What is the Value of Architecture to the UK Economy?

The UK economy is a diverse one. All kinds of industries contribute to the economic well-being of the nation, including the architecture sector.

Here we explain just how big a contribution those who work in this industry make to the health of the UK economy. We guarantee that you will be surprised by just how much income this relatively small group of people generates for the nation.

Where the figures come from

The majority of the statistics we are using in this article are from the Creative Industries Economic Estimates report from January 2015. This report, produced by the Department for Culture, Media and Sport, is used to help decision makers to make funding and development decisions.

Some surprising facts

The contribution the creative industries make to the economy is rarely discussed in the press. This means that the report makes for interesting reading and uncovers some surprising facts about the creative industries as a whole, as well as about architecture.

The number of people employed in the creative industries

The first surprise is the number of people who are employed in the creative field. In 2013, 2.62m people were working in the creative industries.

That means that for every 12 people working in the UK, one is involved in the various design industries, the arts, publishing or advertising and marketing. Levels of employment in the creative sector have grown much faster than in the rest of the UK economy.

Between 1997 and 2013, the number of people involved in these sectors rose by 44.8%. For the same period, the number of jobs across the non-creative sectors rose by just 10.6%.

This shows that the creative industries are becoming an increasingly important part of the UK’s economy. Many economists and industry insiders expect this upward trend to continue.

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The number of people employed in the architect sector

In 2013, ONS figures showed that 136,000 people were working in the architecture sector. This is a relatively small number, but the figures are not surprising when you consider the specialist nature of the service delivered by the professionals.

However, the number of people involved in the industry is on the rise. In 2011, there were only 121,000 employed in the architecture sector. By 2013, 15,000 more people had joined the profession, which is an increase of 12.3%.

This means that employment in this sector has grown faster than it has in other industries. Across the rest of the economy, the number of people in employment rose by just 10.6% between 2011 and 2013.

Gross Value Added to the economy

The other surprise was just how much income UK architects generate for the economy. In the report, this is measured as Gross Value Added (GVA).

In 2008, the creative industries contributed £61.1bn to the economy. At that time, this represented 4.5% of the economy as a whole.

By 2013, the amount these industries generated had risen to £76.9bn. In that year, people working in these industries were responsible for producing 5% of overall GVA.

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Since 2008, the GVA for the creative industries as a whole has increased by 25.8%.That is much more than for the UK economy as a whole. Across all other industries, GVA increased by just 11.4%, over the same period. Again, a drastic demonstration of just how important the creative industries are becoming to the economic health of the nation.

GVA produced by architects

In 1997, the GVA figure for the architecture sector was £1.4bn. By 2013, it was £3.6bn. However, it is important to realise that between 2008 and 2012 there was very little growth, so the majority of the increase in turnover has occurred in the last few years.

Between 2012 and 2013, GVA increased by 2.7% for the architect sector. This suggests that demand for the services of architects is once again taking off. As you will see later in the article, there is good reason to believe that demand will continue to grow.

The architectural sectors contribution to exports

In the UK, there is still a tendency to think that only manufacturers that produce physical goods can be involved in the export market. Therefore, most people do not think of architectural services as something that can be exported.

In reality, this is not true. Many of those involved in the creative industries sell their services abroad, and do so regularly. This means that they are slowly turning into important exporters.

In 2009, the creative industries as a whole exported £13.3bn in services. By 2012, that figure had risen by 29.7% to £17.3bn. For the architect sector, the figures were 0.3bn in 2009, increasing to 0.4bn in 2012.

Architects role in promoting the UK abroad

Demand for the skills of British architects abroad has always been strong. The UK has produced many world-renowned architects. Amongst them are Zaha Hadid, Will Alsop and David Adjaye. All have of these award-winning architects have created iconic buildings across the world.

British architects were also behind the creation of the West Kowloon Cultural District in Hong Kong. The same firm is currently working on the plans for Masdar City.

This vast eco-city is due to be built in Abu Dhabi, in the United Arab Emirates. Demand for the services of UK based architects continues to be strong, so it is highly likely that they will generate even more export pounds in the future.

The fact that British architects are involved in so many iconic developments across the world helps to boost the idea that UK professionals are creative, innovative and adventurous. This reputation stimulates interest in the UK. That has the knock on effect of increasing demand for other kinds of British products and services abroad.

