The Economic Value of the Heritage Sector
Part of the Heritage Counts series. 6 minute read.
England's heritage sector is a guardian of our nation's historic environment, protecting and conserving heritage for current and future generations. The sector also wields a substantial influence on our national and local economies.
The heritage sector is a source of economic prosperity and growth
The heritage sector is an integral part of England’s national economy and is deeply embedded in local property markets, local supply chains and local economic activities. The economic value of heritage stems from a variety of sectors and subsectors, ranging from the conservation and preservation of historic buildings to activities in the natural environment. Each year, Historic England commissions a detailed economic study to capture the full economic ‘footprint’ of the heritage sector using national statistics disaggregated into subsectors, occupations and local geographies.
Using the latest national statistics (2021), England’s heritage sector is estimated to have contributed £45.1 billion in Gross Value Added (GVA) to the UK economy in 2021 and employed over 538,000 workers, including direct, indirect and induced impacts (CEBR, 2023).
The economic value of the heritage sector in 2021
Figure HEI 1 – A graphic highlighting the Total GVA and Workers employed by the Heritage sector. Source: CEBR, 2023.
Producing the heritage sector economic estimates
In 2023, Historic England commissioned the Centre for Economics and Business Research (CEBR) to undertake a detailed economic assessment of England’s Heritage sector.
The direct economic impact of the heritage sector is calculated via a mapping process in which occupations are mapped to specific industries. From this, it is possible to observe which UK industries workers in the heritage sector are classified into.
CEBR’s input-output models are used to calculate bespoke multiplier impacts for the heritage sector. These multipliers are calculated based on a 2019 structure of the economy, per the most contemporaneous granular domestic use data, published by the Office for National Statistics. The analysis considers England’s heritage sector by Government Office Region (GOR) and its contribution that spills over to the wider UK economy.
Structural changes in the economy since 2019 are not captured within the standard model, as historically there has been a 2 year lag in the availability of national economic statistics. To address this, the CEBR study has produced a ‘nowcast’ reducing this lag time to 1 year. As the data underpinning this is less detailed, the 2022 forecast inherently comes with more uncertainty, thus a combined approach is taken to minimise any possible forecast error and a range of estimates presented.
You can read the full CEBR assessment for more detail on the method and data.
The Gross Value Added (GVA) of England’s Heritage sector
Gross value added (GVA) measures the contribution made to an economy by 1 individual producer, industry, sector or region. The figure is a quantitative assessment of the value of goods and services produced minus the cost of inputs and materials used in the production process. It is used in the calculation of gross domestic product (GDP).
England’s heritage sector’s direct contribution to the UK’s GVA in 2021 stood at £15.4 billion. This is also equivalent to 0.87% of England’s total Gross Value Added (GVA).
- When considering the combined effects of the direct GVA (£15.4 billion), indirect GVA (£14.8 billion) and induced GVA (£14.9 billion) contributions, England’s heritage sector supported £45.1 billion in 2021
The heritage sector's contributions extend beyond immediate activities
Figure HEI 2 – A graphic representation showing the build up of GVA to reach the Total GVA. Source: CEBR, 2023.
For every £1 of GVA that the sector directly generates, an additional £1.93 is added into the wider economy.
- This is driven by indirect and induced spending impacts, which occur when sector employees, visitors and businesses spend in the wider economy supporting a wider supply chain
- For every £1 of direct GVA generated, £0.97 is supported through wider spending effects (induced impact) and £0.96 is supported in the sector’s supply chains (indirect impact).
Heritage supports spending in the wider economy, 2021
Figure HEI 3 – A graphic representation of the wider gain from the Heritage sector in 2021. Source: CEBR, 2023.
Forecasts for 2022 indicate a growing heritage sector:
- It is estimated that in 2022, England’s heritage sector directly contributed between £15.8 and £17.5 billion to the national economy (1)
Heritage sector GVA nowcasts, 2018 to 2022
Figure HEI 4 – A line graph showing projections of GVA (this is based on a projection of more recent evidence and data considering early indicators of changes to the national and regional economy.) Source: CEBR, 2023 – ONS Annual Business Survey, ONS GDP Tables, ONS Labour Productivity Tables, CEBR analysis.
Economic Effects: Indirect, Induced, and Supply Chains
Indirect Impacts: Occurs when positive economic conditions, like salary increases or enhanced job security, influence employees in a specific sector. These conditions prompt individuals to engage in discretionary spending, meaning they have more money available for non-essential purchases. The increased discretionary spending creates a ripple effect, boosting demand for goods and services across various industries.
Induced Impacts: Results from the subsequent increase in demand for goods and services. The heightened demand leads to increased production in response to consumer needs. This, in turn, creates job opportunities in the industries experiencing the surge in demand.
Supply Chain Dynamics: As businesses and employees in a sector source raw materials, components, and services from a wide array of suppliers, the sector's expansion generates a substantial demand ripple throughout the supply chain. These suppliers, in turn, experience increased orders, leading to their growth and potential job creation.
- In terms of the regional breakdown, the heritage sector in London alone supported a total of £10.7 billion in GVA through direct, indirect and induced impacts. On the other hand, the North East had the lowest ’in-region’ multiplier impacts in England suggesting the region’s economy is providing relatively less to the intermediate input needs of the heritage sector within the region. £1.06 billion of GVA was supported in the region in 2021
Regional contribution of the heritage sector (direct, indirect and induced GVA), 2021
Figure HEI 5 – Map view of regional breakdown of Total GVA, 2021. Click the legend to filter the content. Source: CEBR, 2023.
