New Deal for Business Group: progress report and recommendations

7. Subgroup Five: Sharing Key Metrics

Overview

The subgroup is to propose an agreement on collating and sharing key metrics and real-time evidence across different sectors, with the aims that (i) the Scottish Government is aware of the business climate and can consider policy in the light of this and (ii) Scottish businesses can use metrics and data to capitalise on sectoral and international market opportunities and to contribute to the National Strategy for Economic Transformation (NSET) metrics.

Achieving each aim requires different metrics and therefore two different sets of data.

The purpose of the work of the subgroup has not been to identity a common baseline of metrics that could be reported at top line level and broken down into sectors but rather to consider what metrics industry is using, how to co-ordinate and feed this into policy making within the Scottish Government and to gain a better understanding of how the data is used in policy making.

The work of the subgroup has included:

• Reviewing the strategies of Industry Leadership Groups (ILGs) to identify priorities for sectors that will drive and shape data and metrics as well as to identify domestic and international opportunities for business.
• Mapping the industry metrics to NSET metrics of success to identify common ground.
• Summarising available business resilience metrics.
• Collating case studies of available survey data and reports.
• Identifying best practice in data sharing, including the role of technology and data platforms.

Issues considered

Existing metrics and data

There is a wide range of data collected across sectors, businesses and Government and a range of metrics. The challenges are around getting real time data and synthesising data into accessible data and digestible reports.

There is a need to make sure that the right data is being collected on the barriers businesses are facing so it can be used to inform policy. There is also a need to avoid duplication and to avoid a plethora of indicators and instead have a focused set of metrics.

Government statistics tend to be top down (aggregated) and have a bit of a time lag. Industry can provide more bottom up/on the ground data that is also more timely. There is a need for both.

Work undertaken and published alongside the NSET set out Evidence from Industry Leadership Groups and Sector Groups. It summarised the ambitions, opportunities and challenges of each. Looking at the ambition statements across ILGs, the following industry metrics are most common in measuring ambition in industry strategies:

• GVA and/ or turnover
• Jobs
• Investment
• Emissions/ net zero

There are also sector specific indicators, for example, visitor numbers for tourism. Some sector metrics are very specific, others are more general. Other themes from industry metrics are the importance of global markets, data and digital as well as recovery from the pandemic. It is also important to include the higher education sector as there is not a separate ILG for this but investment in skills, research and commercialisation is important for industry generally.

NSET metrics are high level measures of success and are representative of the key areas where the NSET programmes seek to shift the dial to maximise impact. The ambition indicators in NSET align with the industry ambitions noted above in terms of broad themes of GDP, emissions and workforce. The NSET annual report sets out the NSET measurement framework with details of specific measures of success for each programme. Alignment with NSET metrics is critical for business and industry to demonstrate their contribution to NSET.

The decisions metrics are used to inform

Metrics inform a range of decisions and have different purposes. Shorter term performance metrics differ from high level ones that are used to monitor progress towards long term outcomes. For example, the NSET ambition indicators are longer term in nature. Industry can align behind the longer term goals to demonstrate fit with NSET.

As noted above, achieving the aims for this work requires two different sets of data – one on business resilience and one on market opportunities.

Business reliance metrics are critical to understand the business climate and can help identify short term constraints that may be limiting the ability of industry to achieve its stated ambitions as well as its intended contribution to NSET. Identifying metrics on business conditions will help Government respond to the challenges businesses face. They can provide an 'early' warning of sectors experiencing viability issues and used as part of 'preparedness' for economic shocks. They can also be used as part of Business Regulatory Impact Assessments (BRIAs) to understand how business will be affected by regulation.

The fortnightly Business Insights and Conditions Survey is good source of information on business conditions. There are other sources that can also inform business conditions, including industry surveys with metrics on cash flows, recruitment difficulties, supply chain issues and so on.

An initial set of business resilience metrics is shown in Box A. These can be reported on a regular basis and can be used to provide cross sectoral comparisons. This is an initial set and further metrics can be added as survey questions are made more consistent over time. The metrics can be supplemented by sector specific information

Box A: Initial Set of Business Resilience Metrics by Sector^[5]

• Economic performance overall, and by sector and trend since pandemic.^[5]
• How long cash reserves will last, by sector and trend since the pandemic.
• Business risk of insolvency, by sector and trend since the pandemic.
• Business debt repayments as share of turnover, by sector and trend since the pandemic
• Confidence in meeting current debt obligations, by sector and trend since the pandemic.
• Difficulties recruiting employees, by sector and trend since the pandemic.
• Ability to get the materials, goods or services needed from within the UK/EU, by sector and trend since the pandemic.

Metrics that Scottish businesses can use to capitalise on sectoral and international market opportunities require a different set of data. There is potential to use the information from trade missions as well as to use data from the business support networks to identity these. The key is making the information available in a useful format. As part of this, there may be a need to consider metrics on emerging industries and technologies, such as net zero but also automation.

Challenges in sharing metrics

Getting reliable data on micro and very small businesses is challenging. Engaging with COSLA and Enterprise Agencies is voluntary so not all businesses will choose to engage.

