Methodology

What is the Local Growth Index?

The Local Growth Index scores every local authority in the UK on the companies based there, across four pillars: innovation, scaling, investment and ESG (environmental, social and governance). A composite score combines all four.

There are 382 actual local councils but that includes 21 English county councils which govern the same areas as some local authorities. Therefore, there are only 361 local authorities from a statistical point of view.

Every score is measured against a fixed UK benchmark, on which the UK as a whole scores 1,000. A higher score means the area does better than the UK average on that pillar; there is no upper limit. Because the benchmark is fixed, an area's score depends only on its own companies, not on how other places are doing.

• 1,000UK benchmark
• 4Pillars
• 16Measures
• 361Authorities scored

The four pillars behind the score

Which companies are included

The scores measure the approximately 4.5m active companies in the UK, tracked by the Beauhurst platform, with data as of 19 October 2026. Companies are counted as True Companies, as the platform shows them: a corporate group counts as one company, not as each of its registered entities. Patents held anywhere in a group count for the group; its signals and sectors come from its main company.

Each company counts wholly for the local authority of its main registration's head office, or its registered address where no head office is known.

Dormant companies are left out, since the share of dormant companies varies widely from place to place and would otherwise pull some areas down for reasons unrelated to their economy. So are groups headquartered outside the UK, along with their UK subsidiaries; companies in the Isle of Man and the Channel Islands; and companies at the four Companies House default addresses (two in Cardiff, one in Edinburgh and one in Belfast), where Companies House moves companies whose address is invalid. Those would otherwise inflate the counts in those cities.

Grant and equity measures look at the last five years, and patents at families filed in the last 20; to tell whether a raise was a company's first, its full equity history is checked. All amounts are restated in August 2026 prices using the ONS Consumer Prices Index, each grant and deal adjusted by the month it happened, so inflation on its own does not raise a score.

What the four pillars measure

Each pillar is built from a handful of measures, each worked out for every company and then averaged across the area. Most are simple yes/no characteristics, for example whether a company has raised equity, whereas a few are amounts or rates. The weights show how much each measure counts within its pillar.

Why these weights? The weights within each pillar are set by how much one company with a given characteristic should count compared with another. In the Innovation pillar, for example, one spinout counts about as much as four typical patent holders or four typical grant recipients, with the two sector measures adding a lighter, classification-based view alongside these public datasets. In Investment, a first-time raiser also counts as an equity raiser, so the smaller first-time weight is a deliberate extra credit for new raisers.

Keeping a few large values from dominating

1. 1

   Caps

   Patent counts and funding amounts are capped, so one very large holder or deal can’t dominate a place: 90 patent families per company, £10.3m for R&D grants and £130m for equity. Headcount growth is capped at −48% and +49% a year.

2. 2

   A log scale

   Capped patent counts and funding amounts are then logged, as ln(1 + value), with funding measured in units of £100,000. A grant at the cap therefore counts for about seven times a typical £100,000 grant rather than over a hundred times, and a holder of 90 patent families about four times a typical two-family holder rather than 45 times. Because the log is taken per company, every measure is still a simple average across the area.

Headcount growth is only measured for companies that already had five or more employees, because among the smallest companies a single hire can look like dramatic growth. Companies below that size count as showing no growth yet, in the same way that a company that is not a scaleup counts as zero on the scaleup measure.

How a score is calculated

The same calculation is used for every area, from the whole UK down to the smallest local authority, which is what makes them comparable.

1. 1

   Measure each company

   Every company gets a value on each of the 16 measures: a 1 or 0 for yes/no characteristics, a capped, logged figure for patents and funding amounts, or a capped growth rate.

2. 2

   Average across the area

   For each measure, take the mean across the area's active companies. For a yes/no measure this is simply the share of companies with that characteristic.

3. 3

   Compare with the UK

   Convert each measure to a z-score: the area mean minus the UK mean, divided by the standard deviation of that measure across UK companies. This puts all 16 measures on a common footing, whatever their units.

4. 4

   Combine into pillars

   Each pillar's z-score is the weighted average of its measures' z-scores, using the weights in the table above.

5. 5

   Combine into the composite

   The composite's z-score is a weighted average of the four pillars: Innovation, Scaling and Investment 30% each, and ESG 10%.

6. 6

   Put it on the 1,000 scale

   Convert each z-score to a score with the linear formula below, floored at zero.

• 1,000Matches the UK on every measure: z = 0.
• 1,200A tenth of a UK standard deviation above the UK: z = +0.1.
• 800A tenth of a UK standard deviation below the UK: z = −0.1.