Interestingly, the UK also contributes disproportionately to the education of new architects. There are 50 schools or architects based in the UK. London alone has 10 of these universities.

The rest of the story

Well, those are the cold facts. They are a bit dry, and maybe a little boring, but they certainly illustrate the fact that architects make a significant contribution to the UK economy.

However, these statistics only tell part of the story. It is important to understand that the UK’s architects are enablers as well as contributors to the economy.

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The work that architects do enables those who work in other parts of the economy to operate successfully, make money and contribute to the economic health of the nation. Below are a few examples that will help you to better understand how this works.

Architects contribution to the construction sector

The first example is an obvious one. There is clearly a strong connection between architects and the construction industry. Without the work of architects very little of the building work that takes place in the UK would be possible.

According to the ONS, in 2014 alone, the construction industry contributed £103bn to the economy of the UK. That was 6.5% of the overall total.

This sector employs more than 2.1 million people, which is around 6.2% of the UK’s total workforce. The figures for 2015 are yet to be released but GVA for the construction sector is expected to have grown by 7.4% (pg2). Therefore, it is not unreasonable to expect the contribution made to the economy by the construction industry to grow, something that will only be possible with the help of architects.

How architects help the UK’s growing tourist industry

In the UK, the tourist industry is becoming an increasingly important part of the economy. According to figures produced by Deloitte, tourism contributed £126.9bn to the UK economy, in 2013. That represents 9% of the UK’s GDP.

A total of 3.1m people are directly employed in the tourism industry. The tourism sector is a major job creator, One third of the jobs created in the service industries in the UK during 2013 were in the tourist industry.

Tourism will be an increasingly important part of the UK’s economy. The tourist sector is set to grow by 3.8% year on year between now and 2025. By then the industry is expected to generate £257.4bn in revenue representing 9.9% of the country’s GDP. Around 3.7m people are expected to work in tourism by 2025.

However, that growth will only be possible with the help of British architects. New hotels and other forms of accommodation need to be built to provide somewhere for the additional visitors to stay. New attractions also need to be designed and built to make sure that the UK continues to offer world-class entertainment to visitors. None of that will be possible without the co-operation of the architect sector.

It is also worth bearing in mind that architects are heavily involved in the restoration of the UK’s historic buildings. This is an important role because many of those who visit the UK do so to visit these iconic buildings. Yet another great example of how the UK’s architects make an indirect contribution to the economy.

Other ways architects contribute to society

Architects also make other indirect contributions to the economy. The vast majority of the UK’s businesses operate out of premises, none of which could have been built without the work of an architect.

However, the connection goes deeper than that. When an architect designs a building, he or she does so with the owner in mind. They work hard to ensure that the finished building is fit for purpose and practical.

Poorly designed business premises have a negative impact on productivity, so it is vital that the architect does their job well. This is something that people who work in the profession are aware of. We architects have a saying – ‘good design makes economic sense’, and experience shows us that this is actually true.

The Royal Institute of British Architects (RIBA) regularly reminds its members of the responsibility they have to society. Well, designed schools support learning. Community-buildings that are fit for purpose play an important role in holding people together and reducing crime.

Public buildings that function well help people to get on with their lives. Hospitals that are well designed help to ensure that people get the treatment they need and help to keep the cost of taking care of the nation’s health under control.

Ok, so that gives you a feel for how architects help others to live their lives, make money and contribute to society.

The future looks bright

The future for the architect sector looks bright. The latest Future Trends Workload Index, produced by RIBA, shows that confidence is high within the industry. Architectural firms across the UK are confident that their practices will be kept busy over the coming few months.

Those involved in the housing sector are the most confident. This is not surprising given recent promises made by the UK government to increase the pace of house building drastically over the next decade or so.

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As of May 2015, the government had announced eleven different initiatives aimed at increasing the amount of private housing stock available in the UK. In addition, during 2015, the government also announced legislation to speed up the planning process, as well as schemes to help first time buyers and young people to buy homes. From the looks of things, there are more initiatives to come.

In January, David Cameron revealed that Lord Heseltine would chair a panel to look at the idea of demolishing sink estates and building them afresh. Should that policy go ahead even more new housing will need to be built in the UK, which will require the input of architects.

There is little doubt that demand for the services of architects will continue to grow. That should mean that they will continue to make a significant contribution to the economy of the UK, as well as to society as a whole.

Posted by Adam Lloyd
January 20, 2016
Features

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