Although there are regular surveys carried out across industry, there is limited co-ordination of surveys and survey questions. There is no agreed 3 or 4 key metrics that each survey could ask to get a more holistic national picture. There may be opportunities to improve coordination across surveys and have agreed core questions.

Government synthesises analysis on economy through monthly economic briefs and this could be expanded to include more on business conditions.

There is a need to ensure that the data collected from members gets seen by Government and raises awareness of current business conditions. The channels through which information is currently disseminated should be clear.

Early and co-ordinated sharing of data could help responsiveness of policy decision making and there are important links to the work of the New Deal for Business subgroup on Business Partnership.

There is innovative work in NSET on implementing the Master Customer Record programme across the Business Support Partnership. This will make better use of the data already held about businesses across the public sector and make it easier to target support at businesses. There are opportunities to use the Business Support Partnership data analytics programme to identify market opportunities for industry.

There is a role for technology, including data market places and data sharing platforms that could be developed over the medium to long term. These platforms facilitate data visualisation and are interactive. There are some good examples of platforms that do not store data directly and therefore do not compromise privacy and security aspects of data.

Case studies

The sub-group has shared a number of case studies of current practice. These include but are not limited to the following:

Regular Surveys and Reporting

• Scottish Chambers of Commerce run a major quarterly economic survey, looks at the past three months and looks ahead to the next three months. Covers a lot of metrics. Scottish Chambers of Commerce works closely with Skills Development Scotland (SDS) and Local Authorities. Some local Chambers of Commerce have capacity in this area, too. For example, the energy transition survey from the Aberdeen and Grampian Chamber of Commerce.
• The Fraser of Allander Institute produce the quarterly Scottish Business monitor.
• The Federation of Small Businesses produces regular surveys.
• College sector give quarterly statistics to Scottish Funding Council – some with sophisticated methods. For example, College sector data held by Scottish Funding Council and captured in quarterly returns, and SDS hold rich data as a result of monthly returns. Universities Scotland also publishes statistics and Higher Education Statistics Agency (HESA) has an open data platform with information on higher education and its impact.
• Financial services sector has good data and reports, although some data is confidential. Financial services produce a report monthly compiled from all main banks in Scotland into a qualitative report on conditions.
• A quarterly 'Tourism Short-term Indicator Dashboard' is prepared by Scottish Government (OCEA) and VisitScotland (Insight team) for the Tourism & Hospitality ILG but due to data sharing arrangements this cannot be circulated wider than that ILG.
• Scottish Tourism Alliance has a quarterly industry survey.
• The Scottish Hospitality Group sit on the Tourism & Hospitality Skills Group within SDS alongside colleagues from the Scottish Tourism Alliance and relevant reports on Sectoral Skills Assessment Tourism.
• The Royal Bank of Scotland reports the survey of Purchasing Managers index.
• Lloyds Bank publishes a Business Barometer.
• Scottish Engineering publish a quarterly review.
• Scotland's Rural College undertakes a regular farm survey.
• The Institute of Directors undertakes an annual Scotland State of the Nation Survey and monthly Policy Voice surveys.

Reports synthesising evidence

• The Scottish Government produce regular reports on the economy.
• Fraser of Allander Institute produce regular reports, blogs and podcasts.
• The Scottish Tourism Observatory aims to make tourism data for Scotland easy to find and use, and to enrich the data available.
• Skills development Scotland produces regular reports on the labour market
• Visit Scotland produces research insight reports.

Role for technology and data sharing and management, including approaches to sharing in real time.

• Examples shared were the rail data market place for the Rail Delivery Group and work for the Improvement Service.
• Technology Sector metrics are set out in the annual Scotland Is Technology Industry Survey.

Recommendations

Short-term recommendations (6 months)

To improve understanding of the business climate

1. Government to publish a synthesis of business conditions in its monthly report on the economy.

2. Monitor and report business resilience regularly using a consistent set of business resilience metrics that can also be used in Business Regulatory Impact Assessments.

3. Share and use data on the type of support businesses are searching for to help government understand business needs (for example through Find Business Support).

4. Provide channels for Scottish businesses to share sectoral intelligence with Government.

To improve business and industry understanding of market opportunities and contribution to NSET

5. Share and use data on the market opportunities businesses are seeking (for example through Find Business Support).

6. Share information on key sectors and market opportunities, building on the work in NSET on new market opportunities.

7. Identify a few core measures which would help Scottish businesses align to NSET and could feed into enhancements in data collection in business and industry surveys.

Medium-term recommendations (12 months)

8. Improve coordination across sectoral and industry surveys with a view to agreeing a core set of questions.

Long-term recommendations (18 months)

9. Explore the role of a data market place to share data.

Subgroup membership

• Business lead, Professor Mairi Spowage, Fraser of Allander,
• SG Lead, Kathy Johnston, Deputy Director, Economic Analysis
• Claire Vekic, Colleges Scotland
• Sandy Begbie, Scottish Financial Enterprise,
• Gopalan Rajagopalan, TCS
• Steve Montgomery, Scottish Hospitality Group
• Tracy Slaven, University of Aberdeen
• Karen Christie, STA
• Colin Campbell, Scottish Chambers of Commerce
• Jamie Fowler, Business Gateway