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83. Economic Impact Assessment of the Advanced Manufacturing Research Centre’s Training Centre

Last year, the University of Sheffield Advanced Manufacturing Research Centre (AMRC) commissioned Kada Research to produce an Economic Impact Assessment (EIA) to capture the economic benefits generated by the operations of the Training Centre.

The AMRC Training Centre was established to train the next generation of world leading engineers. It works with employers to identify and provide the skills required to enable manufacturing companies to compete globally. Trends within the advanced manufacturing sector drive demand for greater technical proficiency and higher-level engineering skills, for both apprentices between Levels 3-6 and the existing workforce.

Kada were commissioned to undertake the EIA which could be used to inform potential expansion of the Training Centre and future bids to the public purse. The EIA report looks at the Training Centre’s activity over a five-year period (2018/19 to 2022/23).

The approach to assessing the economic impact of publicly funded interventions has evolved in recent years. Local places have often focussed on jobs and Gross Value Added (GVA) benefits that an intervention will deliver, because increasing local employment is often a key strategic objective of place-based initiatives (as acknowledged by the Department of Levelling Up, Housing and Communities’ Appraisal Guide). Such metrics are relatively visible and easy to measure.

However, HM Treasury’s default assumption is that any jobs created by a policy resulting from government expenditure do not increase employment at the UK level. As set out in The Green Book, these employment effects are assumed to be largely determined by macroeconomic decisions on the level of overall public expenditure (though they may have an important local impact). The Green Book approach therefore does not take jobs and GVA into account in the assessment of economic benefits.

What is taken into account is supply-side effects which have the effect of raising productivity – such as improvements to the skills of the labour force and movement into more productive jobs. The benefits of these improvements are generally seen through increases in wages rather than increased employment at a national level.

Considering the above, the assessment of the economic impact of the AMRC Training Centre provides three separate estimates:

  • An estimate of the productivity uplift generated through the increased skills which the Training Centre generates within the labour force.
  • An estimate of the local jobs and GVA benefits arising from AMRC TC apprentices moving into fully-skilled job roles following completion of their training.
  • An estimate of the GVA benefits arising from the operation of the Training Centre, based on current levels of employment.

The economic impact delivered by five years’ operation of the AMRC Training Centre is significant. The Training Centre is a national asset but its location in South Yorkshire means that its impact is particularly significant for the local and regional economy. Over a 15-year period, the apprentices who completed their apprenticeships at the AMRC TC between 2018/19 and 2022/23 will contribute:

  • £46m of productivity benefits, of which £38m will be in the South Yorkshire economy
  • £280m of direct, indirect and induced GVA, of which £233m will be in the South Yorkshire economy.

The operation of the Training Centre also generates jobs and GVA. Over the 2018/9-2022/23 period, the Centre’s activities created £20m of GVA, of which £16m has been retained in South Yorkshire.

AMRC TC apprentices take a number of years to complete their training, with most starters from the 2018/19-2022/23 period still on their apprenticeship at the current time. This provides a pipeline of future benefits, which will be realised over the coming years.

If you are thinking about commissioning an economic impact assessment, have any questions about this piece of work or if you would like to talk through an idea and discuss how we can help, please contact us at info@kadaresearch.co.uk