THE ECONOMIC AND ENVIRONMENTAL IMPACT OF THE HISTORIC AND CLASSIC MOTOR INDUSTRY IN THE UK

54 12. Value of skills and apprenticeships 12.1 Introduction This section considers how the specific skills and in particular apprenticeships in the classic and historic vehicle sector contribute to the economy. It evaluates the value of the specialist skills in the sector, using the standard excess wage methodology. It also looks at the qualitative value of preserving specialist historic craft skills for the nation. 12.2 Skills spillover benefits Given the size of the classic car industry, and the significant demand for restoration and maintenance work for the 3 million classic vehicles, there is significant value in maintaining these essential key heritage skills. As seen in Sectio n 6 , the restoration, maintenance and sale of parts for classic vehicles is worth over £1.3 billion in GVA to the UK economy. One approach for measuring the specific value associated with these skills, is using the observed wage premium for workers in the classic vehicle sector over those simply restoring and maintaining all vehicles. Intuitively, at least for a sustained period of time, a firm will not pay a worker more than the value of the output they produce. The fact that firms in the classic vehicle maintenance sector on average are spending more on labour costs per worker, implies that the specialised skills these workers have leads to a greater level of output. This benefits the firm through higher revenues, the worker who would anticipate seeing a portion of this through higher wages, and the economy as a whole due to both. Using this approach, with the average wage premium used as a proxy for the additional output each worker is likely to produce, we estimate that the specific skills that classic car maintenance and restoration workers possess are worth at least £335 million per annum to the UK economy. 18 This is a slightly conservative estimate for several reasons. Firstly, this assumes that the entirety of the additional output that these workers produce is reflected in higher wages. In reality, firms are likely to also see an increase in profits, which would feed through to a GVA estimate higher than the £33 5 million above. As such, this represents something of a ‘lower bound’ for the true value of these skills. Secondly, anecdotally through interviews with industry figures, we heard several times that the UK’s high level of specialised skills means that significant portions of revenue come from overseas clients. This incentivises overseas vehicle owners – especially those that own high value vehicles for whom this is a cost-effective solution – to store their vehicles in the UK. This can lead to further economic benefit through additional spending in the UK, for example for vehicle transport or storage firms. These benefits are very difficult to quantify, but clearly represent a significant ‘s econd- order’ economic impact. The ability to restore a classic car requires a variety of skills. Restorers will always have a strong knowledge of the mechanics and electrics of the vehicles. Often all the parts required for restoration are not readily available. Only the most experienced in the field are able to cast parts such as washers, discs, plates, and nuts. Restoration may require the use of a telescopic magnet and expensive machinery such as The English Wheel (costs up to £1,900). Companies such as Frost specialise in this machinery. Bodywork often is the hardest work of these projects. Most hobbyists do not have the skills and techniques to beat panels. 18 It is worth clarifying that these benefits are not additive to the GVA benefits discussed in Sectio n 6 . Instead, these benefits are captured within the £1.3 billion in GVA that the maintenance and repair sector generates, through the employee compensation component of GVA. The correct inter pretation would be that of the £1.3 billion generated, £335 million is attributable to specialised skills that maintenance and repair workers possess.