Apprenticeships contribute £34 billion per year to UK economy

ECONOMIC IMPACT OF APPRENTICESHIPS

Research from the Centre for Economics and Business Research (Cebr) revealed that apprenticeships contributed £34 billion to the UK economy in 2014.  

This figure includes gains to the economy from higher wages, business profits and taxes of £31 billion per year, an estimated reduction in unemployment benefit payments of £370 million per year, and benefits to organisations while training apprentices of £1.9 billion per year (in 2014 prices).

The ratio of benefits to costs of apprenticeships is £21 for the national economy for each £1 of public money spent.

The number of people starting an apprenticeship each year had grown from around 100,000 in 1950 to more than 450,000 people in 2013-14, and the government is on course to deliver in excess of 2 million apprenticeships in the lifetime of this parliament.

If this upward trend in recruitment had continued, the national economy could gain £50 billion by 2025 and £101 billion by 2050.  If the number of employers taking on apprentices rose still further, these benefits could increase by £8 billion in 2050, giving a total gain of £109 billion.

This came ahead of the ‘Made by apprentices 1914 – 2014’ event on board HMS St Albans, marking 100 years of apprenticeships.

Minister of State for Skills Nick Boles said:

“This celebration of a hundred years of apprenticeships demonstrates how they have long played a key role in the workforce and commemorates the contribution apprentices have made to employers and the nation. Today apprenticeships are at the heart of the Government’s drive to equip people with the skills that employers need to grow and compete.”

Employers who have been delivering apprenticeships for 100 years will attend an event tomorrow (27 Nov) on board HMS St Albans along with some of their apprentices. These will include the Ministry of Defence, the largest employer of apprentices in the UK, large independent retailer the Lincolnshire Co-op, leading engineering support service provider Babcock International Group and Merseyside shipbuilder Cammell Laird.

‘Made by apprentices 1914-2014’ will recognise all the employers taking part in the Centenary Apprenticeship Programme and the contribution of apprentices past and present.

The Cebr report “ECONOMIC IMPACT OF APPRENTICESHIPS” revealed the economic benefit of apprenticeships for all parties involved – the apprentice, employer and the state:

• For every £1 that is spent on apprenticeships, the national economy gains £21. This is high in comparison to other expenditurereturns on investment in the innovation, research and technology sectors range from around £4 – £7 per £1 spent.
• Apprentices are more likely to be in employment for longer, and will receive higher earnings, with wage premiums of 11% for intermediate-level apprentices, and 18% for advanced-level.
• Employers gain in the long and short term from taking on an apprentice, with the Cebr estimating increased outputs for businesses of £1.8 billion in 2012-13.
• Unemployment is reduced with £370 million gained from saved benefits per year, thanks to around 99,000 extra employed people as a result of apprenticeships.
• The most popular sectors for apprenticeships are: health and social care (13%), customer service (10%), business administration (8%) and retail and engineering (both at 7%). This is out of a total of 950,313 people participating in an apprenticeship in 2012-13.
• The region with the highest concentration of apprentices per total population is the North West, followed by regions within Northern England and the Midlands.

The Skills Funding Agency is urging employers to recognise the positive impact apprenticeships have made over the past hundred years and to consider how an apprenticeship could benefit their business.