UK business services sector: a national growth engine
New research commissioned from Oxford Economics and published by the BSA – the Business Services Association – reveals the impact of the business services sector at national, regional, and parliamentary constituency level, showing the sector as an engine for growth across the UK.
The sector is made up of five categories: FM, Business Process Outsourcing, IT and digital services, construction services and front-line outsourced public services.
The delivery of these services touches every region in the UK, from waste collection to facilities management, healthcare to TV licence administration, defence infrastructure support to security and catering.
The majority of business services activity in the UK is conducted business-to-business. As a percentage of annual turnover, around 70% of business services is with the private sector, with 30% in the public sector.
Nationally, the sector’s annual turnover amounts to £263 billion, equivalent to 8.7% of economy-wide output. This means the sector far outweighs the output of the agricultural sector and financial services sector
At regional level, the turnover accounts for between 6.7% and 12.4% of total regional output in every region of the UK. Unlike other industries, the business services sector has a wide regional spread. The North East, Scotland, and East of England are among the five regions where turnover is highest as a percentage of total regional output, with London and the South East.
Over the long term, as the UK emerges from a difficult economic position, self-supporting, regionally balanced private sector job creation can help to share the benefits of growth to a wider area than just London and the South East.
The sector contributes £142 billion a year to the gross value measure of UK output and is responsible for contributing 10.5% of the five main taxes, and would have been sufficient to fund the entire activities of the Department or Transport, Home Office and Ministry of Justice combined.
The industry directly employs 3.3 million people, equivalent to 10.2% of all UK workforce jobs. As an employer, the sector is bigger than manufacturing and has a huge part to play in the government’s growth agenda and in generating private sector jobs. At regional level, employment is again evenly spread across the country: between 8.25% and 11.75% of people in each UK region work in the sector.
Taking IT as an example, the number of jobs directly dependent on IT and data-related services activities in the business services sector is put at some 340,000 with an annual turnover of £48.4 billion in the UK.
The Business Services sector has more to give to help governments and the private sector to meet their goals: helping to grow the economy by making companies more competitive; improving quality and innovation; contributing to the control of public spending; maximising taxpayer value; and most importantly enhancing services.
About the Author
Dominic King is Policy Advisor at the Business Services Association (BSA). The BSA is a policy and research organisation, bringing together all those who are interested in delivering efficient, flexible and cost-effective service and infrastructure projects across the private and public sectors.