1. Company valuee.g. 1 = spinout →
2. Area averageshare of companies →
3. z-scorevs fixed UK baseline →
4. Pillar & compositeweighted averages →
5. Score1,000 + 2,000 × z

How the composite is weighted

A fixed UK benchmark

The UK means and standard deviations used to calculate z-scores were calculated once, on 19 October 2026, and are held fixed. This has three consequences:

• Any area can be scored on its own, without reference to any other area.
• An area's score only changes when its own companies change, not when other places improve or decline.
• The UK as a whole will drift away from exactly 1,000 over time as new data arrive. That is intended: it shows how the UK has moved since the benchmark date.

Likely range, and when a score is shown

A score is exact for the companies in an area today. The likely range is a 90% interval (±1.645 standard errors) showing how much it could move if the area were made up of slightly different companies of the same kind.

The standard error comes from the area's own companies: each measure's spread divided by the square root of the number of companies, never assuming less spread than the UK has. Measures are combined at the pillar weights allowing for how they move together (a spinout has often also won a grant and raised equity). An area whose score rests on a few large fundraisers or spinouts has a wide range; one made of many similar companies has a narrow one.

• A score is shown only when its likely range is within 20% of the score either side. Beyond that point, scores start to depend heavily on a handful of companies.
• Each pillar and the composite are judged separately. A pillar that is too uncertain to show still counts towards the composite, whose own range already reflects that uncertainty.
• Almost every local authority clears the limit, because almost all collections of 250 or more companies do. Investment is the pillar most often hidden: only around 0.4% of UK companies raised equity in the last five years, so a small area may hold only one or two raisers.

Worked example: Cambridge

Cambridge is the top-ranked authority, with a composite of 1,442 and a likely range of 1,396–1,488. Here is how its four pillar scores combine into it.

Each pillar's z is its score worked back through the scale: (1,713 − 1,000) ÷ 2,000 = +0.3565 for Innovation. The weighted sum, +0.2212, goes back through the same formula: 1,000 + 2,000 × 0.2212 = 1,442.

Counties and regions

Counties and regions are scored alongside the 361 local authorities, so an authority can be compared with the area around it.

• Counties and regions are scored the same way as authorities: every active company in the area, measured and averaged together. Because the calculation is linear, that works out as the weighted mean of their authorities’ scores, weighted by active companies, so a large authority counts for more than a small one.
• Each county and region has its own likely range, which is narrower than its authorities’ because it holds more companies.
• County is not a uniform tier. Outside England it falls back to the nation, and the City of London is a county of its own. A county that spans two regions, such as North Yorkshire or Lincolnshire, is scored once as a whole.
• Each authority also carries a "vs county" and "vs region" figure: how many points its composite sits above or below that area’s score.

Reading and comparing scores

1. 1

   Most places are close

   80% of local authority composites sit between 941 and 1,037, and the typical likely range is ±15 points. Two mid-table places a few points apart are effectively level.

2. 2

   Quote differences in points, not percentages

   A move from 1,020 to 1,060 is 40 points. Because the scale has no natural zero, percentage changes are misleading. For a percentage, use the underlying measure instead, for example "12% more companies raised equity".

3. 3

   Scores move with the company base

   Scores rise as companies raise equity, win grants, file patents, grow headcount or gain signals. They also move with the number of companies: when many new companies register in a place, each share is spread over more of them, so a score can fall while the number of companies with a characteristic holds steady, and rise when companies close. Signals such as scaleup status are kept once gained.

4. 4

   Compare like with like

   Typical gaps vary a great deal by kind of collection: around 32 points on the composite between whole places, around 355 between digital companies in different places, and roughly 290 to 1,630 between niche or curated collections in different regions.

5. 5

   How a collection is built shapes its score

   A collection chosen for a characteristic will score highly on the pillar that measures it. A list of funded companies will score highly on Investment by design. Local authorities are defined by place alone, which is what makes them comparable.

6. 6

   Funding amounts are in August 2026 prices

   Grant and equity amounts are restated using the ONS Consumer Prices Index, each adjusted by the month it happened, and the UK benchmark stays fixed at 19 October 2026, so inflation on its own does not move a score. Describe them as August 2026 prices.

Limitations

1. 1

   Head office assignment

   A company headquartered in one area but employing people elsewhere counts entirely towards the area its head office sits in. That can overstate activity where head offices cluster.

2. 2

   Intensity, not size

   Every measure is averaged across an area’s companies, so a score says how active the typical local company is, not how large the local economy is. A small district can outscore a big city.

3. 3

   Small company bases

   An area with few companies has a wide likely range, and a score that rests on a handful of fundraisers or spinouts. Where the range is too wide the score is not shown at all, rather than shown with a caveat.

4. 4

   Not a measure of output

   The index measures the characteristics of a place’s companies. It is not a measure of economic output or GDP growth.

Glossary