors with the highest GVA growth between 2012 and 2017 (see Figure 2).

*GVA is in current prices, not adjusted for inflation

** GVA figures sourced from the Annual Business Survey (ABS); exceptions below

*** Employment data sourced from the Business Register and Employment Survey (BRES)

**** The Finance and Business Services, and Oil and Gas GVA figures are sourced from the GPD Quarterly National Account Statistics. These figures reflect onshore activity only.
***** The data for the Food and Drink sector for agriculture comes from the Economic Report on Scottish Agriculture (GVA) and the Agricultural Census (employment).

****** It is not possible to look the performance of the Gambling and Betting Activities sector over time. Data on purchases for 2012 onwards have been produced using a new method for apportionment. This has resulted in volatility for a small number of multi-site businesses in Division 92 - Gambling and betting activities. Further analysis is being carried out by the ONS; therefore figures for this Division should be treated with caution.

The Veterinary Activities sector has experienced the highest rate of growth in GVA since 2012 (around 74%), however it is not represented by an ILG or other industry groups. ILGs operate in each of the bottom five sectors for GVA growth. GVA has fallen by around 5% in both the Oil and Gas, and Engineering and Advanced Manufacturing sectors between 2012 and 2017.

Sector performance in Scotland and Great Britain

Figure 3 shows the change in employment in each sector between 2012 and 2018 in Scotland and Great Britain (with ILGs only operating in Scotland). For this analysis, change in employment over time is used as a proxy for sector performance. ILGs operate in Scotland but not in the rest of GB.

ILGs operate in all Scottish sectors represented in Figure 3. Ten out of thirteen sectors in Scotland had higher levels of employment in 2018 compared to 2012. Of these sectors, four performed better in Scotland than in GB as a whole. Creative Industries and Technology, Digital and Media saw the greatest increases in employment levels in Scotland between 2012 and 2018; 33% and 29% respectively. These sectors in GB grew by 19% and 16% respectively. Life Sciences (including Biotechnology) and Chemical Sciences also saw higher levels of employment growth in Scotland compared to GB as a whole.

Textiles, and Oil and Gas performed relatively better in Scotland than the same sectors in GB as a whole, although this was due to falling employment between 2012 and 2018 in GB.

* Data sourced from the Business Register and Employment Survey

** Numbers in brackets indicate the number of ILGs and other industry groups that operate in each sector; e.g. (1,1) indicates that the Creative Industries sector is represented by one ILG and one other industry group.

Methodology

The basis of this work was an industry mapping exercise undertaken by Scottish Enterprise (SE). This work identified 17 ILGs that represent 15 "Economic Areas". For this analysis, sectors were defined according to the Export Performance Monitor (EMP) (see "sector definitions" below for exceptions) as this most closely matched the Economic Areas identified by SE. The ILGs (and other industry groups) were then mapped onto the sector that best matched the economic area that SE assigned them to. The economic area "Biotechnology" is included in the Life Sciences sector. The methodology used means the sector mapping presented in this report may not fit exactly with the industries the ILGs see themselves as representing.

Notes on data sources

The Business Register and Employment Survey (BRES) is the official source of employee and employment estimates by detailed geography and industry. New figures are published annually by the ONS.

The Annual Business Survey (ABS) is an annual survey of registered businesses covering the primary industries, manufacturing, construction and service industries (including distribution) which represent the UK Non-Financial Business Economy. This is about two thirds of the UK's whole economy in terms of Gross Value Added. The statistics do not cover the whole economy, omitting the financial sector, parts of agricultural sector and parts of the public sector (including public provision of healthcare and education). Alternative data sources were used for some sectors (see footnotes above).

Sector definitions

Sectors are defined according to SIC codes, however sectors may be defined by different groups of SIC codes in different data sources. Multiple data sources have been used for the analysis presented, so there may be some overlap between sectors, where SIC codes have been included in different sector definitions by different data sources.

The Export Performance Monitor (EPM) was used as the basis of sector definitions, however the Annual Business Survey dataset covers a number of SIC codes that are not included in the EPM. Analysis of these remaining SIC codes resulted in four further sectors being identified as appropriate to include in figures 1 and 2: Gambling and Betting activities, Veterinary activities, Human Health and Social Work Activities, and Other Service Activities. "Human Health and Social Work Activities" includes the divisions "Human health activities", "Residential care activities" and "Social work activities without accommodation". "Other Service Activities" includes the divisions "Activities of membership organisations", "Repair of computers and personal and household goods" and "Other personal service activities" (e.g. laundrettes, hairdressing services).The Creative Industries sector was defined according to the Growth Sectors database definition in this analysis. The Food and Drink Sector was defined according to the Growth Sectors database for Figure 3, to allow GB comparison.