- The heritage sector is made up of a diverse, dynamic set of subsectors, permeating across various industries. The construction industry is the largest single sub-sector in terms of the heritage sector GVA, generating 48.4% of total GVA, or £7.5 billion. This is more than double the next largest industry of Libraries, archives, museums, and other cultural activities
The economic footprint of key heritage sub-sectors, 2021
Figure HEI 6 – Graphic representation of economic contribution of the Heritage sectors main sub-sectors in 2021. Source: CEBR, 2023.
Employment in the Heritage Sector
In 2021, heritage sector directly employed approximately 207,000 workers, constituting 0.75% of England's workforce.
- Direct employment in 2022 is projected to stand at between 203,000 and 227,000 jobs
- When considering the combined effects of the 2021 direct employment (207,000), indirect employment (174,000) and induced employment (157,000) contributions, England’s heritage sector supported 538,000 jobs in 2021
Employment in the heritage sector, 2021
Figure HEI 7 – A graphic representation showing the build up of GVA to reach the Total GVA. Source: CEBR, 2023.
- For every individual directly employed within the heritage sector, an additional 2.60 workers are indirectly employed in related sectors such as tourism, public, creative industries, and social services sectors
The economic impact of heritage employment
Figure HEI 8 – A graphic representation of how the heritage sector supports the wider job market. Source: CEBR, 2023.
- The heritage sector in London supported the largest number of workers, 86,000, through direct, indirect and induced impacts in 2021. The North East with 19,000 workers again had the lowest aggregate impact in terms of total employment supported
Regional distribution heritage employment (direct, indirect and induced), 2021
Figure HEI 9 – Map view of regional breakdown of employment figures (both as a number and %) in the heritage sector. Click the legend to filter the data. Source: CEBR.
The heritage sector demonstrates robust economic recovery since 2019
Like many sectors, the heritage sector has faced extraordinary challenges since 2020 due to macro-economic shocks, including the COVID-19 pandemic, the cost of living crisis and rocketing global energy costs. While the impact of the energy crisis and cost of living crisis is still unfolding, the post-pandemic evidence demonstrates a resilient and recovering heritage sector:
- Between 2011 and 2019, heritage GVA grew 34.7% from £11.4 to £15.1 billion in 2021 prices. This growth trajectory was disrupted in 2020 during the pandemic, which led to a GVA contraction of 14.7%
- The heritage industry generated its highest-ever GVA (in nominal terms) of £15.4 billion in 2021, which demonstrates the rebound after the pandemic. Central to this rebound was the construction industry within the heritage sector, which experienced a 32.5% annual growth in 2021
Trends in the heritage sector’s GVA, 2011 to 2021 (in real terms £million for 2021)
Figure HEI 10 – A line graph showing the growth in GVA for the heritage sector. Hover over the axis point to see the detailed figures. Source: CEBR.
The economic performance of the heritage sector also translated to employment:
- The heritage sector saw its highest yearly job increase from 2020 to 2021, adding 15,100 roles (CEBR, 2023)
- Between 2011 and 2021, heritage employment growth outstripped the rest of the UK economy
Employment change 2011 to 2021, comparing total UK employment and total heritage employment
Figure HEI 11.1 – A graphic representation of the overall growth of the total employment figures versus the heritage sector.
Figure HEI 11.2 – Employment change 2011 to 2021, Total UK employment and Total heritage Employment. A line graph showing the growth in employment in the heritage sector within the wider UK job market. Source: CEBR.
Public support for the heritage sector during the pandemic
The Culture Recovery Fund (CRF) was designed to support cultural and heritage organisations during the pandemic and played a crucial role in the sector’s recovery.
CRF increased the net total income of funded organisations by £777 million. This led to an additional expenditure of £612 million. Additionally, CRF supported 110,861 full-time employees and 107,950 contractors in 2020.
The benefits from the number of organisations it likely prevented from failing (620 to 830) and the number of jobs it safeguarded (up to 20,500) outweigh the costs of implementing the programme (with every £1 spent leading to between £1.98 and £3.66 in benefits). These positive cost-benefit ratios do not include the intangible benefits that the programme generated, such as enabling more risk-taking cultural endeavours, supporting the mental health of people working in the cultural sector, and providing wider cultural opportunities for the public during a time of national crisis.
Source: DCMS, Evaluation of the Culture Recovery Fund Final Report, 2022
In conclusion, beyond preserving our rich history, England's heritage sector significantly contributes to the economy. The sector's GVA figures, direct and indirect job opportunities, and resilience, especially during challenging times, highlight its continuing importance to the UK economy.
References
- CEBR (2023). ‘The heritage sector in England and its impact on the economy: An updated report for Historic England.’ Available at: https://historicengland.org.uk/content/heritage-counts/pub/2023/heritage-sector-in-england-and-its-impact-on-the-economy-2023/ (Accessed: 13.11.23)
- Deloitte (2023). 'Estimating economic multipliers for the screen industries in four Latin American countries'. Available at: https://www2.deloitte.com/content/dam/Deloitte/br/Documents/strategy/Deloitte%20-Estimating%20economic%20multipliers%20for%20the%20screen%20industries%20in%20four%20Latin%20American%20countries-%20EN.pdf (Accessed: 17.11.2023)
- DCMS (2022). ‘Evaluation of the Culture Recovery Fund Final Report.’ Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1146922/GOV.UK_17.3_CRF_Final_Report_accessible_v3.pdf (Accessed: 05.10.23)
- Lemma, A.F (2014). ‘Tourism Impacts: Evidence of Impacts on employment, gender, income’ Available at: https://assets.publishing.service.gov.uk/media/57a089f2ed915d622c000495/Tourism_Impacts_employment_gender_income_A_Lemma.pdf. (Accessed: 20.08.23)
